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BUILDING BRICS BY BRICS

While publishing the paper “Building Better Global Economic Brics”, Jim O’Neill

knew ull well that the B!"# countries $along with %outh &rica, added later' would be the

economic leaders o the uture and the world would no longer rest in the sole hands o the (%&)

But all these countries did not ha*e a glorious past) Bra+il, in -.-, /ust ater suering

through an endless period o stagnation, inlation and crisis, emerged out o cloud o the militar0

rule which was not letting the countr0 rise ahead) E*en ater that, the leadership o 1ernando

#ollor went ha0wire and Bra+il was still struggling to claw its wa0 out o the economic crisis it

was acing)

&ter its independence rom 233 0ears o British !ule in -45, "ndia was still battling

with the economic woes and was tr0ing to establish itsel in the world) "t was not until --, that

"ndia saw unprecedented economic growth, when liberali+ation reorms were introduced b0 6r)

7anmohan %ingh) 8his ended the “9icense !a/” and thus opened a whole new door o opportunities or "ndia)

#hina, on the other hand had great and eicient leaders) Jiang :emin, 9i ;eng and :hu

!ong/i ,in the nineties) &nd under their administration, around <3 million peasants were pulled

out o po*ert0 and #hina was alread0 seeing an economic growth o )2=)

!ussia, on the other hand, was ha*ing huge debts, high budget deicit during the late

nineties) 8he --. !ussian 1inancial #risis urther declined the G6; o the countr0 and the

econom0 was slipping into a doom) But in the ne>t 0ear itsel, !ussia saw ?ladimir ;utin as its

;resident who *owed to regain his countr0’s power and prestige)

8he below table summari+es the abo*e acts and shows how the G6; o the our 

countries ared in the 0ears --. and ---)

Gross Domestic Product (in millions) Brazil Russia India China

1!

@.44,2A @25,3. @42-,AA @,3-,4.3

1

@<.A,-22 @-<,-35 "#$#%&'# "1%'!%!#

%o we can see that these countries seem to be so dierent, so disparate, separated

geographicall0 and culturall0, the0 ne*er concei*ed themsel*es as a unit) Cet what the0 allshared in the late -3s were large populations, underde*eloped economies and go*ernments that

appeared willing to embrace global markets and some elements o globali+ation) 8o O’Neill,

these characteristics made them natural sistersD the* all had the +otential ,or ra+id ,uture

-ro.th) "n 233,he anal0+ed the emergence o these our economies and speculated that b0 23<3

their economies would surpass the G5 economies) Was that *ision reall0 true 9et us see some

acts and then we can come to some conclusion)

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"n 233, #hina continued to increase its growth and /oined World 8rade

Organi+ation) %tateFowned newspaper  People’s daily  declared “This is a historic moment in

China’s reform and opening up and process of modernization”) #hina was mo*ing be0ond its

established low wages sectors and was on its wa0 to become a leading industrial powerhouse b0

the increasingl0 sophisticated production o computers, pharmaceuticals and automobiles)

"ndia too was not ar behind) &ter the liberali+ation reorms o --, "ndia began

car*ing its path in its economic reorms) 8he reorms allowed automatic appro*al or oreign

direct in*estment in man0 sectors) B0 the ad*ent o the 2st  centur0, "ndia had progressed

towards a reeFmarket econom0, with a substantial reduction in state control o the econom0 and

increased inancial liberali+ation) With -3= percent rise in its stock market$233F233<', "ndia

was one o the astest growing countries with an a*erage growth rate o about -= in the period

233F2335)

!ussia bounced back rom the --. inancial crisis under the leadership o ;utin)

8he domestic industries gained at a national as well as an international le*el due to thede*aluation o rouble) 6eregulation policies also assisted in the !ussian reorm the ta> reorm

helped bring more capital to the go*ernment) &ter 2333 until the global recession, !ussia came

out with l0ing colors) "ts G6; grew at a rate o 5= until 233. its stock market increased upto

5A= rom 233 to 233<) 8here was a boom in pri*ate consumption and the number o people

 below po*ert0 line reduced drasticall0 rom 3= in 2333 to 4= in 233.) "n 2335 the World

Bank  declared that the !ussian econom0 achie*ed Hunprecedented macroeconomic stability”)

!ussia had indeed come out o its economic doom in a *er0 impressi*e manner)

9ui+ "nacio 9ula da %il*a undertook the responsibilit0 o pulling Bra+il out o its

economic darkness) 9ula renewed the agreements with the "71$"nternational 7onetar0 1und',

which inused mone0 into the Bra+ilian market) Bra+il slowl0, but steadil0 was growing into one

o the largest economies o the world under 9ula’s go*ernment) Growth &cceleration ;rogram,

was one o the programs initiated b0 9ula, and there were man0 other such programs which led

Bra+il to the position where it is toda0) HUnder Lula, Brazil became the world's eighthlargest 

economy, more than !" million people rose out of acute po#erty )HI  The $ashington Post ,

October 233)

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8he table gi*es us the G6; and other measures o the de*elopment o the B!"#sin 233- and thus substantiates the inormation written abo*e)

 

BRICS/

1inall0 the *ision o O’Neill did come true &ll these our countries had the power o emergence and the0 did emerge out to be some o the astest growing economies o the world)&ll these our countries came together and /oined hands in 233A to reali+e the *ision o JimO’Neill) 8he0 had a series o meetings to bolster their relations until in 233-, the irst ormalB!"# summit happened at Cekaterinburg) &ter this, there was no looking back) "n 233, %outh&rica was in*ited to /oin the group and it was thus renamed B!"#%)

%outh &rica too was *er0 much similar in its growth stor0 with the other our 

B!"# countries) &ter --4, there were changes in the go*ernment policies, which inusedgrowth and capital into the %outh &rican market, as a result o which inlation came down, and public inances were stabili+ed) %outh &rica ound itsel to be a ma/or tourist hotspot, andthrough that it earns its ma/or re*enues)

(ntil 234, there ha*e been A B!"#% summits) B!"#% summits are the annualdiplomatic meetings where all the countr0 leaders come o*er a single platorm to discuss their uture de*elopments or the B!"#% countries)

"n the last summit held in Bra+il in Jul 234,  New Development Bank wasoiciall0 inaugurated with %hanghai as its headKuarters) 8his step would change the group’s

 participation in the World Bank decision making s0stem and would reduce dependenc0 on the(% dollar b0 strengthening the international law)

%The international monetary system itself depends a lot on the U& dollar, or, to be precise, on themonetary and financial policy of the U& authorities The B()C& countries want to change this” L ?ladimir ;utin, !ussiaD !8) *+ uly !"*-)

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Reasons .h* BRICS .ould -ro. ,urther

&t present, the B!"#% countries represent

• billion people $43= o the world population'

• a combined nominal G6; o @A)3- trillion $23= o world G6;'

• @4 trillion n combined oreign reser*es

• .= o the world econom0

B!"#% would continue to demonstrate this growth because o se*eral contributing actors whichcan be summari+ed as ollowsD

  Science and 0echnolo-*/ 1rom 2332 to 2335, "ndia, Bra+il and #hina ha*e

doubled their spending on research, and their collecti*e share o global !M6 hasincreased rom 5 to 24 =) 8his would lead to new ideas and inno*ation o theB!"#% industries)

 

Gro.in- BRIC iddle Class/ 8he rapid growth and demographics o "ndia and

#hina ha*e gi*en rise to a huge middle class, which would dri*e the B!"#%’economic de*elopment and e>pansion o the global econom0) 8he below graphshows us how the B!"#s middle class would outrace that in the G5 countries)

 

Figure: Middle Class of BRICs and G7countries

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• 2conomic De3elo+ment/ With impro*ed education and inrastructure, huge labor 

a*ailabilit0, inancial market de*elopment, easing go*ernment policies,technological readiness, increasing market si+e, better trade opportunities, theB!"#% countries ha*e immense growth opportunities the0 ha*e to make ull outo it) #hina has alread0 dethroned German0 to be the second largest econom0 in

the world ater (%&) Others in the group /ust need to ollow the same path and pro*e O’Neill’s *ision true)

"n order to continue with their economic growth, the B!"#%countries should ocus on the *arious obstacles the0 are acing currentl0D  &ccessto 1inancing,  "nadeKuate "nrastructure,  "neicient go*ernment,  Bureaucrac0,#orruption and man0 such issues) " the0 tread careull0 on their current path, thatda0 is not ar when B!"#% would be the uture “(%” o the world)

Re,erences/

• httpDwww)marketwatch)comstor0bricsFnationsFslowl0FcreatingFaFnewFpowerF

centerF23F34F3

• httpDwww)globalsherpa)orgbricFcountriesFbrics

• httpDwww)asiapathwa0sFadbi)org233AhowFsustainableFareFtheFbricsF

economicFandFsocialFpolicies  and www)wikipedia)org