Meet the BRICs
he openingcase for this chapterhighlighted accelerating the successof emerging economies.s2 focus of attention now squarely the vanguardof emerging The is on economies, so-called the BRlcs:Brazil, Russia, India, and china.The BRlc countries. although much larger scaleand scopethanotheremerging in markets, symbolically represent trendsthat are developing throughout world. Many presumethat wherethe BRICs the go, others follow. we lookat the emergence the BRlCs, discuss implications will As of we the for the economic environment wellas individual as company activity. Then, close,we,llsee to what threatsto the BRICsmightmakethem crumble. At currenttrends and with reasonable projections, over the next few decades Brazll, Russia, lndia'and Chinawillbecome larger, a morepowerful forcein the worldeconomy. By 2050,the BRICs eclipse will mostof the current richestcountries the world,will eniomof passover40 percent the world'spopulation, holda combinedppp-adjusted of and GDp of nearly$15 trillion. Consequently, rankings national the of economies changedramatjwill cally(seeFigure 4.8). In termsof specifics, Chinaand Indiawill be the dominant globalsuppliers manufacof tured goods and services, respectively, whileBraziland Russiawill becomethe principal suppliers raw materials. of Collectively, almosteveryscale,they will becomethe largest on entityon the globalstage. The unfolding influence the BRICsas enginesof new growth and spendingpower of leads some to arguethat these transitions may happeneven sooner,especiallygiven the FIGURE4.8 The LargestEconomies theWorld:2050 in Current proiections see the national economic order of the world changingdramatically over the next few tenerations. By midcentury China will likelyclaim the top rank,followedby the United Statesand lndia. Sonrce; DominicWilsonand RoopaPurushothamary "GlobalEconomics PaperNo.99: Dreamingwith BRICS: path to 2050,, The (ColdmanSachs, 2005), ww.gs.com (accessed at OctoberlS,2OOZ).
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The Economic Environrnents Facins Businesses
rates in richernations.Expertsforecast agingworking populationsand fallingproductivity the most dramatictransition take placeoverthe next20 to 30 years. will that By 2016, China'seconomywill be largerthan those of Japan,the UnitedKingdom, France,ltaly,and Canada, with an eyeto passing UnitedStatesas the world's the Germany, economysoon thereafter. India'seconomywill passJapan'sby 2030,makingit the largest century only the thirdlargestin the world.Of the premiereconomicpowersof the twentieth in economies 2050. UnitedStatesand Japanwill be amongthe largest This trend has also shapedrelationships parties. between Indiaand China, world's the partnership end a borderdispute agreedto form a strategic to two most populouscountries, betweenthe Asiangiants.The and boost trade in a deal markinga major shift in relations signed by the premiersof both countries, easesdecadesof mutualdistrust agreement, the as of the reshape between nations a result a war in 1962."lndiaand Chinacan together Singh proclaimed a ceremony his for world order,"lndian prime ministerManmohan at counterpart, Premier presidential palace. WenJiabao,at India's Chinese bilateral Similarly, Sino-Russian tradewas $33 billion 2006,up from$20billion 2005, in in to parttrading and it is expected reach$70 billion 2010.Chinais Russia's by fourth-largest ner;Russiais China'seighth.Theyare the leading members the Shanghai of Cooperation Council,one of the most influential economiccentersin the world. Indications show a of strengthening ties betweenthesenations,ln manypeople'seyes,Russia, rollingback by past, is morepolitically its and reviving imperialist democracy alignedwith the one-party stateof China. As...