The importance of the BRIC countries to the global economy has increased because of the high economic growth rates in China, Brazil, India, and Russia. A forecast has been made shows that the BRICs would account for 37% of economic global growth during the period 2011-16 which would increase the BRIC share of global output from 19% to 23% (Goldman, S. (2004). However, the proportion of global output produced by the traditional great powers in the G7 economies will fall from 48% to 44% (IMF 2011). It`s obvious that the BRIC countries are catching up fast. Nevertheless, their current role in the global economic is still relatively small in terms of GDP at market price.
The BRIC countries, and in particular China and Russia, hold a great quantity of surplus capital. By far China holds almost $1.5 trillion foreign exchange reserve which is the largest proportion of the world exchange cover (Paola, S. (2008). Together with Russia, India and Brazil, these countries hold almost half of the world’s foreign exchange reserves. The surplus of these countries’ current accounts reflects their economies’ position in the global economic, as big exporters of both manufactured goods and commodities in the global supply chain (Paola, S. (2008).
With purchasing-power-adjusted exchange rates being applied to the comparison of GDP, the role of the BRIC countries in the global economic becomes more important. With regard to purchasing-power-adjusted GDP, these countries’ share of the global economy is almost 24 percent due to BRIC countries` lower price levels. However, USA is still the largest economy. China moves to the position of the world’s 2nd largest economy, followed by Japan and India in respectively 3rd and 4th position in terms of purchasing-power adjusted GDP (Goldman, S. (2004).
Accompanied by high economic...