New Powerhouses – One BRIC at a time

In economics, BRIC or BRICs is an acronym that refers to the fast growing developing economies of Brazil, Russia, India, and China. The acronym was first coined and prominently used by the bank holding company Goldman Sachs in 2001. Goldman Sachs argued that, since they are developing rapidly, by 2050 the combined economies of the BRICs could eclipse the combined economies of the current richest countries of the world.

Goldman Sachs did not argue that the BRICs would organize themselves into an economic bloc, or a formal trading association, like the European Union has done. However, there are strong indications that the “four BRIC countries have been seeking to form a political club” or “alliance”, and thereby converting “their growing economic power into greater geopolitical clout”. One of the recent indications was from a BRIC Summit meeting in 2008, in the Russian city of Yekaterinburg between the foreign ministers of the BRIC countries.

Brazil’s economic potential has been anticipated for decades, but it had until recently consistently failed to achieve investor expectations. Only in recent years has the country established a framework of political, economic, and social policies that allowed it to resume consistent growth. The result has been solid and paced economic development that rival its early 70’s “miracle years”, as reflected in its expanding capital markets, lowest unemployment rates in decades, and consistent international trade surpluses – that led to the accumulation of reserves and liquidation of foreign debt (earning the country a coveted investment grade by the S&P and Fitch Ratings in 2008). How long such positive factors will stay in place remains to be seen, specially with upcoming presidential elections and possible political changes.

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