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    Bric Country's

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    Meshack Mate
    This is an esay about BRICS

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    © All Rights Reserved
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    Bric Country's

    Uploaded by

    Meshack Mate
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    This is an esay about BRICS

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    BRIC COUNTRY'S

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    This is an esay about BRICS

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    3 views5 pages

    Bric Country's

    Uploaded by

    Meshack Mate
    This is an esay about BRICS

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 5

    1

    BRIC Countries Economic Policy

    Student’s Name

    Course

    Instructor

    Date
    2

    BRIC Countries economic Policy

    The Historical Perspective of Economic Development

    The BRIC is an acronym that describes Brazil, Russia, India and China. According to the

    predictions from Goldman Sachs economist Jim O'Neill, the four countries were likely to control

    the global economy by 2050. In 2001, the four countries were ranked as the globe's fastest

    emerging economy. According to economists, the states were likely to form a powerful

    economic bloc, even acknowledging and forecasting that the government was optimistic

    (Siddiqui, 2016). The high wave of economic reforms characterized the last quarter of the 20th

    Century. The policy changes in the economy were proposed regarding the technology up-

    gradation, industrial licensing, removal of restrictions in the private sector, and foreign direct

    investments.

    The BRIC countries are important because they account for 20% of the global GDP and

    40% of the World's population. The significant determinants of the economic growth among the

    BRIC countries include the increase in exports of manufactured goods, the development of GDP

    and the changes in trade policies. China is projected to be an economic powerhouse by 2050 in

    terms of economic output. India is likely to be third, while Russia and Brazil follow on fourth

    and fifth position (Siddiqui, 2016).). The Economist (2015) notes that developing world

    accounts or global economic growth by purchasing power parity. The lower chance of the

    emerging markets impacts the multinational corporates by hitting their profits and the cash flow

    of exporters. Development banks from put in place in 2015 offered to give loans to members of

    the BRIC for infrastructure projects. The developmental policy will increase the way of the

    south, and this makes it necessary for the member countries to avoid being dependent on IMF

    and World Bank loans.


    3

    While the BRIC countries have presented higher economic growth, there is a difference

    in the member states. China and Russia have shown a higher growth while India only gave a

    significant positive economic growth in the past five years. The GDP growth rate for China for

    2016, 2017 and 2018 is 6.755, 6.95%, and 6.85%. The Russian GDP growth is 0.29%, 1.79%

    and 2.54. On the other hand, India's GDP growth rate is 8.26%, 7.04% and 6.12%. The Brazillian

    GDP growth marked the highest by 3.80 but has always been negative (Trading Economies,

    2019). The BRIC countries economic growth is challenging the global giants. The Strong GDP

    growth is making the countries to the more robust engines of the World's economy.

    The Impact of 2007/8 Financial Crisis in BRIC countries

    The Financial crisis in October 2008 sent a shock in the stock market of the BRIC

    economies, making them to the tumbling of the markets. As the global economic hits recession,

    the economies from the developing BRIC countries felt the pinch of the recession as the demand

    for exports from the BRIC economy fell in the United States and Europe. The foreign

    investments could fail due to the departure of the foreign funds from the BRIC stock markets.

    Also, the Indian's service industry suffered due to its dependency on the developed countries for

    the market. The direct foreign investments had played a significant role in the growth of the

    BRIC economies. For instance, Foreign Direct investments accounted for 4% of the Russian

    GDP in 2007(Kaplinsky & Farooki, 2010). On the other hand, the energy prices throughout the

    World had gone down due to the falling o the oil prices and other sources. On the other hand,

    Russia was heavily reliant on the hydrocarbon sector.

    The fall of the consumer demand was worrying for China as the exports accounted for

    35.8% of GDP in 2007(Li et al., 2013). The main exports for Brazil constituted Iron ore and

    agricultural products such as the Soya and Coffee. Coffee prices fell by February and October
    4

    2008. Similarly, 56.3% of the exports in Brazil were destined for developed countries and thus

    a prevalent fall. Therefore, the fall in demand was likely to have a significant impact on the

    Brazilian economy. The combined effects of the slow growth could account for the job losses

    and the slow economic growth due to the slower growth of BRIC. At the same time, domestic

    consumer spending power would decrease as it supposed to fuel the economy during the

    recession period.

    However, the survival of the BRIC countries was fueled by the economic strength of

    large trade surpluses and the foreign exchange reserves. The BRIC governments incorporate the

    extras to increase spending and boost consumer demands. While other developing countries were

    cutting down the consumption power, BRIC's consumers represented a substantial growing

    market with 2.8 billion consumers or 41.8% of the global population in 2008 (Eghbal, 2008).

    Also, the BRIC consumers were not hit by the credit crunch as they did not depend on the

    mortgages. Also, many Chinese did not have a bank account. The limited level of debt

    dependency assisted the consumers from China and other BRIC countries from vulnerability to

    the banking institutions. In particular, the low dependence on the credit made the BRIC

    economies to enjoy falling inflation.


    5

    References

    Banerjee, R., & Vashisth, P. (2010). The financial crisis: impact on BRIC and policy response.

    Brazil GDP Growth Rate. Trading Economies Retrieved from

    https://tradingeconomics.com/brazil/gdp-growth

    Eghbal, M. (2008). BRIC economies withstand the global financial crisis. Euro-monitor

    International, https://blog.euromonitor.com/bric-economies-withstand-global-financial-

    crisis/

    Kaplinsky, R., & Farooki, M. (2010). Global value chains, the crisis, and the shift of markets

    from North to South. Global Value Chains in a Postcrisis World; A Development

    Perspective, 125-154.

    Lin, C. Y. Y., Edvinsson, L., Chen, J., & Beding, T. (2013). Impact of the 2008 global financial

    crisis. In National intellectual capital and the financial crisis in Brazil, Russia, India,

    China, Korea, and South Africa (pp. 7-20). Springer, New York, NY.

    Siddiqui, K. (2016). Will the Growth of the BRICs Cause a Shift in the Global Balance of

    Economic Power in the 21st Century?. International Journal of Political Economy, 45(4),

    315-338.

    The Economist. 2015. "The Never Ending Story", November 14, pp.15, London

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