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Without these four countries, global growth would be below 4%.
Without Brazil, Russia, India, China and much of Asia growing their economies by at least 3% over the last two years, global economic growth would have been zero.
Ten years ago, Goldman Sachs economist Jim O’Neill used the acronym BRIC to describe the big emerging markets of Brazil, Russia, India and China in a report called “Building Better Economic BRICs”. A decade later and it has become clearer that the BRIC nations are the healthiest of the world’s super economies. And if not for them, global growth wouldn’t be what it is today.
Each one of the BRIC countries has their own set of unique problems, from China’s fixed income investment strategy wearing thin, to Indian political corruption and poverty. But one thing they don’t have is mounting debt rising above national GDP. While the political leadership in Russia and China may be more cohesive, if not autocratic, than that in the world’s largest democracy — India — and even Brazil, political leaders in these countries have one thing in common at least. They have acted faster on monetary and fiscal policies than in the U.S. and Europe. The biggest political battles is the BRICs are over corruption charges, and where to invest oil wealth. Meanwhile, in the U.S. and Europe, the biggest political battle is how to bailout so! uthern E urope, or about cutting government programs for ideological rather than economic principles. The BRICs are moving forward as the U.S. and Europe are in limbo.
Last week, O’Neill told “Modern Russia”, a blog run by multinational communications firm Ketchum, that the big four have done better than he expected when he first wrote about them as a unit back in November 2001.
“The aggregate growth of the BRIC economies has been so much faster than I envisaged,” he said. “In the most optimistic scenario, I imagined they could rise from around the 8% of global GDP they were to about 14% today. In fact, they are closer to 20%.”
O’Neill also said that economists, like Paul Krugman, who think Russia should not be included in the BRICs are misunderstanding his original concept. Krugman saidthat Russia does not compare with the more diversified economies of Brazil, India and China due to its overdependence on energy resources to balance the federal budget and grow the economy. Krugman was not mentioned in the published interview.
However, “Russia scores more highly than India in terms of the growth environment score,” said O’Neill. “I think many people who suggest that I drop the R in BRIC don��t really understand the concept and look at these issues with a very narrow Western-centric mentality. Russia has 140 million people, more than any European nation, and if it continues to avoid a major crisis, and grow 3-4 percent for the next 20 years, its economy will be probably as big, if not bigger than Germany and the other European countries. So while Russia is never going to get to the size of China, and soon India will start to become much bigger, it can hold its own against many of the G7 countries.”
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