The Global Economy in Turbulent Times

CHAPTER 131 The BRICS Are Coming . . .¹

The term BRIC (Brazil, Russia, India, and China) was first used in 2001 by economist Jim O’Neill (Goldman Sachs) to call attention to four rapidly rising large emerging economies considered able to play a significant role in global affairs, championing the interests of developing nations. Very much like what G-7 does for the developed world. For years since, it was treated by investors and journalists as a shorthand for the big emerging markets. Adding South Africa to the group widens its focus to include more from outside fast-growing China and India.

The BRICs held its first summit in 2009 in Russia, discussing issues on international monetary reform, including possibilities of a new dominant reserve regime to replace the US-dollar-based system. In 2011, China played host and invited South Africa to join, formally naming the group BRICS. Together, they exceeded three billion people, nearly 45 percent of the world, and about 25 percent of the world’s 2011 gross domestic product (GDP) based on purchasing power parity. China’s total output is bigger than the other four put together. The economic clout of the BRICS is now growing as the developed world struggles to expand and pare debt. Indeed, they are starting to operate as a common bloc in the G-20, providing a counterpoint to the United States and Europe.

Building BRICS

But the group is vastly different. India, Brazil, and South Africa are vibrant democracies, in contrast to the more ...