BRICS nations include Brazil, Russia, India, China and South Africa and they are considered to be the fastest growing economies in the World. South Africa was initially not part of the powerful nations and was later added into the group in 2010. According to economists, the countries mentioned earlier are expected to be leading suppliers of raw materials and manufactured goods by the year 2050. China is expected to be the leading global supplier of manufactured goods, on the other and India is projected to be the leading supplier of services while Russia and Brazil are expected to leading in the supply of raw materials (Majaski, 2019). South Africa was added into the list as it exhibits features similar to those of the group members including low production and labor costs. Also, the BRICS nations are perceived as the primary source of foreign direct investment opportunities by various multinational companies. It is critical to note that countries require fast-growing economies to attract investment opportunities. The following article is a critical evaluation of the BRICS nations with the aim of understanding why the countries in this particular group are expected to influence the global economy in the coming decades massively.
BRICS countries are categorized among the most populated regions in the world. Combined BRICS countries make up over 40 percent of the global population. Compared to the United States which stands at 4.3 percent of the worldwide population. The economies of the BRICS countries are yet to attain the level of industrialized countries such as the USA and Germany. Brazil and Russia are the leading countries in the group as they have the highest GDP per capita, but despite their expanding economies they are only accounted to a 6th of the USA GDP (GED, 2018)
According to an IMF 2018 report; Brazil has a population of over 207 million people with an inflation rate of 3.4 percent. The country’s GDP per capita is at 9,875 US dollars, and the GDP current price is at 2,055 billion dollars. The Brazilian economy is characterized by free market trade that is managed by capitalism (GED, 2018). In 2006, the Brazilian economy was ranked as the ninth largest economies in the world thus making it the largest in South America standing at 1.813 trillion US dollars. The Brazilian economy is driven by technology which has facilitated rapid growth of industrialization in the country despite the process of industrialization having started in the 1930s. Industrial growth has been attributed to export. According to the Brazilian government, the state is the first country in the world applying capitalism to have the ten largest car assemblies within their boundaries. The primary manufacturing industries in Brazil include; petrochemicals, construction, aircrafts, and automobiles. Manufactured and semi-manufactured goods make up over 74 percent of the country’s exports (Economy watch, 2010).
Russia’s population by 2018 was estimated at over 144 million according to the IMF. As of 2018, the current GDP prices were at 1,527 billion US dollars with a GDP per capita of over 10,000 US dollars(Russia,2019). The inflation rate was estimated at 3.7 percent. Russia’s economy is ranked as the 98th freest economies in the world with a score of 58. Percent. The Russian economy is highly dependent on oil and gas exports. In the past, the low cost of oil, as well as the financial burden on the country as it focused its resources on developing its military capabilities, have played a critical role in straining finances to the public. In the last decade, the demand for oil and gas as significantly increases and positively impacted the Russian economy. Imports and exports account to 46 percent of the country’s GDP and the average traffic applied on goods are placed at 3.6 percent. According to a report by the WTO (World Trade Organization), Russia had an estimated 225 non-tariff measures (Economy watch, 2010).
According to the India Brand Equity Foundation, India’s GDP grew by over 6.6 percent in 2017-2018, and it is expected to have grown further in 2018-201 by 7.3 percent. India is ranked as the most significant startup base in the globe with over 4,750 startup companies specializing in technology. The labor force in India is expected to it over 170 million people by the year 2020 due to increases population, increase labor participation and an increase in tertiary education enrollments. As of December 2018, India had over 393 billion dollars in foreign exchange reserves. Besides, the country’s GDP was at over 2,000 billion dollars, GDP per capita at 1,980 million dollars and an inflation rate of 3.6 percent.
In 2017, China’s GDP was recorded as 23.12 trillion US dollars making it the world’s largest economy ahead of the European Union which was at 19. 9 trillion US dollars. China also has the world’s largest population of over 1.30 billion people (Kimberly, 2019). Despite a thriving economy, the country is still ranked as a developing country due to its low standards of living. The Chinese economy generates over 16,600 dollars per person compared to the United States which produces over 60,000 dollars. As a result, companies in China incur low labor costs as they pay workers low wages as compared to those in the United States. A low cost in labor results to a low price in production thus luring numerous multinational companies into the region to outsource employees. The Chinese economy is based on low cost exports of equipment and machinery (Kimberly, 2019). Besides, the government has invested heavily on state-owned manufacturing companies which aim at fueling the exports.
South Africa is ranked as the world’s largest miners and exporters of precious minerals and metal including gold, platinum, and diamonds among others. Additionally, South Africa has well-structured sectors including communication, legal, financial and transportation making it the continents largest stock exchange. 2018 IMF reports indicate that the county has a population of over 56 million people. The country’s GDP is estimated at 349 billion dollars, GDP per capita is at 6,180 million dollars experiencing an inflation rate of over 5 percent.
Internal and External Forces Influencing BRICS
Despite BRICS comprising of five nations, it is apparent that there is no equal partnership in the group as China’s economy is more dominant than others. Also, China plays a critical role in the trade relations between the group and other countries hence making BRICS a China-dominated affair. Secondly, the BRICS countries lack common economic interest as trade between the member countries is recorded at 320 billion dollars annually a figure that continues to decrease steadily. In this respect, it is apparent that China’s trade with nations outside BRICS is 12.5 times greater. Thirdly, there is a great similarity between the members as all except Russia maintain vast foreign reserves amounting to over 20 percent of the country’s GDP.
Saint Leo University
According to the Saint Leo University website; responsible stewardship is described to argue the theory that the Institution has been blessed with abundant resources and as a result, the Saint Leo community should foster a lifestyle of service to employ organizational resources for the benefit of the university and the society. The core value stated above can be applied in international business and the rise of the BRICS countries to mean that since the BRICS countries have been blessed with numerous resources, they should use those resources not only for the development of the group countries but also to assist the global community. Multiple global issues need to be addressed, and with the kind of resources, the BRICS nations possess they may be in a favorable position to assist in managing global warming, starvation, disease, and corruption among others not only in their countries but beyond there territorial boundaries.
In conclusion, it is apparent that BRICS countries are expected to be the new superpowers in the decades to come. Their thriving economies are bound to create change in various sectors. Also, it is apparent that BRICS have numerous internal and external issues which may affect the organization. Nonetheless, the five countries are expected to impact significantly global economies by creating a shift. One can only wait and see how the BRICS block develops in the future.
Economy Watch. (2010). “Brazil Market.” Brazil Market, www.economywatch.com/market/world-markets/brazil-market.htmlMajaski Christina
GED. (2018). Globalization Report 2018: What about the BRICS countries? Retrieved at https://ged-project.de/ged-blog/improving-public-understanding-of-economic-globalisation/globalization-report-2018-what-about-the-brics-countries/?cn-reloaded=1
[email protected]. (2019). “The Surprising Ways China Affects the U.S. Economy.” The Balance, www.thebalance.com/china-economy-facts-effect-on-us-economy-3306345.
Majaski, C. (2019, March 12). History and Criticism of Brazil, Russia, India, and China (BRIC). Retrieved from https://www.investopedia.com/terms/b/bric.asp
Russia retrieved at https://www.heritage.org/index/country/russia.