Jim O’Neill’s epiphany came on September 11, 2001. Chief economist at Goldman Sachs then, he had grown up in a working class neighbourhood, south of Manchester in England “getting drunk and playing soccer”.
Three thousand people died that day when 19 terrorists’ owing allegiance to Al-Qaeda, a terrorist group, hijacked four passenger jets. Of these, two were used to bring down New York’s iconic twin towers at the World Trade Center; another one was rammed into the Pentagon, America’s defence headquarters; and one crash landed into a field in Pennsylvania after passengers onboard the plane overpowered the hijackers and a scuffle ensued. An outraged America responded with grief, fury and acts of retribution.
Unlike most people who believed this was a clash of civilisations, the economist in O’Neill argued it was an act of lopsided globalisation. In fact, in January 2010, he’d told the London-based Financial Times that all things global are exemplified by all things American. And that it didn’t feel right to him. “...for globalisation to advance, it had to be accepted by more people … but not by imposing the dominant American social and philosophical beliefs and structures,” he argued. September 11 was his evidence.
He called in his team of number geeks, including Roopa Purushothaman and Dominic Wilson, to interpret the world from this lens. It culminated in a report: Global Economics Paper No: 66. People in business and economics know of it as the BRIC report, with BRIC being an acronym for Brazil, Russia, India and China.
The hypothesis it contained was this: “Over the next 10 years, the weight of the BRICs and especially China in world gross domestic product (GDP) will grow”. GDP measures the total market value of all final goods and services produced in a country in a given year, minus the value of what it imports. “...in line with these prospects, world policymaking forums should be re-organised,” the report said. Therefore, it argued, investors across the world would do well to pay more attention to this block of nations.
It’s a tough world
• China: For its size, China has suitably large problem. It needs to overhaul its political and social systems. Nobel laureate Ronald Coase and Ning Wang of Arizona State University have pointed out that in China the production and dissemination of ideas are still controlled by the state. This leaves little room for private universities, independent research institutes, and free academic societies. “Without an open market for ideas, the talents and creativity of one-fifth of human population remain under-explored,” say Coase and Ning.
Turkey rediscovered its position in world strategic affairs in the aftermath of the US war on terror, as it increasingly became important to both the Islamic as well as the Western world. A decade ago, the country’s budget deficit was 16 percent of GDP. But last year, the country slashed that number to 3.6 percent. The country’s inflation rate was 72 percent a decade ago. It is now down to eight percent. Its GDP is now more than thrice what it was in 2002. One of the key themes has been privatisation in telecom, energy and infrastructure.
(This story appears in the 08 June, 2012 issue of Forbes India. To visit our Archives, click here.)
Great article on BRICS. Projections on the future power of the BRIC economies vary widely. Some sources suggest that they might overtake the G7 economies by 2027. More modestly, Goldman Sachs has argued that, although the four BRIC countries are developing rapidly, it was only by 2050 that their combined economies could eclipse the combined economies of the current richest countries of the world. In 2010, however, while the four BRIC countries accounted for over a quarter of the world\'s land area and more than 40% of the world\'s population, they accounted for only one quarter of the world gross national income. A criticism is that the BRIC projections are based on the assumptions that resources are limitless and endlessly available when needed. In reality, many important resources currently necessary to sustain economic growth, such as oil, natural gas, coal, other fossil fuels, and uranium might soon experience a peak in production before enough renewable energy can be developed and commercialized, which might result in slower economic growth than anticipated, thus throwing off the projections and their dates. The economic emergence of the BRICs will have unpredictable consequences for the global environment. Indeed, proponents of a set carrying capacity for the Earth may argue that, given current technology, there is a finite limit to how much the BRICs can develop before exceeding the ability of the global economy to supply. Dr.A.Jagadeesh Nellore(AP),India
on Oct 27, 2013this article reads like a synopsis of the \"breakout nations\" by ruchir sharma
on Jun 7, 2012The most important thing is that the BRIC countries produced and the developed nations bought. Now, the developed nations slowed down on buying and the BRIC nations are left searching whom to sell the goods and services!
on Jun 4, 2012