Rise of BRIC Nations

By Naveed Qazi | Editor, Globe Upfront

World's four emerging economies, Brasil, Russia, India, and China are poised to become the leading global economies in the twenty-first century.

China's decade of unprecedented growth has eclipsed Japan as the world's second-largest economy. Brasil has harnessed its resources and has become the largest economy in Latin America. India will soon become the most populated country in the world, with a young and educated workforce. Russia, for a while, has dominated its position as the world's leading energy supplier.

Recent economic data on foreign direct investments, both to and from, these countries reflect the appearance of the rise of a new economic bloc on the world stage. FDI outflows from BRIC states accounted for $146 billion in 2011. This is almost 10 percent of the world's GDP output, shared by four developing countries.

World Investment Report (2012) ascertains that outward FDI from developing nations by 'Third World Multinationals' is globalising at a faster rate than its western counterparts. 

In economic theory, outward FDI helps in productivity improvements, linked to increased specialisation of firms, competing in international markets, as well as the transfer of technology and knowledge. There are also location and ownership advantages. So, internationalisation of third world corporations is beneficial.

That is why David Collins, a senior lecturer at City University London, suggested that corporations from the third world now make up their presence in the world's largest 500 global firms. For example, Brasil's Andrade Gutierrez and Russia's Sistema are rising players in global construction and telecommunication sectors. Indian and Chinese companies have been recently involved in requisitions of western firms: Dr Reddy's, an Indian pharmaceutical or China's Unicom, a telecommunication giant.

Modified technology transfers according to local cultures and tastes have given many local companies from BRIC states a competitive edge over their competitors in markets of other developing nations. It is also widely held that FDI can lift millions of people out of poverty and has a character of capacity building for physical infrastructure on which the international business relies, that in the end should be advantageous to citizens of the world.

By thinking about a parallel global institution such as the New Development Bank, BRIC nations are thinking of global strategies which are running in competition with the IMF and World Bank for infrastructure developments, after their repeated calls of major representation. The investments can have a significant impact on services, including employment, knowledge transfer and enhanced competition.

The diplomacy has been to promote bilateral and multilateral agreements on common themes, such as standards of treatment, as well as dispute settlement, allowances for public interest and ease from barriers for market suppliers.

  

BRIC nations are also rooting for a new global currency after several falls in the value of US dollar in the recent past. There is a huge scope for this new bloc in identifying the sectors for their pattern of investments, which have also given rise to several social issues to be addressed and the legal compliance that comes with it.

These steps have in fact proved positive in terms of rapid economic growth ever since the financial crises of 2008 happened due to greater trust bondage and rationality between the BRIC nations through numerous global summits.   

BRIC bloc has been currently devising a $100 billion fund to stabilise the currency markets.   All these strategies are an attempt to rebalance the global economy that gives plenty of scope for an optimistic debate for prosperity.