EXECUTIVE SUMMARY

Brazil, Russia, India and China, the four giants among the emerging markets, are so medial to the
outlook and prospects of the global economy that they have received the accolade of being
referred to as the BRIC nations together, which today is not just an acronym but a status. Ever
since investment bank Goldman Sachs christened this upcoming power bloc in its paper
Building better global economies BRICs in November 2001, theyve been at the forefront of
thinking on the subject, resulting in a regular stream of reports including How solid are the
BRICs? (November 2005), BRICs lead to global recovery (May 2009) and the recent report
of 2011 which does not portray their original sentiments that strongly about BRIC.
Goldman Sachs has argued that since the four BRIC countries are developing rapidly, by 2050
their combined economies could eclipse the combined economies of the current richest countries
of the world. A paper published by Goldman Sachs discussed the state of the world economy
with particular emphasis on the relationship between the G7 and some of the larger emerging
market economies.
On a PPP basis, the aggregate size of the BRICs was about 23.3% of world GDP at the
end of 2000, somewhat higher than both Euro land and Japan.
Whilst on a current GDP basis, the size of the BRICs was just under 8%, which was also
set to rise.
Some of these countries were already bigger than some individual G7 economies; China,
at 3.6% of world GDP (using current US$ prices), was slightly bigger than Italy at the
end of 2000, and notably larger than Canada.
According to the progress report of June 2011, Infrastructure in the BRICs has improved notably
in recent years, but still remains far behind developed country norms. Infrastructure investment
will need to accelerate in the years ahead to prevent it from constraining future growth rates in
the BRICs. While recent large-scale plans from the BRIC governments are encouraging in this
regard, they will need to do more to attract private investment as well. And the market sentiments
have indeed been in alliance with the forecasts.
Mutual funds, hedge funds, ETFs, indexes, future, options and a host of other investing
instruments mushroomed to take advantage of the rapid growth in these economies. Many
companies that operate in these countries listed their stocks in the New York Stock Exchange as
well, in search of a wider pool of investors and investment dollars. During the global economic
recovery phase (2009), among the top-five performers of the year, three were BRIC funds
those investing only in the emerging economies of Brazil, Russia, India and China. Thus, there
have been giddy-ups (Brazils stock market up 97% in 2003) and downs (Russias bourse down
72% in 2008), but overall, the trend line for the first decade of the 21st century pretty much
played out the way ONeill expected: outsized growth among the BRICs.
Of late, the BRICs stock indices have generally just matched or even underperformed the U.S.
market, though investors who place their bets in accord with macro-economic, political, and
social trends are mostly still comfortable with the proposition that the BRICs are likely to
continue to outperform in terms of GDP growth at least between now and 2020 and probably

beyond, analysts suggest better portfolios including other emerging economies like South Korea
& Mexico.
Apart from the slow growth of BRIC, stemming from internal politics, high inflation rates, overreliance on commodities etc., the term is not also universally accepted crediting to the
disproportionate importance of China, absence of other large emerging markets, lack of the
synergies so essential to merge them together. According to analysts, all that the four countries
share in common is their continental geographic scale and large economic size.
What is not to doubt is the ambition of the people of Brazil, Russia, India and China to achieve a
similar level of wealth to that of, for example, the US and Western Europe and this is very much
helping to drive their economies forward.