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RICS is the acronym for the combined emerging economies of Brazil, Russia, India, China and South Africa. Initially coined BRIC by Goldman Sachs in 2003 (without South Africa), these emerging economies were predicted by their analysts to be among the world’s leading economies by 2050. Jim O’Neill, the analyst that devised the
responsible for inviting South Africa to join them in 2011. Although, unlike for instance the EU, these countries don’t have political alliances or a trading association, leaders of BRICS countries have regular summits to discuss and lobby for shared goals (including enhancing their representation on the world stage and pursuing the democratization of
BUILDING WITH BRICS How the BRICS countries are impacting western economics
acronym, proposed that China and India would be the fastest growing and lead the world in providing manufactured goods and services, while Brazil and Russia would be the dominant suppliers of raw materials. In the intervening years, China and India have mainly surpassed expectations in their annual GDP growth, however Russia and Brazil have suffered with recession and in the case of Brazil, political unrest. Initially conceived to be a tool to assist investors looking for exciting growth prospects, BRICS have taken on a life of their own. It’s a strange example of ‘if you build it, they will come’; a prominent financial figure developed an idea that grouped four very different countries, linked only by their potential for rapid growth, which has led to an alliance of these nations. The BRICs themselves were
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international governance) and an ‘open world economy’. These countries contain nearly half the world’s population; China and India both have over one billion citizens each and represent around 23% of the world GDP. Clearly, they continue to represent exciting investment opportunities, but what about the impact they will have on the rest of the world? The pros and cons of globalisation are intrinsically linked with the ones that impact our relationships with BRICS. Globalisation has meant that countries; their economies and cultures, have increased interconnectedness. It often benefits some of the richest countries who can capitalise on cheap labour in developing nations and sell for high prices in leading economies, but also benefits some of the poorest countries in that
Cape Town, the location of the NDB 2019 meeting for sustainable development.
they can access leading markets and sell cheap goods. This, and global shift have led to a huge amount of companies manufacturing their goods in emerging and developing countries like BRICS. India, one of the world’s largest manufacturers of goods, provide cheap and efficient labour. Countries like Russia and Brazil (along with many other South American countries) are extremely rich in natural resources. Many developed nations with minimum wage laws, health and safety regulations and other considerations have moved to manufacture their products in countries like India to decrease the price of manufacturing their goods. Labour market deregulation and cheap local resources mean that companies can get things done at a smaller expense and a lot more efficiently than if the factory was in a developed nation. The flip side of this coin is the oft reported and seemingly never decreasing sweat shops. The harsh reality of being able to buy three dresses, four t-shirts and a pair of trousers for less than £20, is that somewhere down the line, people and the environment are suffering the consequences. Global shift also affects the jobs available in developed (and developing) nations, including the UK. Manufacturing goods abroad for less money, makes businesses a larger profit and allows companies to grow, which in turn, allows their countries to have higher economic growth. However, this same growth also removes jobs, mainly secondary, but also primary, from the population. Although most primary sector employment has dwindled in the UK due to depleted resources and mechanisation, cheap
