Dipti Ranjan Mohapatra 2 Year MBA, Utkal University

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BRIC Nation: The Key to Strategic Investment

BRIC is an acronym for the economies of Brazil, Russia, India and China combined. It is typically rendered as "the BRICs" or "the BRIC countries" or "the BRIC economies" or alternatively as the "Big Four". The acronym was coined by Jim O'Neill in a 2001 paper entitled "Building Better Global Economic BRICs". The acronym has come into widespread use as a symbol of the shift in global economic power away from the developed G7 economies towards the developing world. It is estimated that BRIC economies will overtake G7 economies by 2027. The general consensus is that the term was first prominently used in a Goldman Sachs report from 2003, which speculated that by 2050 these four economies would be wealthier than most of the current major economic powers. These four countries, combined, currently account for more than a quarter of the world's land area and more than 40% of the world's population. Brazil for instance is the world's 5th most populated country and has the 9th largest GDP in the world, while Russia has the 7th biggest GDP. India is the second most populated nation in the world with the 4th biggest GDP, while China of course is the most populated country in the world and is second in GDP only to the United States. Apart from this there are various advantages of these countries over others. Like Brazil is rich in mineral reserves. It is a big producer of iron ore, aluminum, copper, chrome, gold, tin, nickel, manganese, zinc and potassium. Similarly Russia is highly industrialized, with rich deposits of oil, gas, strategic minerals and timber. Russian wages increased sevenfold between 1999 and 2008 and wage distribution has also shifted to share wealth more equally across the population. India is young and vibrant, with a working age population forecast to grow by 136m by 2020 compared to China's 23m increase. On the other hand the growth explosion China has had in its economy over the last decade has meant it has raced up the ladder for GDP and has been a popular country for investors to add to their portfolio. The BRIC thesis posits that China and India will become the world's dominant suppliers of manufactured goods and services, respectively, while Brazil and Russia will become similarly dominant as suppliers of raw materials. Due to lower labor and production costs, many companies also cite BRIC as a source of foreign expansion opportunity.