Sunday, October 16, 2005

BRICs: The economic powerhouses of 2050

BBC Radio World Service has a series of four programs about the four biggest economies in 2050: Brazil, Russia, India and China; in short, BRICs. This claim has been put forward by the Goldman Sachs bank in this article. The abstract reads:

Over the next 50 years, Brazil, Russia, India and China-the BRICs economies-could become a much larger force in the world economy. We map out GDP growth, income per capita and currency movements in the BRICs economies until 2050.

The results are startling. If things go right, in less than 40 years, the BRICs economies together could be larger than the G6 in US dollar terms. By 2025 they could account for over half the size of the G6. Of the current G6, only the US and Japan may be among the six largest economies in US dollar terms in 2050.

The list of the world's ten largest economies may look quite different in 2050. The largest economies in the world (by GDP) mayno longer be the richest (by income per capita), making strategic choices for firms more complex.

Along with this BBC's documentary you will travel to all four countries to listen to interviews of many economical actors, big and small. The idea is that China and India will become the world leaders in manufacturing and services. The growing markets and industries will require resources, provided by Russia and Brazil. You can already see the flow of investment from China to Asia and South America. Is this scenario too optimistic? Aren't we forgetting the big problems that this countries face.

To provide balance, the reporter travels to poor neighborhoods to then talk with people living there. Understandably, they express skepticism at the BRICs thesis. The additional income of these countries flows slower into isolated or excluded areas. More problems include the huge belts of poverty around big cities, massive corruption both in public and private sectors, environmental disasters, health disasters, etc.

Nevertheless, an Indian economist (if I remember right) reminds us that all these problems were present in today's developed nations when they were becoming rich nations. About corruption, maybe the problem that makes us the most pessimistic, he tells that it is not an instrumental problem. As countries become more developed (rich) these problems slowly fade away. Also he points to the slums that existed in Berlin and London at the end of the 19th century and beginning of 20th century.

In the interviews you will listen to optimistic young people talking about their future. This good documentary gives you a foretaste of the interesting times to come.

You can download the four episodes from this webpage. You should click on "download mp3" in the right side panel to listen to the program. The next four episodes are available in the same panel, a bit lower.

If you are into podcasting, you may subscribe to the BBC Documentary feed. All feeds are available from here.

4 Comments:

Anonymous zajcek said...

It made me think of Sir Arthur Lewis who was also optimistic about the hidden reserves that could be tapped in the less-developed nations. He suggested the idea that is wildly accepted today,that is that LDC had a potential dynamic comparative advantage in some types of manufacturing based on their relatively lower wage costs. But what came out as a surprise to Lewis is, that this increase in labour-intensive manufacturing exports is not so easy dispersed throughout the global economy. He thought that developed countries wouldn't face any serious threat from the export competition and this would not resort to protectionism. As we see now,the developed countires are trying strongly to protect their markets from the products from China. I wonder how long can these measures resist the predicted outcomes of the BRIC economies.

5:53 AM  
Anonymous zajcek said...

LDC is an abbreviation for less developed countries. I was reminded that not everyone knows that. Sorry. And the idea is not wildly accepted, but widely:)

6:06 AM  
Blogger Alexey said...

You are not so far from the truth :). According to this autobiography (http://nobelprize.org/economics/laureates/1979/lewis-autobio.html), his idea was wildly accepted: "The publication of my article on this subject in 1954 was greeted equally with applause and with cries of outrage."

1:03 PM  
Blogger Alexey said...

I am so used to protectionism from the part of developed countries that it is a surprise for me that he was surprised. This might be relatively recent, although before I was born.

How are developing countries going to overcome this protectionism so that they can develop from exports? Only big countries such as China and India can play tough since they can protect their profitable huge markets to external competition if they want. Maybe that is why only big countries are part of the BRICs thesis.

2:36 AM  

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