Thursday, May 6, 2010

An acronym in economics and geopolitics: BRIC for Brazil, Russia, India and China

Brazil, Russia, India and China are commonly referred to as BRIC to highlight their economical development and their advances in technology, contrasting BRIC with the rest of the world.

Whereas the PIIGS countries—another acronym built from the first letters of country names—are typically mentioned in context of financial crisis, the BRIC nations are mostly viewed and discussed as fast-developing countries and emerging markets. These countries do not form an economic bloc or a political alliance in the way the European Union does—and to which it tries to hold on.

The BRIC countries, located on two different continents, are politically, culturally, and economically diverse. Each has its own currency. And they differ in their regulatory frameworks and financial transparencies, making long-term planning, investment and risk assessment a complex task.

Brazil and Russia are important suppliers of raw materials. India and China are important suppliers of manufactured goods. It has been speculated (at Goldmann Sachs and elsewhere) that the BRIC countries would dominant the world by 2050 economically. More likely, interdependence of BRIC with NAFTA, EU and other regions will keep any dominance in check.

Finally, there remains the interesting question if our financial future will unfold in Thomas Friedman's Flat World (the hot and crowded one to be saved by a green revolution) or in David Smick's Curved World (the one with all the hidden dangers to the global economy) or in another, completely Unexpected World with groupings and alliances for which we don't have acronyms yet.

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