The BRICs Invasion!
Who are the BRICs? Why are they important? Why do we hear so little about them here in the United States?
To read the New York Times, Washington Post or watch CNN you’d think the United States is about the only country that exists. To them, its certainly the only country that matters.
The great thing about breaking free of US-centric media reporting based out of places like New York or Washington DC is that you experience a different worldview.
That is where London’s Financial Times (FT) fits in. They provide a more accurate and balanced perspective on global economics.
The FT is where you see articles every day about the BRICs and how they will affect this or that in the future world economy. A whole section of their newspaper is titled “beyondbrics“.
I was so completely mystified by “BRICs” that I had to look up the term after seeing it used so often.
Who Are the BRICs?
The original BRIC nations are Brazil, Russia, India and China.
According to Wiki, the term was coined by economist Jim O’Niell in a now famous 2001 paper with the very clever title “Building Better Global Economic BRICs“.
The BRICs have since added South Africa to their ranks. There are sure to be more added.
The BRICs represent emerging world economies. They are compared and contrasted with the more familiar establishment G7 nations organized back in 1975.
The G7 meets several times a year to discuss economic policy. The original G7 developed countries are: France, Germany, Italy, Japan, Canada, the UK and the United States.
Its got more confusing in recent years with the G8 and now the G20 nations.
Since 1980, there are revealing trends glaring at the G7 like blinding beacons when the developing third world BRIC countries are compared to the developed establishment countries:
- BRIC GDP grew far more in 2010 than G7 GDP did
- BRICs world GDP percent grew from 14% to 24% since 1980
- G7 world GDP percent shrank from 52% to 40% since 1980
The BRICs economies are growing like gangbusters compared to the developed G7 countries. The BRICs closed the gap in world GDP dominance by the G7 over more than half, from a difference of 38 percentage points in 1980 to only 16 percentage points in 2010. That’s remarkable growth!
The trend clearly shows that as China surpasses the U.S. as the world’s dominant economic power in the next decade that the BRICs will replace the G7 as the drivers of global economic growth.
In other words, there will be a role reversal… the BRICs will become the developed, establishment countries and the G7 will become the third world!
Why are BRICs important?
After World War II, the United States became so strong economically that, combined, the rest of the world’s economies literally didn’t matter. Even the old Soviet Union during the Cold War was an economic midget compared to the United States.
In 1956 Soviet Premier Nikita Khrushchev famously said of the west, “We will bury you”. He meant economically. That didn’t happen. Instead, the Soviet Union crumbled away in economic ruin in the late 1980s by just trying to compete with and outspend the United States.
The BRICs, on the other hand, represent how globalization is changing everything. The world has rebuilt since the devastation of WWII. The economies of all nations are now interdependent.
The United States is still dominant, but not so strong anymore… and in decline.
Why do Americans hear so little about the BRICs?
The BRICs are showing us where the world economy is going, not where it has been.
The United States is still trying to live on its past glory. We think American exceptionalism extends to economics, like it used to. Wrong!
Globalization, as it should, has changed the course of world economics. Americans just haven’t adjusted to that inevitability. Thus, we hear nothing about the BRICs.
The British, who know a thing or two about being the dominant world power, see the writing on the wall and recognize change is in the air. Thus, the FT writes about the BRICs frequently.
Americans read and hear about China all the time. China is one of the BRICs. America views China like another Soviet Union challenging the United States for world supremacy.
We instinctively believe if we just buckle down that we can turn back the Chinese threat like we did the Soviet Union last century.
Not this time. Globalization has altered the playing field.
The world has changed and we need to change with it.