Global Business Perspectives (MGMT8110)

Running head: POTENTIAL OF WORLD’S LARGEST EMERGING ECONOMIES:
BRICS
Potential of World’s Largest Emerging Economies: BRICS
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POTENTIAL OF WORLD’S LARGEST EMERGING ECONOMIES: BRICS
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The purpose of this essay is to present the current situation of the political dialogue,
which was organised in the year 2006 and later, formed into BRICS club. Chief economist of
Goldman Sachs, Jim O’ Neil was the first person to coin the term BRICS, made up of five
countries including Brazil, Russia, India, China and South Africa. Later in 2011, it appeared
as independent global organisation with the motive of sharing equal effort to keep a balance
between nations in economic, cultural and political sectors.
Although, if according to importance it has been arranged it must be CIRB, yet
economists felt the term BRIC is market friendly. Before the interference of South Africa it
was termed as BRIC. After the summit of 2010, it was internationally known as BRICS
countries. According to Menon (2017), these countries are known for their potential of
economic growth. Therefore, this essay will analyse and explore current economic condition
of BRICS nation and their potential to conquer economic power to compete with the
strongest nations by the middle of 21st century. Mutual relationship between the nations are
based on non-interference policy and nations believe in equal distribution of benefits among
them. The contemporary chair person is from Russia and the seventh summit was conducted
by them on 15th July, 2015.
According to the predictions of Goldman Sachs, within 2050, the US will be the only
western country which has a chance of securing place into the top five. The list of worlds’
largest economic power China will be the leading one just before US. However, the
difference between these two is going to be much higher than it is now. Among the BRICS
countries, China can lead the world economy if they can match America’s GDP rate by 2027.
The collective count of BRICS’ GDP should come in parallel with USA by 2032 if growth
rate remains the same. Even according to a prediction by The World Bank U.S currency will
lose its dominant nature globally and China’s renminbi will come into an equal rate. One of

POTENTIAL OF WORLD’S LARGEST EMERGING ECONOMIES: BRICS
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the greatest success of China is to surpassed Japan and securing the place of second largest
economy of the world.
Apparently, two central reasons can be found behind such collaboration. The first and
foremost reason was to challenge the prolonged superlative status of America forming a
substitute organisation to IMF and World Bank (Shetiya). Apart from that, to have mutual
assistance in procedures of development plans within a self-operated structure without any
foreign aids or assistance. In order to make their initiatives stronger, as per the study of Basha
(2018), nations even working on forming BRICS bank to self-finance themselves.
Studying BRICS is significant as it delivers knowledge about economic direction. The
reasons why these nations are considered to unite into such an organisation Gunasekaran,
Jabbour and Jabbour (2014); are that all of these countries are capable of Bulk production
irrespective of industrial boundaries, workforce is greater than the numbers of job profiles
and cost of labour maintenance is lower than other countries. Moreover, emerging strongest
economies has a tendency of rapid growth depending on real estate, oil and energy plants;
both the telecom and automobile, retail, IT and pharmacy sectors chiefly. With such
promising growth prospect, if nations can collaborate with each other, there is a possibility of
competing with even the strongest economy of the world. However, while executing the
agendas of BRICS several issues are raising due to unpredictable nature of world economy.
According to Carducci and Bruno (2014), before moving into weakness and future
challenges, the strength and performance can be evaluated first. There are certain figures,
which show their collective capability to perform significantly in world’s economic platform.
The countries current occupy 42% of the total world population; no less than 26% of the total
land area and contribute 14% of the world’s GDP. According to IMF World Economic
Outlook Database, recorded in April 2018, China was the highest in terms of GDP. Whereas

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in terms of average annual gain South Africa has scored the highest. As argued by Mostafa
and Mahmood (2015), while counting the combined share of global GDP, it has been noticed
that BRICS is in a good position as compared to G7 countries. However, it will take time to
develop and fulfil the objectives of BRICS. Goldman Sachs has forecasted BRICs economic
growth, which predicts China to be the top contributor in terms of economic growth
(Hongfeng, 2017).
Therefore, it can be summarized that, as mentioned before, economic collaboration of
these five countries are important because of their ascending rate of growth and the most
promising emerging economies. Moreover, they occupy half of the entire world population
and according to recent reports; their contribution covers a major part in world GDP
progression. Economists have already predicted that it is only a matter of few years for China
to become the biggest economy. According to such predictions, supported by recent
evidences, it can happen anytime in between 2030 to 2050. Along with that if current pattern
of growth is followed, a nonprofessional can even understand this nations will be the most
powerful economical territory. They can even be counted under 10 largest economies of the
world.
People may argue apart from this growth parameter what factors have made them
together forming one group working together on shared objectives. To be honest there are
very few factors which are similar about them. All of those countries are in category of
investment and mutual political and economic collaborated have been established. Once in
2008, when they met together in a summit, economists believe it was for transforming the
economic collaboration into a political one. In case, they become successful in cresting
economic order with the club then China can supervise manufacturing industry, Russia,
Brazil can regulate raw materials and natural resources, and India can be the hub for
outsourcing and services. As argued by Kelsey (2015), businesspersons will be interested in