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May - 2006 - issue > In My Opinion

The World, BRICs Dream and India

Jim O'Neill
Monday, May 1, 2006
Jim O'Neill
In 2001 we called for the world to ‘Build Better Global Economic BRICs (Brazil, Russia, India and China).’ In doing so, we prompted what has become a global debate about the opportunities presented by Brazil, Russia, India and China. In the intervening five years the BRICs have emerged as central players in the world economy and global policymaking, affecting trade, capital markets, energy policy and investment decisions.

When we first wrote in 2001, we stressed these four countries’ importance to the global economy. We calculated that their share of world GDP share was set to increase significantly over the next decade. This growing importance led us to argue that the time had come for a radical reform of international economic policymaking. Writing in the aftermath of September 11, we argued that the inclusion of the BRICs in formal policymaking was key to greater international economic and political cooperation.

Specifically, we called for reform of the G7 into a new G9 that would scale back Europe’s role and incorporate Brazil, Russia, India and China.We followed this paper two years later with Dreaming With BRICs: The Path to 2050. This groundbreaking work projected long-term growth rates and suggested that the BRICs as a whole would be bigger than the G6 (the U.S., Japan, Germany, the U.K., France and Italy combined) by 2041. Our projections were not based on hopes of ‘miracle growth,’ but on a sensible model that stressed the importance of good economic policy and stable institutions.

Within the BRICs story, India has the best long-term growth potential not least due to its fantastic labor force dynamics. Since then, the case for the BRICs has become ever stronger. The BRICs have in fact grown more rapidly than we had predicted either in 2001 or in 2003, and we now expect that they will continue to exceed our projections for the next several years. The BRICs are of course benefiting from favorable global economic and financial conditions, but they have also been central contributors to this benign environment. In fact, the BRICs’ growing impact on the global economy has been felt on a wide range of issues over the past few years:

From Growth and Trade . . .
Between 2000 and 2005, the BRICs contributed roughly 28 percent of global growth and 55 percent in Purchasing Power Parity terms. More than 30 percent of total world demand in the past five years originated in the BRICs economies.

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