Foreign Policy.
"The BRICS Are in a Class by Themselves."
Yes and no. There is no question that the BRICS -- Brazil,
Russia, India, China, and the group's newest member, South Africa -- are big. They
matter. In terms of population, landmass, and economic size, their pure
dimensions are impressive and clearly stand out from those of other countries.
Together, they
make up 40 percent of the world's population, 25 percent of the
world's landmass, and about 20 percent of global GDP. They already
control some 43 percent of global foreign exchange reserves, and their share
keeps rising.
Jim O'Neill of Goldman
Sachs put the spotlight on the rise of the original four of these big new
economic powers when he gave them the name BRICs in 2001, and their collective
growth began to soar. But in reality their economic success had been a long
time coming. Twenty years before that, when I was at the World Bank's
International Finance Corp. (IFC), we were identifying the opportunity
to rebrand these countries, which, despite their enormous economic potential,
were still lumped together with the world's perennial basket cases as "underdeveloped
countries" stuck in the "Third World." At the time, Third World stock markets
were simply off the radar screen of most international investors, even though
they were starting to grow; I gave them the name "emerging markets." Local
investors were already quite active in Malaysia, Thailand, South Korea, Taiwan,
Mexico, and elsewhere, as homegrown companies became larger and more
export-competitive while market regulation became more sophisticated. But until
the IFC
built its Emerging Markets Database and index in 1981, there was no way to
measure stock performance for a representative group of these markets, a
disabling disadvantage when stacked against other international indices, which
were skewed in favor of developed countries such as Germany, Japan, and
Australia. This brand-new research on markets and companies provided investors
with the confidence to launch diversified emerging-market funds following the
success of individual country funds in markets such as Mexico and South Korea.
