SIEMENS

The acronym BRIC was coined in 2003 by Jim O'Neill, head of Economic Research at Goldman Sachs investment bank. It is made up of the first letters of Brazil, Russia, India, and China — four countries whose combined population of 2.8 billion accounts for about 40 % of the global total. According to Deutsche Bank Research, these nations will post a combined gross domestic product (GDP) of $10.5 trillion in 2010, or around 17 % of the gross world product (GWP). By contrast, the G7 nations (U.S., Japan, UK, Germany, France, Italy, and Canada) account for just under 52 % of the GWP.

But even in the aftermath of the financial crisis, BRIC growth rates of 4 to 10 % far outpace those of the G7. According to a June 2010 estimate by the International Monetary Fund (IMF), anticipated global economic growth of 4.6 % this year will largely be driven by China (10.5 %), India (9.4 %), and Brazil (7.1 %). Even the BRIC “problem child,” Russia, will probably achieve more than 4 % growth after experiencing an 8 % decline in GDP in 2009. Experts at Goldman Sachs believe the BRIC nations will account for nearly half the growth of the GWP by 2020.

BRIC is sometimes expanded to “BRICK” to include South Korea or “BRICS” to include South Africa. In December 2005 Goldman Sachs published a list of 11 countries that may experience a similar type of dynamic growth as the BRIC nations. These “Next Eleven” (N 11) countries are Vietnam, Bangladesh, Pakistan, the Philippines, South Korea, Indonesia, Mexico, Turkey, Iran, Egypt, and Nigeria. This grouping has generated some controversy, however. For example, as a member of the OECD, South Korea has long been considered by many to be part of the group of industrialized nations that record stable growth.

O´Neill predicts that most of the N 11 countries will be among the world's top 20 economies by 2050. “After the BRIC nations, these countries have the largest combined populations and the highest growth rates,” he says. Goldman Sachs evaluated the sustainable growth potential of 170 nations using an indicator that takes into account factors such as inflation, public debt, openness of the economy, technological capability, life expectancy, education, political stability, rule of law, and corruption. The study found that Vietnam has the best chance to achieve above-average growth. The N 11 nations already account for 11 % of global economic growth, as opposed to only 1 % before the economic crisis. According to Goldman Sachs, the combined N 11 GDP will be around two thirds that of the G7 by 2050.

Experts consider rising mass consumption to be the most important factor for BRIC growth. Although this is complemented by government investment, it is also due to the rise of a new middle class. China will lead the way here, according to Goldman Sachs, as it is expected to increase per capita income from $3,463 in 2010 to $8,829 in 2020 and $17,522 in 2030. The latter figure would correspond to 28 % of the U.S. per capita income of $62,717 that is expected for 2030.

The BRIC nations' rich resources are another reason to expect long-term economic expansion. Brazil, for example, is the world's leading supplier of iron ore, and Russia delivers natural gas to Western Europe and elsewhere. The BRIC states now also export high-tech products. Brazil can compete with the world's best in aircraft production, and India is a major center for innovative ideas, with two thirds of the country's GDP now generated by the service sector, especially the software, IT, and biotech industries. India is also the world's fourth-largest producer of medications in terms of quantity (specialized in generic brands), and its business process outsourcing sector is expected to nearly double its 2008 revenues to $110 billion by 2013.

China has long been considered the “workbench of the world,” but in the future it will manufacture more and more high-quality products. To date, China has primarily exported electronic devices, machines, clothing, and iron and steel products. In the future, however, the country will increasingly also export rail technology financed by state-run Chinese banks. For instance, China Southern Rail exports reached $1.2 billion in 2009, as compared to just $59 million eight years earlier. China is also set to increase its exports of sophisticated power plant and infrastructure technologies to regions such as Eastern Europe.

China's expansion is resulting in a high level of foreign currency reserves. At over $2.4 trillion, China has the lion's share of the total BRIC currency reserve of $3 trillion, according to Deutsche Bank Research. Thanks to the large BRIC current account surpluses, these reserves are expected to continue increasing rapidly. China also aims to become the “world's leading scientific power” by 2050 — a goal it has made official in a national directive. Its research investments have grown by 20 % a year since 1999. Still, this budget remains low in relation to GDP, accounting for 1.5 % in 2007. By contrast, Germany spent 2.5 % of its GDP on research in 2007, and the U.S. spent 2.6 %. China plans to catch up by 2020.

This is reflected by the increase in China's patent registrations. An analysis by the Cologne Institute for Economic Research found that in 2007 some 160,000 Chinese engineers registered patents worldwide — in comparison to 130,000 engineers from Germany. Just ten years ago, German inventors filed six times as many patents as Chinese scientists. No other country is experiencing such rapid growth in scientific publications as is China today. Its current 70 publications per one million inhabitants puts it well behind industrialized nations like the U.S. (960) or Germany (930). Nonetheless, if Chinese researchers continue at their current pace — i.e. increasing their publications more than fourfold from 1997 to 2006 — China will be publishing more than the U.S. in ten years and more than the EU 27 nations in 15. Most nanotechnology publications already originate in China.