The term BRIC was invented by Goldman Sachs economist Jim O’Neill. It was an easy-to-memorize acronym based on the names of four large developing countries: Brazil, Russia, India and China. According to O’Neill, those four — although not necessarily in that order — would provide most economic growth in the 21st century and become the economic powerhouses of the future.
Goldman Sachs, even after converting to a bank holding company last year, remains an investment bank. Its business is to sell stocks. The BRIC story was a great marketing ploy to put investors into emerging markets. Very much like those fancy names real estate agents come up with for formerly depressed urban neighborhoods in order to attract middle-class home buyers — something like New York City’s famed TriBeCa, which originally stood for the Triangle Below Canal Street.
But international bureaucracies have a tendency to mushroom. No sooner did the BRIC term gain currency than officials from the four countries set up joint commissions and began holding high-level conferences to discuss their bright economic future. The fact that they had fairly little in common was no impediment to such activities.
But the current economic crisis has been a godsend for the BRICs — or at least three of them. While rich industrial nations, most notably the United States, saw their economies tank, China and India avoided a recession and continued to post only slightly slower, but still spectacular, growth rates right through the downturn. Brazil did suffer a short-lived recession, but its economy turned around quickly. O’Neill appears to have been right, after all.
Russia has been the exception. In a decade when high oil prices generated huge inflows of petrodollars, it failed to diversify away from natural resources, especially oil and gas, while its state-owned conglomerates became even less efficient. Russia has suffered disastrously from the economic slump. Its GDP is forecast to shrink by 7.5 percent this year, despite a bounce in oil prices in the fourth quarter. By early 2009, Russia’s finance minister Alexey Kudrin was pleading with the international community not to kick his country off the prestigious BRIC list.
It may be too late. Some economists are ready to replace Russia with Indonesia on the list of leading emerging economies. The world’s most populous Muslim-majority nation, Indonesia also began as an oil exporter (it used to belong to OPEC but suspended its membership in January 2009) and commodity producer. However, it has undergone considerable changes since the 1997 Asian financial crisis, including greater democracy and economic reforms. The Economist Intelligence Unit forecasts that Indonesia’s economy will grow by over 4 percent this year and next.
So, if Russia is removed from the BRICs and is replaced by Indonesia, what should this prestigious up-and-coming economic club be called? Shouldn’t it become the BICIs?
In a way, this could prove to be a more appropriate name. The old BRICs did stand up against the crisis, but not like a real brick wall. Russia quickly became a breach you could drive a truck through: Import demand fell sharply and its motor vehicles market, which briefly emerged in 2008 as Europe’s largest, shrank by around 50 percent.
The remaining BRICs did provide some help to the world economy, but it has been a mixed blessing. Demand from China supported international commodity prices, notably the price of oil and most metals. This was hardly a great help to the rest of the world during an economic slump. In the U.S., motorists have already started to see higher gasoline prices once more. Meanwhile, Chinese authorities are not letting the yuan appreciate against the U.S. dollar, a move that would have resulted in fewer Chinese exports to the rest of the world and greater imports from other countries.
In Latin languages, including Brazil’s Portuguese, the word bici is short for a bicycle. And “bicycle economy” is a term often applied to Asian Tigers, notably South Korea, Taiwan and others on the Pacific Rim. This refers to the fact that they either roll forward at a breakneck speed or, the moment they stop, start to topple over.