Brazil, Russia, India, China and South Africa (BRICS)

What is BRICS?

BRICS is an abbreviation for Brazil, Russia, India, China, and South Africa. Goldman Sachs economist Jim O'Neill authored the term BRIC (without South Africa) in 2001, claiming that by 2050 the four BRIC economies would come to overwhelm the global economy by 2050. South Africa was added to the rundown in 2010.

This thesis became conventional market wisdom in the aughts. In any case, there were dependably doubters, including some who guaranteed the phrase was Goldman marketing publicity. For sure, not many talk about BRICS much any longer — essentially not in terms of their global control. Goldman closed its BRICS-centered investment fund in 2015, combining it with a more extensive emerging markets fund.

Grasping BRICS

Brazil, Russia, India, China, and South Africa positioned among the world's quickest developing emerging market economies for quite a long time, because of low labor costs, good demographics and plentiful natural resources all at once of a global commodities boom.

It's important to note that the Goldman Sachs thesis wasn't that these countries would turn into a political alliance (like the EU) or even a formal trading association. All things considered, Goldman said they can possibly form a powerful economic coalition, even recognizing that its figures were hopeful and dependent on huge policy suspicions.

In any case, the ramifications was that economic power would bring political power, and for sure leaders from BRICS countries consistently attended summits together and frequently acted working together with every others' interests.

Early Development of the BRIC Thesis at Goldman Sachs

In 2001, Goldman's O'Neill noted that while global GDP was set to rise 1.7% in 2002, BRIC nations were estimated to develop more rapidly than the Group of Seven, the seven most advanced global economies: Canada, France, Germany, Italy, Japan, the United Kingdom and the U.S. In the paper "Building Better Economic BRICs," O'Neill framed his perspective on the capability of the BRIC nations.

In 2003, O'Neill's Goldman partners Dominic Wilson and Roopa Purushothaman followed up with their report "Dreaming with BRICs: The Path to 2050." Wilson and Purushothaman guaranteed that by 2050, the BRIC cluster could develop to a size bigger than the G7, and the world's biggest economies would in this manner look definitely changed in forty years. That is, the biggest global economic powers presently not would be the most extravagant, as indicated by income per capita.

In 2007 Goldman distributed another report, "BRICs and Beyond", that zeroed in on BRIC growth potential, the environmental impact of these developing economies and the sustainability of their rise. The report likewise illustrated a Next 11, a term for 11 emerging economies, in relationship to the BRIC nations, as well as the domination of new global markets.

Closure of Goldman's BRICS Fund

Growth in the BRICS economies slowed down after the global financial crisis and the oil price collapse that started in 2014. By 2015, the BRICS abbreviation at this point not seemed to be an alluring investment setting and funds focused on these economies either shut down or merged with other investment vehicles.

Goldman Sachs merged its BRICS investment fund, which was centered around generating returns from these economies, with the more extensive Emerging Markets Equity Fund. The fund had lost 88% of its assets from a 2010 pinnacle. In a SEC filing, Goldman Sachs stated that it didn't anticipate "critical asset growth in the foreseeable future" in the BRICS fund. Per a Bloomberg report, the fund had lost 21% in five years.

BRIC is presently utilized as a more generic term. For instance, Columbia University laid out the BRICLab, where understudies look at foreign, domestic, and financial policies of BRIC individuals.

Features

• The party had to a great extent ended by 2015, when Goldman closed its BRICS-centered investment fund.
• BRICS began in 2001 as BRIC, an abbreviation begat by Goldman Sachs for Brazil, Russia, India, and China. South Africa was added in 2010.
• The thought behind the coinage was that the nations' economies would come to aggregately overwhelm global growth by 2050.
• The BRICS nations offered a source of foreign expansion for firms and strong returns for institutional investors.