TITLE: THE IMPACT OF BRIC COUNTRIES ON ECONOMY

MS.P.DEVI BALA, LECTURER, INFANT JESUS COLLEGE OF ENGINEERING, KEELAVALLANADU. MOBILE NO: 9865352611 MAIL ID:devisparkler@gmail.com

AUTHORS MRS.P.STELLA, LECTURER, INFANT JESUS COLLEGE OF ENGINEERING, KEELAVALLANADU. MOBILE NO: 94866 93866 MAIL ID:stellajenefa@gmail.com

THE IMPACT OF BRIC COUNTRIES ON ECONOMY

INDIAS RISING GROWTH POTENTIAL On the eve of the Industrial Revolution, India was the second-largest economy in the world, contributing more than 20% of total world output. By the 1970s, after two centuries of relative economic stagnation, that share had fallen to 3% the lowest in its recorded history. From a long-term perspective, the post-industrial economic decline of India and China was a historical deviation, driven to some extent by a lack of openness. After independence in 1947, India followed inward-looking and state-interventionist policies that blinded the economy through regulations, and severely restricted trade and economic freedom. Comparisons with other countries that have experienced similar rapid rates of growth show that India is firmly on the growth expressway. There is considerable scope for catch-up and, even with our baseline projection; the speed of Indias growth transition is not doubtful when compared to the growth experiences of other East Asian countries. A turnaround in manufacturing productivity since 2003 has been crucial. The proximate cause is the increase in efficiency of private-sector firms in the face of growing competition. The gradual opening up of the economy introduced a competitive dynamic, which forced the private sector to restructure during the relative slowdown in growth and corporate profitability during 1997-2002. THE EFFECT OF REFORMS IN INDIAN ECONOMY After the restructuring, the private sector emerged leaner, fitter and more productive. The underlying causes for the increase in efficiency of private firms have been trend accelerations in international trade, financial sector growth, and investments in and adoption of information and communication technology. These are also the cumulative effects of a decade of reforms. The re-allocation of land, capital and especially labor from lowproductivity agriculture to high-productivity industry and services is an essential dynamic behind sustained productivity growth.

KEY STRENGTH AND WEAKNESS OF THE BRIC COUNTRIES:

COUNTRY KEY STRENGTH KEY WEAKNESS It boasts abundant and varied Social infrastructure is lacking Brazil natural resources and a (e.g., investment in energy,

relatively diversified economy rail, road, ports) and public with favorable labor costs. dept has remained high.

It has a wealth of natural The investment rate is among resources, Russia a skilled labor the lowest for major emerging

force, and relative political countries. stability which has strengthen its regional and energy

position. Private companies are the key The financial situation in the asset to the country, benefiting public sector continues to be India from advantages in several Indias primary weakness. economic sectors(e.g., IT,

Outsourcing, Pharmaceuticals, textiles) Industrial competitiveness and Increasing inequality has

diversification has benefited resulted in growing social China Chinas trade with other tensions; overcapacity various industrial

countries, with strong foreign threatens financial investment.

and commercial sectors.

CONCLUSION It is clear that the BRIC countries are all very different from each other. Russia is the weakest growth prospect and the country really does not belong to any high growth club. Its growth in the past five years has been driven mainly by energy exports. Its recovery is linked to the recovery in Europe, as well as other non-economic factors. The outlook of Russia is the foggiest of all BRIC countries.

Both Brazil and India escaped the worst impact of the recession, not because of any virtue on their part, but because the financial sectors in these economies are better secured by authorized organizations. India has managed to get back on the growth track by virtue of strong domestic demand. Brazil, on the other hand is trying to export its way to growth, focusing this time on China and India, rather than the US. China's growth needs a new sponsor, now that Western consumers will take a long time to recover consumption levels. Growth in domestic consumption can be the new driver for the Chinese economy. REFERENCES  www.klinegroup.com  www.icis.com  Base Oils Supplement | February 2010  Goldman Sachs Global Economic Research Details