Growth Strategies Case Study

Case Title:

BRIC : Building Blocks of the New World?

Abstract:
Goldman Sachs’s(GS) forecasts of global power shifts and long-term economic projections were treated with caution, given the number of variables in action. In the next several decades, it seemed that at least two Asian “emerging-market” countries, China and India, would move into the front rank of the world’s economies and would increasingly exercise influence as global powers. Analysts thought that a change of such magnitude in the global power balance was likely to challenge the positions of even the most powerful Western countries or at least, the existing G7 countries would have to adjust their policies to accommodate the interests of these rising powers. The rapid expansion of the BRIC economies was creating a powerful paradox in which both opportunities and threats are emerging. Paramount to the success of CEOs worldwide was their ability to make this clash of interests work to their advantage.

Were Asia-Pacific CEOs willing to conduct and build their businesses in these economies, despite the growing threat of competition? And if so, which country's market opportunities did they perceive as having the most potential, as well as the most likely competitive threat?

Despite the cautious language of the GS report, its authors were reasonably confident that their long-term economic projections are sound. Although conservative growth rates were used, GS projections did rely on stable growth and development. GS agreed that disruptions in growth would alter the projections significantly, but noted that the projections were nonetheless useful in imagining the economic potential that the BRIC economies possess. Discussion amongst analysts and economists largely centered around the plausibility of the projections given the difficulty in imagining stable, consistent growth in the BRIC economies. They wondered whether sufficient attention had been paid to the political factors and substantially large population under poverty that could affect the futures of these four large nations. For many people it seemed that the time was not right to invest funds in the BRIC, but GS’s report did clearly suggest that shifting a share of investment portfolio to the four coming giants might not be a bad idea. Although the title of the report had words “dreaming with BRICs ”, the dream could turn into reality and in consequence the radical changes the future could unfold. More important still, it suggested that western politicians who thought that the current world order would last through this century needed to do some serious rethinking. Was it too early to start rethinking?

Pedagogical Objectives:

• To understand about the BRIC economies
• To discuss whether it is beneficial for other countries to invest in BRIC.

Keywords :  BRIC; Brazil; Russia; India; China; Goldman; Sachs; economic size; economic growth; international trade; global demand; currency; sustainability; growth; Growth Strategies Case Study; dollar; international relations

Contents : 
BRIC overview
GDP comparison between nominal and PPP
Goldman Sach’s predictions on growth
The largest economies in 2050
BRIC could make close to 30% of world’s economy
Projected growth potential
Incomes and Demographics
Largest economies but not richest economies
China vs US income per capita growth