PRE-VIEWING:

What is BRICS?

WHILE-VIEWING:

While watching, pay attention to the following words and expressions in context. Use them in your answers to the questions below and discussion.

• disparate/ diverse grouping
• heterogeneous
• coherence
• political upheaval/ financial turmoil
• commodity crunch 
• potential to eclipse
• unscathed
• represent a framework for
• supplementary function/ punitive function
• staple for
• foreclose
• salient

AFTER-VIEWING:

1. What are the major issues of the BRICS?

2. Which of the issues remain unresolved?

3. What are the prospects and challenges for BRICS in the contemporary global and economic context? 

HIGHLIGHTS

• read the passage
• focus on key terms
• summarise the information
• elaborate on:

1. Early Development of the BRIC Thesis at Goldman Sachs
2. BRICS Formation and Expansion
3. BRICS as a Source of Foreign Expansion and Investment
4. The importance of BRICS in the global economy

KEY TERMS 

dominate	to be the major factor or influence in
conventional	conforming to or following accepted standards
merge	to combine or unite into a single enterprise, organization, body
returns	a profit or gain, such as from work
abundant	present in great quantity; more than adequate; oversufficient
outline	to indicate the main features of
vehicle	a means of accomplishing a purpose
generate	to bring into existence; produce; originate
foreseeable	that can be sensed or known in advance
generic term	relating to, or applying to all the members of a class, group, or kind

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

This thesis became conventional market wisdom in the aughts. But there were always skeptics, including some who claimed the phrase was Goldman marketing hype. Indeed, few talk about BRICS much anymore—at least not in terms of their global domination. Goldman closed its BRICS-focused investment fund in 2015, merging it with a broader emerging markets fund.

Key Points

• BRICS started in 2001 as BRIC, an acronym coined by Goldman Sachs for Brazil, Russia, India, and China. South Africa was added in 2010.
• The notion behind the coinage was that the nations’ economies would come to collectively dominate global growth by 2050.
• The BRICS nations offered a source of foreign expansion for firms and strong returns for institutional investors.
• The party had largely ended by 2015, when Goldman closed its BRICS-focused investment fund.

Understanding BRICS

Brazil, Russia, India, China, and South Africa ranked among the world’s fastest-growing emerging market economies for years, thanks to low labor costs, favorable demographics and abundant natural resources at a time of a global commodities boom.

It’s important to note that the Goldman Sachs thesis wasn’t that these countries would become a political alliance (like the EU) or even a formal trading association. Instead, Goldman said they have the potential to form a powerful economic bloc, even acknowledging that its forecasts were optimistic and dependent on significant policy assumptions.

Still, the implication was that economic power would bring political power, and indeed leaders from BRICS countries regularly attended summits together and often acted in concert with each 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 forecasted to grow more quickly 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 outlined his view of the potential of the BRIC nations.

In 2003, O’Neill’s Goldman colleagues Dominic Wilson and Roopa Purushothaman followed up with their report «Dreaming with BRICs: The Path to 2050.” Wilson and Purushothaman claimed that by 2050, the BRIC cluster could grow to a size larger than the G6, and the world’s largest economies would therefore look drastically different in four decades. That is, the largest global economic powers no longer would be the richest, according to income per capita.

In 2007 Goldman published another report, «BRICs and Beyond», that focused on BRIC growth potential, the environmental impact of these growing economies and the sustainability of their rise. The report also outlined a Next 11, a term for 11 emerging economies, in relationship to the BRIC nations, as well as the ascendancy 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 began in 2014. By 2015, the BRICS acronym no longer looked like an attractive investment venue and funds aimed at these economies either shut down or merged with other investment vehicles.

Goldman Sachs merged its BRICS investment fund, which was focused on generating returns from these economies, with the broader Emerging Markets Equity Fund. The fund had lost 88% of its assets from a 2010 peak. In an SEC filing, Goldman Sachs stated that it did not expect «significant asset growth in the foreseeable future» in the BRICS fund. Per a Bloomberg report, the fund had lost 21% in five years.

BRIC is now used as a more generic term. For example, Columbia University established the BRICLab, where students examine foreign, domestic, and financial policies of BRIC members.

KEY TERMS

MATCH THE TERM WITH ITS DEFINITION:

dominate	relating to, or applying to all the members of a class, group, or kind
conventional	present in great quantity; more than adequate; oversufficient
merge	to combine or unite into a single enterprise, organization, body
returns	to indicate the main features of
abundant	to bring into existence; produce; originate
outline	to be the major factor or influence in
vehicle	conforming to or following accepted standards
generate	a means of accomplishing a purpose
foreseeable	that can be sensed or known in advance
generic term	a profit or gain, such as from work

RESTORE THE SENTENCE BY FILLING IN THE KEY TERM:

1. BRICS is an acronym for Brazil, Russia, India, China, and South Africa. Goldman Sachs economist Jim O’Neill coined the term BRIC (without South Africa) in 2001, claiming that by 2050 the four BRIC economies would come to …………….. the global economy. South Africa was added to the list in 2010.

2. This thesis became …………….. market wisdom in the aughts. But there were always skeptics, including some who claimed the phrase was Goldman marketing hype.

3. Indeed, few talk about BRICS much anymore—at least not in terms of their global domination. Goldman closed its BRICS-focused investment fund in 2015, …………….. it with a broader emerging markets fund.

4. The BRICS nations offered a source of foreign expansion for firms and strong …………….. for institutional investors.

5. Brazil, Russia, India, China, and South Africa ranked among the world’s fastest-growing emerging market economies for years, thanks to low labor costs, favorable demographics and …………….. natural resources at a time of a global commodities boom.

6. Growth in the BRICS economies slowed down after the global financial crisis and the oil price collapse that began in 2014. By 2015, the BRICS acronym no longer looked like an attractive investment venue and funds aimed at these economies either shut down or merged with other investment …………….. .

7. Goldman Sachs merged its BRICS investment fund, which was focused on ……………..  returns from these economies, with the broader Emerging Markets Equity Fund.

8. In an SEC filing, Goldman Sachs stated that it did not expect «significant asset growth in the ……………..  future» in the BRICS fund.10 Per a Bloomberg report, the fund had lost 21% in five years.

9. BRIC is now used as a more …………….. .

COMPLETE THE PASSAGE WITH THE WORDS FROM THE BOX:

predict  applied  initiated  reach  alternative  diluted submitted  expand  adopting  underway  seek  currently  hegemonic  prominent  within

The BRICS group of nations is to decide this year on whether to admit new member states into the bloc, as Saudi Arabia and Iran formally 1)…………….. to join.

According to South Africa’s ambassador to BRICS, Anil Sooklal, the proposal to 2) …………….. the bloc will be one of its main focuses this year. Speaking in an interview with the Russian news agency, TASS, Sooklal said that at a meeting «in early February in South Africa, we started discussing the expansion of BRICS, thus beginning to carry out the decision made in June 2022 at the BRICS summit to develop criteria for accepting new countries into the group.»

Another three meetings will be held 3) …………….. the next three months «in order to 4) …………….. a consensus on the criteria of recommendations, principles and approaches for BRICS enlargement,» he confirmed. «A corresponding report is expected to be 5) …………….. for consideration to BRICS foreign ministers, whose meeting will be held in early June. Major efforts are 6) …………….. now on the concept for BRICS expansion and criteria for 7) …………….. new members».

The economic bloc 8) …………….. consists of Brazil, Russia, India, China and South Africa, and is notable as a potential trading and political force which many 9) …………….. could serve as an 10) …………….. to the United States and the global economic system it leads, especially as Washington’s influence is considered to be declining on the world stage.

China, the most 11) …………….. member state in BRICS and with a GDP of over twice the size of all other four members combined, was reportedly the one to have 12) …………….. the discussion on expansion, seeing it as a way to make the bloc more of a match against current global financial institutions such as the World Bank, the International Monetary Fund (IMF) and the United Nations.

The other members, however, are reported to be uncomfortable with Beijing’s 13) …………….. influence and the invitation of its allies into BRICS, fearing that their own influence could be 14) ……………...

Along with Saudi Arabia and Iran, Algeria also 15) …………….. to join BRICS last year, with Turkiye and Egypt expected to become additional members soon.

MIXED BAG

Raisi Sees China’s Willingness to Help Iran Join BRICS

China intends to facilitate 1) Iran’s/ Iran joining the 2) BRICS/ BRICs group (Brazil, Russia, India, China, South Africa), Iranian President Ebrahim Raisi said 3) at/ in a press conference after his visit to China.

«We 4) saw/ have seen China’s 5) will/ willingness to help the Islamic Republic of Iran join BRICS 6) , / x and the foreign minister will closely follow the subject so that our country 7) can/ may benefit from the potential of membership in this inter-regional/ intra-regional organization,» the Tasnim news agency quoted the president as saying.

The president 8) assessed/ evaluated his visit to the PRC as successful and fruitful. Twenty memoranda of understanding in the fields of trade, the economy, energy, science and technology were signed 9) amid/ during the visit. The two countries agreed that bilateral cooperation 10) will have been accompanied/ will be accompanied by technology transfer.

According to the president, the trip is in line with the important role Iran plays in security, the economy and trade.