APA

BRICS Nations

Saint Leo University

MBA 575

Abstract

The purpose of this paper is to show the BRICS Nations of Brazil, Russia, India, China, and South Africa and the increasingly important place that they hold in international business. The paper will provide a comprehensive description of the economy of each of the BRICS nations, and elaborate on the reasons why these countries are growing in importance on the international stage. The paper will further describe the internal and external forces that may have played an influential part in the organizational success as it relates to these countries. The paper will then conclude with how Saint Leo Core Values of responsible stewardship is relative to international business and the rise of these economies.

Introduction

BRICS is the acronym given to the economic powerhouse forces of Brazil, Russia, India, China and South Africa. They have a mutual interest and have joined together in a collaboration of strength. They technically do not have a whole lot in common; they are diverse in their resources, finances, politics and population; however, it opens up opportunities for each of them to explore, tap into and profit. The concept evolved when Jim O’Neill, an economist coined the term when referencing how fast these countries were growing and developing, and the impact they were having on economics per se. The idea is to strengthen, build, and advance with a strong economy individually, by partnering up with the BRICS nations and utilizing, and trading resources that would not normally be available, to and for each other. To some extent, these countries will use each other, and some will benefit more than the other; however, each may benefit from the power, the publicity, experience, and exposure (Desai & Vreeland, 2014).

The BRICS nations have united together and started the New Development Bank (NDB). The initial start-up fund of $50 billion has been allocated to build the groundwork for development; the money is equally shared. They will spread and rotate the duties starting with a citizen from India as President. Russia will take a seat in the Board of Governors Chair; Brazil will start with the Board of Directors Chair and the headquarters will start out in Shanghai. They have also started another pot of money funded entirely by the group. China has donated the most at 41%, Brazil, Russia, and India tied their contribution at 18%, followed by South Africa with the remaining 5% (Desai & Vreeland, 2014).

The Economy of the BRICS Nations

Brazil

Brazil is located in the south on the “supercontinent of the Americas” right alongside the Pacific Ocean, Atlantic Ocean, and the Caribbean Sea. It is the largest independent country in South America by size and population (Countries of the World, 2016, p.1). Brazil is 8,358,140 square kilometers, just a tad smaller in size than the United States. The population of Brazil is 205,823,665 placing them number six in the world, most of whom live close to, or alongside the Atlantic Coast. They are an agricultural, mining and service oriented region with a growing middle class. They are known for natural resources of bauxite, gold, iron ore, manganese, nickel, phosphates, platinum, tin, rare earth elements, uranium, petroleum, hydropower, and timber (CIA, 2016).

Brazil was enjoying a strong economic growth in 2007 and 2008, when the global financial crisis impacted their world, however, they did not take long to recover. In 2010 faith in was restored, consumers and investors were feeling more assurance that recovery was on the horizon. In fact, according to the World Bank Group their GDP-purchasing power parity jumped 7.5%, which is the fastest they have seen in 25 years (CIA, 2016).

In 2011 Brazil’s GDP (purchasing power parity) slowed down. There was a global economic- shift happening in the world, casting a great impact on productivity. What they once could count on, collapsed. They put a lot of weight on the exportation of raw materials that cost a lot to produce in comparison to the RIO. Productivity slowed down, operational costs increased, inflation was rising, investments were disappearing, and unemployment started to rise. The government tried to make improvements by offering tax cuts and stimulating consumers. Unfortunately, the decline continued, when newly elected President Dilma Rousseff hand-picked Finance Minister Joaquim LEVY and his team to restore the primary account surplus and recover the economy. “LEVY encountered political headwinds and an economy facing more challenges than he anticipated. The target for the primary account surplus fell to a deficit of 2%, and two of the three main credit rating agencies downgraded Brazil to “junk” status” (CIA, 2016, p. 6).

Brazil is working to restore their economy by changing the way they do business with foreign businesses and by investing in their citizens, and changing their education system to fit in with research and development of technology. They have put programs in place to ‘attempt’ to eliminate poverty, so far they have helped tens of millions (CIA, 2016).

Brazil’s GDP (purchasing power parity): is estimated, as of 2015, $3.192 trillion, down from the previous two years: $3.32 trillion in 2014 and $3.317 trillion in 2013. Placing them at number eight in the world. The GDP (official exchange rate): is estimated at $1.773 trillion, and the GDP real growth rate has dropped to -3.8%, from 0.1% in 2014 and 3% in 2013 (CIA, 2016).

Russia

Russia is located alongside the Arctic Ocean and the North Pacific Ocean and borders 14 countries in North Asia. They are approximately 16,377,742 square kilometers making them the largest water and landmass combined size in the world. In fact, they are 1.8 times larger than the United States. The population of Russia is 142,355,415 placing them number ten in the world, most of whom live in an urban area (CIA, 2016).

Russia has gone through a lot from early domination to the crumble of the Soviet Union. It has shifted economical gears from a centrally planned one to a market-based system. Though they are rich in oil and natural gas they have recently experienced a decline, and a stagnant economy. They felt the global impact of the financial crisis and were not in a position to bounce back quickly; they relied heavily on their exports, and oil and gas prices were dropping all over the world. They also exported larger quantities of steel and aluminum. They continue to suffer through a recession. The hope of the government is by transitioning to a diversified economy, that growth will be on the horizon (CIA, 2016).

Russia’s GDP (purchasing power parity): is estimated, as of 2015, $3.718 trillion, down from the previous two years: $3.862 trillion in 2014 and $3.834 trillion in 2013. Placing them at number seven in the world. The GDP (official exchange rate): is estimated at $1.325 trillion, and the GDP real growth rate has dropped to -3.7%, from 0.7% in 2014 and 1.3% in 2013 (CIA, 2016).

India

India is located alongside the Arabian Sea and the Bay of Bengal in Southern Asia, and they have six countries on their border. Noteworthy is their proximity to Indian Ocean trade routes. They gained their independence from Britain in 1947; however, India and Pakistan separated into two states and continue an ongoing violent feud to this day. India covers 3,287,263 square kilometers making them the seventh largest country in the world and only approximately one-third the size of the United States. India has the second largest population in the world with 1,266,883,598 people, twice as many live in New Delhi than any other region of the country. They are known for their natural resources: coal, iron ore, manganese, mica, bauxite, titanium ore, chromite, rare earth elements, diamonds, petroleum, limestone, arable land, however, the weather is on, one of two ends of the spectrum, droughts or floods (CIA, 2016).

The environment in India is caustic; they do not have proper control of sewage or pesticides, and their soil conservation is non-existent. Improvements are being made to the drinking water and sanitation; however, they are still at a high risk of disease from food and water. 2,118,100 people live with HIV/AIDs (CIA, 2016).

In 2011 India’s economy suffered from a loss of investments, because of high interest rates, and the growth rate became stagnate and inflation started to rise. Faith in the government was dwindling, and investments were diverted elsewhere, until 2014-2015 when an economic reform changed the way investors looked at them. A new election, brought a new focus. The growth rate was improving faster than other places, however, the banks that the Indian government owned had low credit ratings from their bad debts (CIA, 2016).

India has a primarily young and educated populous. A large part of the employment industry is service-oriented, however close to half the population is in agriculture. They have mastered the skill of insourcing-outsourced positions; they are an exporter of information technology services.

India’s GDP (purchasing power parity): is estimated, as of 2015, $7.965 trillion, up from the previous two years: $7.421 trillion in 2014 and $6.92 trillion in 2013. Placing them at number fourth in the world. The GDP (official exchange rate): is estimated at $2.091 trillion, and the GDP real growth rate has dropped to 7.3%, a slight increase from 7.2% in 2014 and 6.6% in 2013.

China

China is located alongside the East China Sea, Korea Bay, the Yellow Sea and the South China Sea, in Eastern Asia, between North Korea and Vietnam. They have 14 countries on their borders, and they have the largest population of 1,373,541,278 people, over half of whom live in an urban area especially in Shanghai and Beijing. They are almost the size of the United States with 9,596,960 square kilometers, placing them fourth in size compared to the rest of the world. They are rich in the natural resources of coal and iron ore, petroleum and natural gas, mercury and magnetite, manganese and molybdenum, tin and tungsten, antimony and aluminum, lead and zinc, uranium and rare earth elements, arable land and the world’s largest hydropower potential (CIA, 2016).

China was once at the forefront of Arts and Sciences until civil unrest wreak havoc causing a domino of effects to ensue. The people suffered from famine, and the country was defeated in battle. The government started to control everyday life and took the lives of millions of people. Economic development took an upward turn, when DENG Xiaoping became the leader. His focus was on market-orientation, away from a centrally planned system. Things started improving, and output kept increasing. Though they are now considered to be “the largest economy in the world, surpassing the US in 2014 for the first time in modern history. Still, China’s per capita income is below the world average” (CIA, 2016, p. 5).

The environment in China is suffering from the industrial progress. They have one of the highest rates of pollution; they emit the largest amount of carbon dioxide in the world. Their soil is eroding, and the water table is dropping (CIA, 2016).

There are financial factors in play that controls economic growth. The looming debt the Chinese government is absorbed in will play out, and it will slow the growth process down. In the mean time, they are working on economic reforms and more efficient distribution of capitol by state-owned financial institutions (CIA, 2016).

In 1979 China felt the need to incorporate a control policy to stop the out-of-control population by mandating that couples could only have one child, they have since increased that to two, they have come to realize that they have a large elderly population and they will have economic needs that must be addressed (CIA, 2016).

China’s GDP (purchasing power parity): is estimated, as of 2015, $19.39 trillion, up from the previous two years: $18.14 trillion in 2014 and $16.91 trillion in 2013. Placing them at number one in the world. The GDP (official exchange rate): is estimated at $10.98 trillion, and the GDP real growth rate has dropped to 6.9%, from 7.3% in 2014 and 7.7% in 2013 (CIA, 2016).

South Africa

South Africa is located in the southern region of Africa, alongside the Atlantic Ocean and the Indian Ocean. They have six countries on their borders, and they cover 1,219,090 square kilometers, twenty-fifth compared to the rest of the world, almost twice the size of Texas. The population is 54,300,704, most of whom live in urban areas such as Johannesburg. They are the twenty-sixth largest population in the world, however, this number is constantly changing due to a slow growth rate and high rate of death. The country is rich in the natural resources of gold, chromium, coal, iron ore, antimony, manganese, nickel, tin, phosphates, rare earth elements, uranium, platinum, gem diamonds, copper, vanadium, and natural gas. They have a semiarid climate in one part of the country and subtropical climate in the other area. Most of the land is agricultural, however, there is a lack of clean water, and there is a need for water conservation (CIA, 2016).

The economic growth is very slow. Some factors that contribute to this, such as inefficient skills to compete globally, ineffective and inefficient productivity, and government inconsistencies. The unemployment rate of 25% and poverty rate of 36% is among the highest in the world (CIA, 2016).

South Africa has the largest stock exchange in Africa and is ranked 20th in the world. South Africa’s GDP (purchasing power parity): is estimated, as of 2015, $723.5 billion, up from the previous two years: $714.4 billion in 2014 and $703.5 billion in 2013. Placing them at number thirty-one in the world. The GDP (official exchange rate): is estimated at $313 billion, and the GDP real growth rate has dropped to 1.3%, from 1.5% in 2014 and 2.2% in 2013 (CIA, 2016).

Importance of growth on the International Stage

The main reason the BRICS nations hold such an important place in the growth of the economy on the international stage is that of the ‘power in play’ forces taking place. They represent a large portion of the world’s population and control a large square footage of land mass and water resources. They have a new finance infrastructure which will promote sustainable development in their respective countries and in their partnering countries opening up more opportunities for development and advancement. Together they are stronger and more powerful than they would be alone. They could move into the most powerful union in the world.

Internal and External Forces that Influence Organizational Success

Internal forces are those lines of communication and steps taken to help propel people, teams, and companies through education, training, written policies, and mutual respect for one another. Each of the BRICS nations has a different perspective on what they value and what is important. However, they know they need to maintain was important to them and seek to utilize their partnership to continue to grow, diversify and develop. The external forces such as the economy is what drives supply and demand. It impacts the local economy and could reach out globally on an international level (Doucette, 2016).

Brazil is working together to progress, and move away from their dependency on exports. They are helping their citizens to advance their skillsets through education and training and reduce unemployment, and curtail inflation. They have had one of the fastest growing economies. The infrastructure they have been maintaining has helped them to reduce poverty and balance the imports and exports. They will diversify and contribute positively to the global impact of supply and demand.

Russia is working on the strength of the economy by exploring and utilizing more of their resources. The oil, gas, and precious metals that are so abundant helped them to maintain a steady economy, and now they realized through the fluctuations in supply and demand they need to diversify and explore the rest of their potential assets they have been reserving. They have refocused their mindset away from the political realm to the economy. Joining the BRICS nations is a positive step to helping their citizens, their country and the global market.

India is advancing and working in an open market economy, as a team utilizing the English language to reach out globally in the service-oriented market, software development, and pharmaceuticals. They are constantly promoting educating and training and contribute positively to the partnership they have within the BRICS nations bond.

China is working to control pollutants and their extremely high interest rated debt. They are a powerhouse, and they are moving at a steady rate of growth. They are using their resources, and they are reaching into their partner’s countries to utilize their resources as well, simultaneously advancing slowly and potentially progressing towards monopolizing the world’s resources.

South Africa is working on the partnership in the BRICS nations to propel it citizens out of poverty, unemployment, and inequality. They are maintaining a high economical foundation through the resources they export.

Responsible Stewardship

Saint Leo University’s core value of responsible stewardship states that we are to “… foster a spirit of service to employ our resources to university and community development. We must be resourceful. We must optimize and apply all of the resources of our community to fulfill Saint Leo University's mission and goals” (SLU, 2016, para 5.). This is relative to all aspects of life, business locally and globally. The international business and the rise of the BRICS’s economies, has the ability to utilize their resources to advance the citizens of their home country and then reach out and help those around the world. God has provided us with resources, and each of us has more than enough for ourselves, however when we reach out, share, and trade we explore the opportunity for all of us to advance and equalize the playing field. There is more than enough for everybody.

Reference

Central Intelligence Agency (2016). Brazil. The World Fact book. Retrieved from the CIA