What Is the Current Role of the Bric Economies in the Global Economy free essay sample

It`s obvious that the BRIC countries are catching up fast. Nevertheless, their current role in the global economic is still relatively small in terms of GDP at market price. Main body Capital The BRIC countries, and in particular China and Russia, hold a great quantity of surplus capital. By far China holds almost $1. 5 trillion foreign exchange reserve which is the largest proportion of the world exchange cover (Paola, S. (2008). Together with Russia, India and Brazil, these countries hold almost half of the world’s foreign exchange reserves. The surplus of these countries’ current accounts reflects their economies’ position in the global economic, as big exporters of both manufactured goods and commodities in the global supply chain (Paola, S. (2008). Purchasing-power-adjusted GDP With purchasing-power-adjusted exchange rates being applied to the comparison of GDP, the role of the BRIC countries in the global economic becomes more important. With regard to purchasing-power-adjusted GDP, these countries’ share of the global economy is almost 24 percent due to BRIC countries` lower price levels. We will write a custom essay sample on What Is the Current Role of the Bric Economies in the Global Economy? or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page However, USA is still the largest economy. China moves to the position of the world’s 2nd largest economy, followed by Japan and India in respectively 3rd and 4th position in terms of purchasing-power adjusted GDP (Goldman, S. (2004). Growth factors Accompanied by high economic growth rates, the BRIC countries’ economic development reveals fundamental differences in growth factors compared with market economies such as the USA, Japan and Germany. For instance, the high growth in China is seems from strong expansion of capital input, as well as growth in both labor productivity and technological progress in the form of total factor productivity (S. Schmalz amp; M. Ebenau. (2012)). However, the contribution from a larger workforce has been smaller. India shows almost the similar growth pattern. Brazil’s economic growth is primarily based on accelerated accumulation of production factors (S. Schmalz amp; M. Ebenau. (2012)). Moreover, to some degree the Russian economy is based on raw materials extraction which is sensitive to price. Compared with developed countries, the economic growth of the BIRC countries has fluctuated more strongly. The fluctuations in their growth make a large contribute to the global cyclical fluctuations Conclusion The sustained high growth in China and India in a long period indicates that these countries have succeeded in sustainable development. As a bloc, the BIRC countries has play a more and more important role in the global economic, but they are at a distance from the developed countries.