When Giants Slow Down
Summary:
The article begins by acknowledging the remarkable economic growth shown by the
emerging markets in the last two decades, with BRIC (Brazil, Russia, India and China) as
its principle flag bearer. The tremendous growth rate shown by these economies is
attributed to various factors such as economic liberalization, availability of cheap
working-age population, accumulation of huge foreign exchange reserves and holding
exchange rates below the levels they might otherwise attain thereby keeping exports
cheap etc. However, the article infers that although the shift of the global economy would
continue to tilt towards emerging markets, its most turbulent phase has peaked and will
soon reach its end. The author however, doesn’t provide exact reasons for this sudden
decline in the growth of the BRIC’s economy.
The article analyses the impact of this gradual decline in growth of the emerging
economies, with BRIC in particular, and how their contribution towards the global GDP
has reduced since 2008. The author argues that the advancements done by these
economies, China in particular, in various fields of science and technology etc have
peaked and there is very less scope for further growth. Although several new countries,
collectively dubbed as the N11, are trying to replicate the BRIC’s success story, the
author cites key factors which can potentially undermine their claim, such as less
population, less gap between N11-country’s per person output and that of the industry
leader (say US) and the very performance of BRIC which cannot be repeated because the
world economy is twice as what it was in 1992.
Group’s View:
The Group is of the view that, it would not be prudent to concur to the fact that the
3. Sreejith Nair
4. Srikant Padhi