BRICs | IndusLatin

Promoting India Latin America Collaboration

Backing BRICS: Market meltdown exposes structural strengths

July 23rd, 2008 Posted in BRICs, Brazil, India

BRIC Countries (Brazil, Russia, India and China).

“We’re talking about the whole BRIC story, the $27trillion that’s going to be spent on infrastructure in the emerging world over the next 10 years, largely funded by internally generated revenues — that’s a fact,” Sosa says. “It’s not going to stop because we’re having a bit of a housing slump in the US and some other countries: the BRIC countries don’t export houses.”

The major parts of the BRIC story are absolutely intact: the massive growth in the middle class, particularly in India and China, which have very young populations, and those populations are moving into urban areas and earning more money. We think that underlying story is unstoppable, from every perspective, and that’s going to continue. If anything it’s going to accelerate: if you think that oil prices and fertiliser prices are going up, that simply provides further impetus to move into an urban area — to quit farming jobs.

“So this crisis is ultimately not going to affect India and China, it is a short-term blip. Now, if we talk about oil going to $US200-250 a barrel and staying there, that is a whole different story. A spike in oil to $150-200 a barrel in the near future is certainly not out of the question, but those kinds of prices build in their own fall, because global economic growth contracts.”

The question that investors have to ask themselves, says Sosa, is whether they can see the benefit in investing in the BRIC countries, which have young populations, and have tremendous internal markets, and which are growing at three to four times the rate of most G7 countries

Popularity: 4% [?]

BRIC, India and China

BRICs nations shift in growth pattern

July 13th, 2008 Posted in BRICs, Commodities, Energy

2 Comments »

Map of Brazil issued by the Portuguese explore...

Image via Wikipedia

The Economic Times
The Asian tigers have lost their allure. And while growth in both China and India is still expected to be among the highest in the world, the sharp decline in their stock markets — China has fallen a whopping 41% since December 2007 with India a close second at 38% — is a measure of the seachange. Once the darlings of investors worldwide, they have now been forsaken for more attractive alternatives.

In contrast, Brazil and Russia have come from almost nowhere to become the new poster boys. True, their growth rates of 5.8% and 8.5%, respectively, for the first quarter of 2008 may still trail Chindia’s (as China and India are often referred to collectively). But even as stock markets around the world have collapsed, both Russia and Brazil are up in dollar terms — Russia by 1% and Brazil by almost 15% during the period December 2007 to June 25, 2008.

What has changed? The world’s unsatiable appetite for commodities and the vantage position of these two economies as major commodity producers. While Russia’s energy resources — both oil and gas — put it in an enviable position in a world where energy has become the lynchpin on which everything else revolves, Brazil with its unique dominance in both food as well as energy, is even better-placed.

Popularity: 6% [?]

Brazil, Commodities

BRIC growth prospects

July 6th, 2008 Posted in BRICs

1 Comment »

Image via Wikipedia

via DB Research
there are also structural factors at work that bode well for the medium-term growth prospects of the BRICs. These factors can be captured in a simple growth accounting framework. Economic growth can be broken down into several components, namely changes in labour and capital inputs, and total factor productivity. (Total factor productivity captures technological progress and/ or efficiency gains and is the residual that is not explained by changes in labour and capital inputs.) Growth accounting provides an analytical framework to assess medium-term economic growth dynamics.

Labour supply dynamics will remain favourable in Brazil and India thanks to demographic trends and/or low urbanisation ratios. In Brazil and India the working age population will continue to expand until the middle of the current century, while in China it will decline after 2015 and in Russia it is at risk of collapsing. From a purely demographic point of view, India faces the most promising prospects, combining solid population growth and a low degree of urbanisation. While this may pose challenges of its own (in terms of urban development and infrastructure), it will be supportive of growth dynamics.
Recent capital accumulation trends favour China and India. Assuming that investment ratios do not change dramatically over the next few years, China and India will face much brighter prospects than Brazil or Russia. Currently domestic investment ratios amount to around 40% and 30% of GDP in China and India, respectively, versus an investment ratio of 20% of GDP (or less) in Brazil and Russia (see chart).

The projected changes in the factors underpinning an economy’s growth potential also suggest that the China and India economies will continue to grow much faster than Brazil and Russia over the medium term.

Popularity: 10% [?]

BRIC, economic growth

The American Multinational, Unbowed

June 28th, 2008 Posted in BRICs, Brazil, Uncategorized, United States

No Comments

Image via Wikipedia

Areas of improvement for BRIC MNCs on the HR front.

NYTimes.com
Traditional multinationals have an advantage over many challengers because they can offer career routes to the most talented Indians and Chinese that their own countries’ companies do not yet have. The incumbents, as noted by the authors, have extensive programs in place to assess employee performance, to develop global plans for job rotations and, in general, to build their long-term careers. Not all the challengers know how to do that, and relatively few of them have established truly global footprints.

Nor are big Western companies always captives of their relatively high cost structures back home. They are capable of stripping down and finding profitable niches at the bottom of the economic pyramid.

The authors note that Whirlpool first introduced a washing machine in Brazil in 1998 that cost $300, at a time when the average Brazilian earned about $200 a month. The product was obviously too expensive and did not sell.

Then Whirlpool decided to create a new lower-cost model and developed the machine in Brazil, where the company has skilled engineers and industrial designers as well as sophisticated factories. The Ideale washer was introduced in 2003 at a cost of $150, creating a new market for low-capacity, low-price, semiautomatic washing machines in Brazil.

Popularity: 5% [?]