The BRICS Nations in International Business - Research Paper Example

The BRICS Nations in International Business Abstract The emergence and importance of the BRICS in international business is a reality that for years had been underestimated. In the past decades, countries forming the BRICS umbrella, that is, Brazil, Russia, India, China, and South Africa, have long been perceived only as recipients of international aid. Their position in global trade as development players or partners was overlooked, as most countries eyed the Americas, especially North America, and Europe. However, this position has since changed. The significance of the economies of these countries in the international business platform today can no longer be downplayed (Jain, 2006). This paper will therefore, discuss the economies of these countries in detail. It will comprehensively discuss the factors that have propelled their growth to international recognition while describing the forces, both internal and external, that influenced organizational success in these countries. The emergence and importance of the BRICS in international business is a reality that for years had been underestimated. The BRICS nations have important roles to play in international business as players and partners. It is, however, paramount that we first understand the term BRICS, before we can give a detailed description of each country’s economy. The word BRICS is an acronym for the world’s largest and strongest emerging economies. These countries are Brazil, Russia, India, China, and South Africa (Strenger, 2012). They are now considered as significant as other global players are and have consequently shifted economic status, from developing to emerging economies. This is because of the rapid and exponential growth that is witnessed in these economies, with statistics indicating that their contribution to the growth of the world’s Gross Domestic Product (GDP) being very significant. In the past decade, the BRICS contributed to more than half of the world’s growth in GDP (Strenger, 2012). The population of these economies has also been singled out as a unique feature. These economies alone constitute half, or a little under half, of the world’s population. Analysts have however pointed to the fact that these economies rarely have anything in common. Their demographic compositions, governance styles and type of economies, are all different. They may have one or two similarities in their economies, but have very little in common (Mary, 2014). This is the beauty that has been associated with these economies, that despite having very little to share, they each have independently affected global business in ways that are not only noticeable, but also strongly profound and significant. These impacts to international business include increased trade levels, increased funding of development or development financing, and donor funding, earlier only a preserve of the western countries. Having looked at the economies forming the BRICS in general, let us now examine them individually. The economy of Brazil is not only the largest in the South American continent, but also the most advanced, making it the economic powerhouse of the continent. It is also ranked among the top ten economies in the world in terms of the size of the economies. Notable advancements in the economy are in the sectors of industry, manufacturing, agriculture, and mining. The country is also playing a key role in foreign aid to other countries mostly in health, poverty eradication and education (Jain, 2006). In Brazil’s economy, the service sector, of the three sectors where significant growth has been witnessed, is the major contributor. The banking, insurance, and other financial service providers are almost synonymous with the words service sector. This significant growth in this sector can largely be attributed to the stability of the financial and macroeconomic structures that have been put in place (Katherine, 2010). As such, Brazil’s economy is enjoying both foreign and domestic reduced debt, low inflation levels and healthy reserves in foreign denominated currencies. The agricultural sector is also a key and integral part of the Brazilian economy. The country is the biggest producer, and exporter of coffee, especially the Arabica variety. Other agricultural products that are of significance to the economy are sugarcane, rice, and cocoa. The industrial sector deals mostly in steel, chemicals, and production of vehicles. The mining sector has largely contributed to the country’s economy because of the massive mineral deposits in the country such as copper, iron, gold, and uranium. All these sectors discussed above are largely dependent on one factor, labor. The labor force in Brazil stood at over 95 million persons (Katherine, 2010). This is as per estimates from the year 2009. So what are the reasons why Brazil has, and continues to be increasing importance to international business? One of the main reasons is its commitment to both its fiscal and macroeconomic policies, which has in turn ensured macroeconomic stability thus a friendly atmosphere for doing business. This very powerful internal force has greatly directed its organizational achievement. This position has also attracted foreign investments into the country further boosting the economy. The result is evidenced by increasing foreign reserve levels. The other major reason is its positioning in foreign aid donations and aggressive engagements with development partners at regional and international levels, both of which it is using in lobbying for a permanent sitting at the security council of the United Nations (Katherine, 2010). The rise in Foreign Direct Investments (FDIs) due to macroeconomic ability is an external force that has boosted its organizational success as a strong and emerging economy. The second country under the BRICS block is Russia. It is also referred to as the Russian Federation, and is uniquely the largest country in the whole world with a population of over 140 million persons. The nature of the Russian economy has transformed from a socialist economy, which was controlled by the state, to that which is informed by the market, that is, market based. This transformation was because of the early 1990s economic changes that saw the ownership of most state controlled industries change hands to the private sector (Mark, 2007). The economy of Russia is mostly dependent on manufacturing and the export of commodities, mainly energy products such as natural gas and oil. Other export products include food, steel, and aluminum as well. Another key aspect in the rapid growth of Russia’s economy is the export of military equipment to other countries of the world. The reason Russia has remained an emerging and important powerhouse in international business can broadly be categorized into two. These are its heavy investments in industrialization and its place as a permanent member of the United Nations Security Council (UNSC). Russia, of all the countries, which once formed the Soviet Union, is the most developed in industrialization (Jim, 2011). Its exports, especially Natural gas and oil, to other countries, form a significant importance to global trade. Recent disruptions of the supply of natural gas last winter to neighboring Ukraine due to political standoffs led to deaths, as people were dependent on gas for warming houses. Its positioning as a permanent member of the UNSC means that its support is sought in policy and decision making. The organizational success of Russia’s economy has been driven by internal forces such as superiority in industrialization, its rich deposits in minerals such as petroleum and Natural gas. Its permanent membership in the UNSC can be viewed as an external force that has buoyed its growth, as decision making in areas affecting world policy and economy is not a sole affair (Mark, 2007). The People’s Republic of China, also a member of the BRIC, is the second largest economy in the world after the United States and is the world’s most populous country. China’s economy was mostly state controlled since the 1940s, a centrally planned economy, and the government was solely responsible in planning for the country’s economy. However, after 1978, elements of capitalism have gradually been introduced into the economy. It is since then that China’s economy has experienced exponential growth, with statistics indicating a double-digit growth, specifically, 10 percent growth in GDP over the last three decades (Jim, 2011). The Chinese economy is mostly reliant on the manufacturing and the industrial sectors, which account for more than half of the country’s GDP. However, the services sector has also sharply risen over the years with a contribution to GDP growth of 44.5 percent as at the year 2012. The agricultural sector has also been a player, albeit not as significant as other sectors. However, the 1978 economic reforms propelled the sector to growth, as China is now the largest producer of rice, cotton, wheat, and barley. The rapid and impressive growth in China can largely be attributed to the commitment of the state in economic reforms, labor force, and technological innovations. China is a populous Nation, and as such enjoys low cost labor, which in turn serves to lower the cost of production. The agriculture sector alone employs over 300 million workers. Government policy has also immensely contributed to growth, with the government increasingly ironing out obstacles to the realization of growth, privatization of state owned enterprises and supports to enterprises it still holds controlling stake over (Mary, 2014). The internal forces that have thus influenced organizational success include cheap labor owing to massive population, and government policy toward economic growth. The external factors are increased global demand for its manufactured goods, increased demand from other world economies for bilateral trade relations, and its positioning as a permanent member of the UNSC. India, like China, has a very massive population, and is actually the second most populous country in the world after China. As such, its economy mainly relies on the abundance of cheap labor, or low cost. Its economy is also dominated by the manufacturing sector, with production mostly concentrated on goods that are labor intensive. The contribution of the industrial, health and agricultural sectors is also a significant addition to the economy. India is one of the few global countries with nuclear capabilities thanks to availability of rich deposits of uranium (Jim, 2011). The other major factor of the Indian economy is services outsourcing. Low cost and available labor and robust industries are key internal drivers towards India’s organizational success, with strong demand from bilateral partners for its services, industrial and agricultural products being the external forces behind its growth success. The last economy among the BRICS is South Africa. The inclusion of this economy into the block came in 2010 due to the fact that no African country was represented (Taylor, 2014). The economy of South Africa is largely dependent on the mining industry as the country enjoys massive gold, uranium and diamond deposits. The other important sectors are services, wildlife, agriculture, and manufacturing. The industrial sector is not as complex as in the other BRICS countries. However, the economy is still a powerhouse in Africa and the globe, with a robust mining, wildlife, and services industries being the internal drivers toward its economic success whereas demand for its mining products, tourist visits to its magnificent national parks, and an increasing demand for its financial services sector being the external forces (Taylor, 2014). In Saint Leo University, one of the six core values is that of responsible stewardship, which postulates that the creator of the universe blessed humanity with resources and as such, humankind must be resourceful, keenly applying and optimizing the usage of these resources towards the good of the community. This value mirrors the very concept of international business, that is, the optimization of available resources (Mary, 2014). The emergence of the BRICS has everything to do with this thought. While China, India, and Russia have greatly optimized the abundant and low cost labor towards economic strength, South Africa and Brazil have greatly tapped into their rich mineral resources and agricultural potential. Russia has also been very resourceful in the optimal exploitation of its naturally occurring resources of oil and gas deposits. In conclusion, the emergence and importance of the BRICS in international business is a reality that for years had been underestimated. However, the BRICS nations have important roles to play in international business as players and partners. . The word BRICS is an acronym for the world’s largest and strongest emerging economies. These countries include Brazil, Russia, India, China, and South Africa. They are currently considered as significant as other global players are and have consequently shifted economic status, from developing to emerging economies because of the rapid and exponential growth that is witnessed in these economies, with statistics indicating that their contribution to the growth of the world’s Gross Domestic Product (GDP) being very significant. In Saint Leo University, one of the six core values is responsible stewardship that postulates that the creator of the universe blessed humanity with resources and as such, humankind must be resourceful, keenly applying and optimizing the usage of these resources towards the good of the community. It reflects the concept of international business, that is, the optimization of available resources. People must optimize the use of available resource by avoiding wastage, overutilization and pollution of the environment. References Jain, C. (2006). Emerging Economies and the Transformation of International Business: Brazil, Russia, India and China (BRICs). New York: Edward Elgar Publishing. Jim, N. (2011). The Growth Map: Economic Opportunity in the BRICs and Beyond. New York: Penguin Group US. Jones, S. (2012). BRICs and Beyond: Lessons on Emerging Markets. New York. John Wiley & Sons. Katherine, B. (2010). Key Players in Global Health: How Brazil, Russia, India, China, and South Africa are influencing the Game. Washington: CSIS. Mark, H. (2007). Building a Future with BRICs: The Next Decade for off shoring. London: Springer Science & Business Media. Mary, H. (2014). The Rise of the BRICS in the Global Political Economy: Changing Paradigms? New York: Edward Elgar Publishing. Strenger, N. (2012). Understanding BRICs: A Closer Look at the Predicted Development of Brazil, Russia, India and China as a Group. Munich: GRIN Verlag. Taylor, I. (2014). Africa Rising? BRICS - Diversifying Dependency. Woodbridge: Boydell & Brewer Ltd. Read More