the didactic blogger: BRICs

i was talking to in the crease and he was bashing me for posting "dissertations". well i would like to be the first to extend a big "fuck you" to our new blogging friend in the crease. what kind of a name is that anyway? it's gay porn, that's what it is. it's not even a proper noun: it's a prepositional phrase.

if in the crease has his way, the blog is going to in google's top ten hits for gay porn. we're already in the top ten for:

• rumspringa
  
• pie 3.14 (note, people are mispelling pi "pie". i weep for the future of our nation.)
  
• and tanushree dutta's ass (fratocrates mission statement #24 is now fulfilled.)

today's lecture is on the projected economic grow of Brazil, Russia, India, and China -- collectively referred to as the BRIC nations. The BRIC nations really started to gain attention when dominic wilson and roopa purushothaman of goldman sachs published global economics paper #99 "dreaming with brics: the path to 2050" (pdf).

people have been getting hyped about this paper since october 2003 when it was first published because it predicts a dramatically different economic world. we all know that the developing nations are...well, developing, but i don't think that any of us (in america) really realize the amount, speed, and capacity for growth in the region. their paper tries to create a predictave framework to analyze those topics. the results are summarized in the following bullet points culled from the beginning of their paper:

• If things go right, in less than 40 years, the BRICs economies together could be larger than the G6 in US dollar terms.
  
• By 2025 they could account for over half the size of the G6.
  
• Currently [the BRICs] are worth less than 15% [of the size of the G6].
  
• Of the current G6, only the US and Japan may be among the six largest economies in US dollar terms in 2050.
  
• The list of the world’s ten largest economies may look quite different in 2050.
  The largest economies in the world (by GDP) may no longer be the richest (by
  income per capita), making strategic choices for firms more complex.
  
• The relative importance of the BRICs as an engine of new demand growth and spending power may shift more dramatically and quickly than expected. Higher growth in these economies could offset the impact of greying populations and slower growth in the advanced economies.
  
• Rising incomes may also see these economies move through the ‘sweet spot’ of growth for different kinds of products, as local spending patterns change. This could be an important determinant of demand and pricing patterns for a range of commodities.

while you guys are yawning, i am getting a boner over this. the growth talked about in this paper is explosive at times, and if this pans out, it will be happening in our lifetimes -- with some movements happening in the blink of an eye. can you imagine a world in which america isn't the dominant economic force (in terms of gdp at least)? what will this mean for american hegemony? will it effect our moral imperative to help those less fortunate than us (important to note that americans will still be the richest individuals, i.e., american will still have the highest gdp/capita)?

of course, the model relies upon certain changes in the policies and infrastructures of the BRIC nations. the following are listed as the most important steps towards growing an economy:

A set of core factors -- macroeconomic stability, institutional capacity, openness and education -- can set the stage for growth. Robert Barro’s influential work on the determinants of growth found that growth is enhanced by higher schooling and life expectancy, lower fertility, lower government consumption, better maintenance of the rule of law, lower inflation and improvements in the terms of trade.

the report goes on to say that of all the BRIC nations, india has the most work to do with regards to improving its infrastructure and education system. infact, the numbers suggest that india will have a pretty slow start out of the gate, and will not start to gain steam until the midway point. recent export data (a component of gdp) mirrors the sentiment (perhaps in spirit only, these are long term predictions after all...and i'm not exactly an economist.):

Export growth in 2003 in key developing countries, including Brazil, Russia, China and South Korea, has outdone India's 13.48 per cent rise registered during April-December.

While China tops the list with a growth of 32.8 per cent during January-October 2003 with exports valued at $333.7 billion, Russia's exports rose by 25.3 per cent in 2003 to $133.7 billion.

Similarly, Brazil posted a record $24.8 billion trade surplus last year on account of a 21 per cent surge in exports that helped pull the economy out of a slump.

Compare this with India's figures. According to commerce ministry's statistics, India is fourth among the BRIC (Brazil, Russia, India, China) group, with total exports during April-December valued at $42.4 billion. Exports surged by 42 per cent in December.

of course, there are those that view the report and its april '04 sister report, global economics paper #109 "India: Realizing BRICs Potential" (if any of you have access to this report, can you forward it to me?) with large grains of salt:

Ergo, India’s cost advantage will continue and India will also get a sizeable chunk of the US outsourcing pie. But at best, outsourcing from the US and other countries will account for 1.5 per cent of India’s labour force. This BRIC report has the standard comparison between India and China and highlights not only China’s head start on reforms, but also manufacturing as the locomotive for growth in China vis-a-vis India’s service sector. Whether service sector growth alone can propel India to the 8 per cent plus category is debatable. GS thinks such an alternative to manufacturing-led growth is possible.

However, even if possible, consider the following. “Growth in IT — and services overall — will not result in a massive shift in employment, as has happened in other economies. India’s services sector may provide some incremental job growth, but it will only be a drop in the bucket for the labor force. Services employment is expected to rise to 107 million by 2007 from 102 million currently, creating only 5 million new jobs. Employment in agriculture is expected to remain roughly stable at 190 million. Also, services tend to concentrate in urban centers, potentially exacerbating the differences in income and development between the rural and urban sectors”. Thus, we can’t really separate the reform agenda from the question of reforms for whom?

coincidentally, philadelphia was virtually indistinguishable from a third world nation today: oppressive heat, perpetual construction on 18th around rittenhouse blocking the sidewalk on both sides, that gag-reflex-inducing stench coming from the giant hole in the ground around 17th and arch, and steam dissolving hundreds of years of destitute-produced urine eminating from sidewalk vents and winding its way into the old-growth rainforest that is your crotch.

by the way, i hope you've all been paying attention, because this will be on the quiz.