Case 2 Douglas Silber

Case 2 Douglas Silber - Between a BRIC and a Hard Place 1...

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Between a BRIC and a Hard Place 1 Between a BRIC and a Hard Place MBA575 Global Business Management Douglas Silber June 5, 2011 Stephen Tvorik Saint Leo University Abstract The countries of BRIC (Brazil, Russia, India, and China) have become increasingly important in international business. To continue to grow as an economic force, each of these countries need to deal with issues separately and together. A major issue which all of the BRIC countries need to address, as it could prove to be a significant force in destroying all they have worked for, is poverty. A profile of each of the BRIC nations will be discussed as well as the issue of poverty. Factors relevant to the problem will be discussed and alternatives to solve the relevant factors will be addressed.
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2 Between a BRIC and a Hard Place BRIC Profile According to Zunita (2010), “BRIC was conceived in a paper by Goldman Sachs in 2001 paper entitled ‘The World Needs Better Economic BRICs’. Over the years the BRIC acronym has become a symbol of the power and growth potential of the world’s largest rapid growth and emerging markets. Increasingly BRIC is quoted to demonstrate the shift of economic power towards emerging markets and away from developed markets such as the United States, Germany, Britain and even Japan (Zunita, 2010, p. 4). Over recent years, the countries of BRIC; Brazil, Russia, India, and China have become increasingly important in the world’s international business market. While most countries’ economies are still trying to come back from the worst recession ever to hit the world economy, Brazil, after showing a slight negative growth in 2009, came back
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3 Between a BRIC and a Hard Place strong in 2010 showing an overall economic growth of 7.5 percent. According to Zirulnick (2011), “It is the eighth-largest economy in the world, and economists project it will reach the No. 5 spot in the next few years. Years of growth have brought a majority of Brazilians into the middle class” (Zirulnick, 2011, para 2). Driving Brazil’s Gross Domestic Product (GDP) is its large industrial sector including machinery, auto manufacturing, and textiles, which make up about 33 percent of its GDP, and the country’s agriculture which makes up about 25 percent of its GDP and accounts for 36 percent of the country’s exports. Russia, while suffering in 2009 with a negative growth of 7.9 percent has been able to turn itself around and create a positive growth in 2010 of 3.8 percent. Zirulnick (2011) writes, “Russia’s transition in the 1990s from a centrally planned economy to a free market was not smooth. Inadequate fiscal reforms and borrowing led to a financial crisis in 1998 that wiped out much of the foreign investment it gained. The situation was exacerbated by dropping prices for its major exports (oil and minerals) and spillover from the Asian financial crisis” (Zirulnick, 2011, para 1). The Russian economy is driven by minerals, metals, timber, furs, oil, and natural gas exports, and is the tenth largest
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Case 2 Douglas Silber - Between a BRIC and a Hard Place 1...

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