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BRIC Emerging Markets - Essay Example

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BRIC Emerging Markets

In line with this, Lopez-Claros (2005) explains that the competitiveness of each nation to compete in the world market is not limited to their ability to maintan exchange rate competitiveness but also the importance of improving their productivitity in order to increase the businesses' return on investment and also improve the aggregate growth among the four countries' economy.
As part of increasing the BRICs competitiveness against other countries around the world, enhancing one's knowledge on economic development could empower each nation to positively act upon the challenges associated with the challenges related to FDI and trade, political stability and sustainability in each nation (Lopez-Claros, 2005; Henisz, 2000; Olson, 1996; Bhagwati, 1989).
Globalization strongly promotes the practice of free trading around the world. In line with this, balancing the volume of local and foreign trade activities is crucial in terms of maintaining a strong economic growth because allowing the import level of foreign goods to exceed the export level within a country is harmful in terms of the country's economic development (Bhagwati, 1989).
Given that a country becomes very dependent on the importation of goods and services, it is likely that the country would experience slow growth and unemployment problem because of the significant decline in the demand for locally manufactured and provided goods and services (Bhagwati, 1989). A great imbalance between the import and export is enough to cause the sudden decrease in the countries' gross domestic product (GDP). (Campos & Coricelli, 2002; Boix, 1999)
Political Stability
The socio-political stability of Brazil, Russia, India, and China could significantly affect the economic development of each nation (Henisz, 2000) In line with this, several past research studies revealed that the governemnt's ability not to interfere with the private property rights of the businessmen is necessary in terms of maintaining the long-term capital investments necessary to enable the BRICs to experience a rapid economic growth (Henisz, 2000; Olson, 1996).
Equally important for the continuous economic growth of BRICs, the government in each nation should develop and implement effective stabilization programs related to taxation, business regulation, and other relevant economic policies that could promote the increase in private investment (Henisz, 2000) aside from intervening on global trade activities like imposing import restrictions and providing export subsidies among others (Bhagwati, 1989). Whenever a new foreign business would enter the country, the government shuld impose a strict entry regulation in order to prevent the incidence of fly-by-night business operators (Djankov et al., 2002).
With regards to tax policy, collected tax revenue should be invested in economic activities including the development of infrastructure, improvement in educational services, and investment on new technology in order to create new job opportunity and demand for the local products and services (Lopez-Claros, 2005). All these can be easily achieve ...Show more

Summary

BRIC is the acronym used when examining the economic activities of the Brazil, Russia, India, and China. Aside from having 40% of the world's population, the combination of these four countries accounts for more than one-fourth of the world's land area (Raiffeisen Centrobank, 2009).
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