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The Basics of BRIC Countries

BRIC countries have been singled out as "emerging" markets with some of the world's fastest-growing economies, and young, burgeoning populations that are playing ever-sizable roles in international business, finance and global politics. International business owners can make the most of the opportunity to conduct business in these emerging markets by using a trusted online foreign exchange service to complete foreign transactions and trades while taking advantage of preferred exchange rates.

It's critical for even the smallest international businesses to familiarize themselves with these economies.

A History of Rapid Growth

The combined gross domestic product (GDP) of these four countries - Brazil, Russia, India and China - will grow to more than $15 trillion in 2013, more than 20 percent of the total GDP, according to data from the International Monetary Fund.[1] That's up from $3.2 trillion a decade earlier when the BRIC was only 8.5 percent of global GDP.

“I don’t think people who are looking at investments in the BRIC or building businesses in the BRIC are looking at this as a short-term opportunity.”

— Niraj Dawar, professor of marketing at the Richard Ivey School of Business

The BRIC countries "offer the fastest growing markets in the world, the fastest growing middle classes in the world, the fastest growing consumption expenditures in the world. This combination of very fast-growing indicators is an opportunity that most small businesses cannot ignore," says Niraj Dawar, professor of marketing at the Richard Ivey School of Business, which has campuses in in London, Ontario; Toronto, Ontario; and Hong Kong.

The acronym BRIC - which has since been expanded to sometimes include South Africa with the term BRICS - originated in 2001 when investment bank Goldman Sachs published a research report predicting that the four economies would become a larger part of the global economy than originally anticipated.[2] More recently, Goldman Sachs has said that the BRIC economies will experience tremendous economic growth and exceed the size of the U.S. economy before 2015, and exceed the combined size of the world's seven largest economies by 2035.[3]

A Slowdown on the Horizon?

With China's economy equivalent to the other three BRIC economies combined, how China does is crucial to the overall economic growth of the BRIC.[4] During 2012, China's economic growth slowed to a moderate rate of 8 percent, a first in more than a decade.[5]

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But that hasn't really dampened enthusiasm, Dawar says. "I don't think people who are looking at investments in the BRIC or building businesses in the BRIC are looking at this as a short-term opportunity," Dawar says. Despite the recent slowdown, prospects continue to be very good. "This is not a month-to-month story, this is decade-to-decade."

Still, when deciding whether to expand into the BRIC countries, it's important for businesses to choose emerging markets that will be a good fit for their products or services, says Thomas Moore, deputy assistant secretary at the U.S. and Foreign Commercial Services' Office of International Operations.

"What we don't want to see is everyone running to China, Brazil, India, Russia," Moore says. "If that's the best place to go, we have programs to help," he says, but there's "a whole world full of opportunity" and "parts of the world that aren't getting as much attention."

More Countries Join the Ranks

There is renewed attention now on an additional class of second-tier emerging markets, or "BRIC-like" countries, that have fast-growing economies and populations.

There are even new sets of acronyms popping up to define these next best places for foreign investment or international business. Again, Goldman Sachs has been at the forefront of tagging these, from the so-called MIST countries - which include Mexico, Indonesia, South Korea and Turkey - and the larger "Next 11" or "N-11," which include Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey and Vietnam.

By partnering with a trusted online FX service, a small international business can extend its reach into BRIC and BRIC-like countries by gaining access to more than 135 different currencies. Plus, using a trusted online FX service can help minimize costs and risks associated with currency fluctuation.

Regardless of which BRIC or BRIC-like countries a business is venturing into, the key is to understand the history and potential future of that region. With careful research and planning, it's possible to find new opportunities that can't be captured at home.

[1] World Economic Outlook database, October 2012 Edition, International Monetary Fund

[2] Building Better Global Economic BRICs, Nov. 30, 2001, Goldman Sachs

[3] The Power of the BRICs and the N11, Dec. 7, 2012, Goldman Sachs

[4] The Power of the BRICs and the N11, Dec. 7, 2012, Goldman Sachs

[5] "The Brics have taken an unhappy turn," Oct. 8, 2012, Financial Times

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