Well now that the theory of ‘decoupling’ has been assigned to the history bin as a fanciful assessment of the global economy, we need to analyze the impact of the global financial crisis on the Rising BRICSAM. It appears to be – not good.
Most analysts have commented on the efforts most BRIC countries have undertaken to defend themselves against financial instability. The BRIC countries have all built large surpluses of foreign reserves. Examine the figures on foreign exchange reserves below.
- China $USD 1.9 trillion (September 2008) +33% change in year 2007
- Russia $USD 485 billion (November 6, 2008)
- India $USD 253 billion (October 2008) +65%
- Brazil $USD 205 billion (August 31, 2008) +106%
These figures, by the way, come from a presentation by Prashant Pathak the managing partner of ReichmannHauer Capital Partners here in Toronto. This week Prashant gave a marvelous presentation to our (Jim de Wilde, Jonathan Hausmann and myself) undergraduate commerce course from the Rotman School of Management entitled, ‘Globalization, Global capital markets and the Structure of the International Political Economy’ (more on that in the future).
The point here is that each of the BRIC countries had taken steps to defend their economies. Bitter lessons of Continue reading