Answer/Solution case: the BRICs: vanguard of the revolution

Evan Octviamen 1701306083 case: the BRICs: vanguard of the revolution 1. Estimate the likely market evolution of the BRICs over the net !eca!e" #hat economic in!icators mi$ht com%anies monitor to &est $ui!e their investment an! actions" 'ns(er) *hey are in the s%ee!y $ro(th of their en! their  en! user markets. +E%erience in!icates that consumer !eman! takes off (hen ,ross -ational Income %er ca%ita reaches levels  &et(een 3/000 an! 10/000 %er year. rom 2000 to 2008/ the BRIC countries com&ine! share of total (orl! economic out%ut rose from 16 to 22 %ercent. *o$ether/ the BRIC countries accounte! for 30 %ercent of the increase in $lo&al out%ut !urin$ the  %erio!. 's BRIC4 o&serve! as emer$in$ market/ many investors reco$ni5e the  %otentially attractive return characteristics an! !iversification &enefits of this asset class. o(ever/ most  %ension %lans an! other institutions currently allocate less than  of their overall  %ortfolio to em emer er$i $in$ n$ ma marke rkett e9u e9uit ities ies.. In Ru Russ ssia ia th there ere is &y no( mo mome mento ntous us verification verificati on of the $ro(th of consumeri consumerism sm throu$hout the history !eca!e. !eca!e. :arallel tren!s are o&servin$ in China an! In!ia/ (here mi!!le classes $ro(th is very 9uick. It is antici%at antici%ate! e! that (ithin a !eca!e/ each of BRIC countrie countriess (ill !emonstrate hi$her %rofits/ am%lifie! !eman! for ca%ital ca%ital// an! stron$er state currencies. 's a result/ overseas firms (ill !esire to o&serve foremost financial %ointers/ as :urchasin$ :o(er :arity/ ,ross -ational Income an! uman ;evelo%ment In!e/ in a!!ition to !evelo%ments in the cultural/ %olitical/ an! le$al environments of those countries. 2. I!enti I!entify fy th thee th three ree im im%l %lica icatio tions ns of th thee em emer er$e $ence nce of the BR BRIC ICss for ca caree reers rs an! com%anies in your country. 'ns(er) *he BRIC thesis %osits that China an! In!ia (ill &ecome the (orl!s !ominant su%%liers of manufact manufacture! ure! $oo!s an! services/ res%ectively/ res%ectively/ (hile Bra5il an! Russia (ill &ecome similarly !ominant as su%%liers of ra( materials. Its im%ortant to note that the ,ol!man 4achs thesis isnt that these countries are a %olitical alliance +like the Euro%ean com%anies. 4tu!ents from Ban$la!e Ban$la!esh sh may &e encoura$e! &ecause their states variety an! com%ete for the investment ca%ital an! those &usiness actions that lea! to im%ortant monetary $ro(th an! the increasi increasin$ n$ international com%etitiveness of our countries> firms. -evertheless/ there is sufficient sco%e of com%arative a!vanta$e in our country. country. 3. ;o yo you u thi think nk re rece cency ncy &ia &iass ha hass le le! ! ove overes restim timati atin$ n$ the %o %oten tentia tiall of th thee BR BRIC IC4" 4" o((oul! you as a mana$er for a com%any assessin$ these markets/ try to control

this &ias" 'ns(er) #ith the economic %erformance an! %otential of the BRICs/ *here may &e some uncertainty. In %rinci%le/ o&serve note the en!emic %ro&lem of recency &ias/ (hich is the !u&ious e%ectationthat the current tren! (ill continue into the future. Re%eate!ly/ com%anies/ eecutives/ investors/ an! officials etra%olatin$ the %resent into the future have ma!e mistakes. here are a num&er of 9ualitative issues that investors must consi!er (hen contem%latin$ an allocation to emer$in$ market e9uities. One of the most !ecisive factors is li9ui!ity/ as %lan s%onsors may shy a(ay from markets (ith lo(er volume an! smaller market ca%s. ?any of these issues are incor%orate! in the classifications of ?4CI Emer$in$ ?arkets In!e/ (hich consi!er economic !evelo%ment/ si5e an! li9ui!ity re9uirements/ an! market accessi&ility. :er ?4CI/ market accessi&ility inte$rates 9ualitative measures reflectin$ the investment e%erience of international investors in a $iven market/ focusin$ on li&erali5ation/ level %layin$ fiel!/ com%etitive lan!sca%e/ information flo(/ an! sta&ility. In a!!ition/ emer$in$ markets may involve a multitu!e of other  %olitical/ social/ le$al an! re$ulatory risks. @. o( mi$ht mana$ers inter%ret the %otential for their %ro!uct in a market that is/ in a&solute economic terms/ lar$e &ut/ on a %er ca%ita &asis/ characteri5e! &y a maAority of %oor to very %oor consumers" 'ns(er) o(ever/ (e &elieve the &est active mana$ers may &e a&le to i!entify o%%ortunities in smaller markets/ an! &uil! %ortfolios that are more !iversifie! than the in!e. 's such/ mana$er selection is critical $iven the volatility in the asset class an! (i!e !is%ersion of outcomes. In all/ (e &elieve institutional investors shoul! consi!er esta&lishin$ or  increasin$ allocations to emer$in$ market e9uities. ?ana$ers mi$ht inter%ret the %otential for their %ro!uct in a market. If there is innovation in the interaction (ith other firms an! (ith kno(le!$e infrastructure inclu!in$ universities an! technolo$ical institutes .so that it can clarify the s%eciali5ation/ an! com%etitiveness .,ro(th %erformance can also $o a lon$ (ay. . In the event that one BRIC country/ if not all/ fails to meet its %roAecte! %erformance/ (hat (oul! &e some of the im%lications for the economic environment" 'ns(er) ?acro sta&ility/ institutions/ o%enness/ e!ucation is the in!icator of economic $ro(th. If one of the BRIC country fails to meet the %roAecte! %erformance/ the stan!ar! of  BRIC countries  %erformance (ill &e ham%er to some etent. 's every country have microeconomic an! macroeconomic environment. *he elements of economic environment as $ross national income +,-I/ %er ca%ita income/ %urchasin$ %o(er   %arity/ human !evelo%ment in!e (ill &e ham%ere!. 4o there can &e inflation/ unem%loyment/ !e&t/ ine9uality in income !istri&ution/ %overty an! m&alance in  %ayments. '$ain maintenance of stron$ %olitical institutions that en!orse trans%arency/ fairness/ an! the rule of la( (ill not also %ossi&le. On the other han! o%enness to tra!e/ ca%ital flo(s/ ;I can>t &e increase!. If these economies can fulfill their %otential for $ro(th/ they coul! &ecome a !ominant force in $eneratin$ s%en!in$ $ro(th.

6. Com%are an! contrast the merits of ,-I %er ca%ita versus the i!ea of %urchasin$  %o(er  %arity/ human !evelo%ment/ an! $reen economics as an in!icator of economic  %otential in Bra5il/ Russia/ China an! In!ia. 'ns(er) *he ,-I consists of the %ersonal consum%tion e%en!itures/ the $ross %rivate investment/ the $overnment consum%tion e%en!itures/ the net income from assets a&roa! +net income recei%ts/ an! the $ross e%orts of $oo!s an! services/ after  !e!uctin$ t(o com%onents) the $ross im%orts of $oo!s an! services/ an! the in!irect &usiness taes. *he ,-I is similar to the $ross national  %ro!uct +,-:/ ece%t that in measurin$ the ,-: one !oes not !e!uct the in!irect  &usiness taes. In economics/ %urchasin$ %o(er %arity +::: asks ho( much money (oul! &e nee!e! to %urchase the same $oo!s an! services in t(o countries/ an! uses that to calculate an im%licit forei$n echan$e rate. s stan!ar! of livin$ that incor%orates &oth economic an! social varia&les.