Comments on: The BRIC laggard http://blogs.reuters.com/david-rohde/2012/09/28/the-bric-laggard/ Fri, 31 Jul 2015 03:37:49 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: eleno http://blogs.reuters.com/david-rohde/2012/09/28/the-bric-laggard/#comment-2029 Mon, 01 Oct 2012 14:04:57 +0000 http://blogs.reuters.com/david-rohde/?p=1217#comment-2029 Brazil and India (I can’t speak for China and Russia) are two countries where I have spent much time on business.

Problem is they have believed the BRIC mythology. In other words, business performance there is mediocre, but everyone thinks it is great. Except for bright spots in each country (software in India and resources in Brazil) business there is terrible.

Everything is slow and inefficient, except for some of the very hardworking middle class everyone is always taking off for one or other holiday, granny’s death, aunt’s party of preparation for marriage (to be fair the marriage thing is more India).

It is impossible to get business permits and finance and after several years of trying to expand businesses in these two regions we gave up concluding that at least the B_I_ in BRIC are simply products of the fevered imagination of the investment community desperate to maintain business after the US debacle.

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By: Prabuddha http://blogs.reuters.com/david-rohde/2012/09/28/the-bric-laggard/#comment-2028 Mon, 01 Oct 2012 11:36:25 +0000 http://blogs.reuters.com/david-rohde/?p=1217#comment-2028 Both India and Brazil need the same therapy of reforms in education, taxes, governance, investment in infrastructure and eradication of corruption. It would be wrong to assume that development will automatically take care of these. There has to be concerted and sincere action to address these issues.

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By: LysanderTucker http://blogs.reuters.com/david-rohde/2012/09/28/the-bric-laggard/#comment-2021 Sat, 29 Sep 2012 14:23:44 +0000 http://blogs.reuters.com/david-rohde/?p=1217#comment-2021 So the corporations came in and “invested”, creating massive growth for a time while the resources were being mined. Now the growth is over and stagnation has set in due to not being able to compete globally. Get ready for the rich to get richer and the middle class to disappear into poverty when corporations get “streamlined” for profits. In a global economy where corporations have no loyalty to anything but the $ and can easily move productions anywhere else, it is natural that the 1st world and 3rd world will have a mass leveling and meet together in the middle. I would view .6% growth as sustainable and a good thing.

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By: llocat333 http://blogs.reuters.com/david-rohde/2012/09/28/the-bric-laggard/#comment-2020 Sat, 29 Sep 2012 06:16:45 +0000 http://blogs.reuters.com/david-rohde/?p=1217#comment-2020 GDP growth for the sake of ‘growth’ is not the ‘be-all/end-all of prosperity. Brazil has accomplished much with it last decade of growth, and that growth has ‘mostly’ been used widely across the society to improve the live of most Brasilieros, particularly those ‘below the poverty line.

That is the most remarkable achievement of Brazil’s last decade, which is not particularly shared by its BRIC colleagues. Growth, as in the US which is not broad-based, leave gaping disparities in fairness, which again would lead to social unrest; something that would wipe out any gains due to social upheaval.

In the calculations of many economists and social academics, it is China’s extraordinary growth that may incur a ‘hard landing’ when it expires. So a period of stability(~2%) allows the economy to stabilize and ‘mature’ on the growth cycles without wild fluctuations.

So, now is the time to ‘spend’ on the seed corn and prepare the country for the next round, instead of trying to ‘push’ GDP just because it looks better on the balance sheet. Infrastructure spending creating ‘internal opportunity’ may not be the sexiest economic measurement, but the ‘next phase’ of growth will depend on the success of infrastructure developments.

If Brazil is able to ‘capitalize’ on its social and infrastructure spending, which will be evident by the time of the Rio Olympics, and the ‘world economy’ stabilizes, then Brazil will be well situated to catch the next ‘growth phase’. So, a little anemic growth consistent with ‘world averages’ right now, is manageable, and ‘necessary’ to smooth the transition, and concentrate on efficiency(education) and productivity(infrastructure).

It is unnecessary really to point out that this is in stark contrast to the US over the last decade, when growth was ‘only’ characterized by GDP, and the bottom half of the society actually lost ground, and now finds very few avenues to ‘individual growth’. This has not fully played out yet for the US, but the impetus for unrest(OWS), labor dissatisfaction, and other social problems is very real. I.e., growth that is lop-sided, uneven, and perceived as unfair, does more to drag the economy down with bloated social spending …the European Disaster(yet to be extinguished).

So, no tears for Brazil. Competent management will always overcome and outlast speedy/uncontrolled growth. I always give the example of SiemensAG(Germany); one of the bulwarks of the German economy which went many many years at constant 2% growth, but the corporate management and infrastructure spending gave strength and ‘endurance’ to the “bottom line”, and ‘that’ does not appear on the ledger, but is intrinsic to long-term prosperity.

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