New Growth Drivers for Low-Income Countries - The Role of the BRICs

Policy Papers, January 12, 2011

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New Growth Drivers for Low-Income Countries - The Role of the BRICs

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Bibliographic details

• Published: January 12, 2011
• Series: Policy Papers

Key findings

• The emergence of BRICs—Brazil, Russia, India, and China—is reshaping low-income countries’ (LICs) international economic relations.
• Industrial countries remain LICs’ dominant development partners, but LIC-BRIC ties have increased so rapidly over the past decade that BRICs have become new growth drivers for LICs.
• Trade with BRICs is already close to half of the value of combined trade with the European Union and the United States, and larger than with other emerging market economies.
• BRIC FDI and development financing are making a significant impact in some key areas despite their relatively small volumes compared with those from advanced countries.
• Beyond increased flows of goods and capital, BRICs have brought new dynamics in LICs’ economic relations with the rest of the world, complementing as well as competing with OECD partners.
• Potential benefits from the LIC-BRIC ties are enormous, but there are challenges and risks in realizing such benefits.

Themes and analysis

• Trade
  • Rapid expansion of LIC-BRIC trade has changed the composition and partners of LICs’ external trade relationships.
  • The value of trade with BRICs approaches that of combined trade with the European Union and the United States.
• Investment and financing
  • BRIC foreign direct investment (FDI) and development financing, while small relative to advanced-country flows, have significant impacts in specific sectors and projects.
• Complementarity and competition
  • BRIC engagement complements OECD engagement in some areas and competes in others, creating new strategic choices for LIC policymakers.
• Opportunities and risks
  • LICs face substantial upside from deeper ties with BRICs but must manage associated challenges and risks to fully realize benefits.

Subjects covered

• Bilateral trade
• Brazil
• China, People's Republic of
• Cross country analysis
• Development financing
• Economic growth
• Foreign direct investment
• India
• Infrastructure
• Low-income developing countries
• Russian Federation
• Trade relations

Source: New Growth Drivers for Low-Income Countries - The Role of the BRICs (January 12, 2011), International Monetary Fund.

Content in this bundle

• New Growth Drivers for Low-Income Countries: The Role of BRICs; IMF Policy Paper, January 12, 2011
  • New Growth Drivers for Low-Income Countries: The Role of BRICs; IMF Policy Paper, January 12, 2011 (Markdown version)
  • New Growth Drivers for Low-Income Countries: The Role of BRICs; IMF Policy Paper, January 12, 2011 (PDF)