Troubled Times: Developing Economies Hit a BRICS Wall

http://www.spiegel.de/international/world/economy-slows-in-brics-countries-as-worries-mount-a-951453.html



Until recently, investors viewed China, Brazil and India as a sure thing. Lately, though, their economies have shown signs of weakness and money has begun flowing back to the West. Worries are mounting the BRICS dream is fading.

Troubled Times: Developing Economies Hit a BRICS Wall
By Erich Follath and Martin Hesse
February 07, 2014 – 01:08 PM

It was 12 years ago that Jim O'Neill had his innovative idea. An investment banker with Goldman Sachs, he had become convinced following the Sept. 11, 2001 terror attacks that the United States and Europe were facing economic decline. He believed that developing countries such as China, India, Brazil and Russia could profit immensely from globalization and become the new locomotives of the global economy. O'Neill wanted to advise his clients to invest their money in the promising new players. But he needed a catchy name.

It proved to be a simple task. He simply took the first letter of each country in the quartet and came up with BRIC, an acronym which sounded like the foundation for a solid investment.

O'Neill, celebrated by Businessweek as a "rock star" in the industry, looked for years like a vastly successful prophet. From 2001 to 2013, the economic output of the four BRIC countries rose from some $3 billion a year to $15 billion. The quartet's growth, later made a quintet with the inclusion of South Africa (BRICS), was instrumental in protecting Western prosperity as well. Investors made a mint and O'Neill's club even emerged as a real political power. Now, the countries' leaders meet regularly and, despite their many differences, have often managed to function as a counterweight to the West.

"The South has risen at an unprecedented speed and scale," reads the United Nations Human Development Report 2013, completed just a few months ago. Historian Niall Ferguson wrote in his 2011 book "Civilization: The West and the Rest" of "the end of 500 years of Western predominance." It is, he suggested, an epochal change.