Peaks versus Averages

Why is the BRICS phenomenon different ?

It has to do with peaks versus averages.

Let me explain, the whole host of theories of developing poorer economies has focused on averages, good macro economic management to slowly increase per capita gdp, and other indices of human development

Given the gap between west and the rest, there is no way developing countries can catch up this way

The BRICS have focused on peaks rather than averages, in specific industries they have begun producing companies that threaten western peaks- i can name several such companies, infosys and TCS in IT services, Mittal and Tata in Steel, huawei and ZTE in Telecom equipment, JBS and Cosan in agribusiness, Vale, Gasprom, Petrobras, Rusal in natural resources, Embraer in Civil Aviation

These peaks have given greater attention and bargaining power to the developing nations

As a result, investment climate is perceived to be better and both foreign and domestic investment is pouring in, Governments have also become more confident to take up ambitious programmes like UID in India, Bolsa Familia in Brazil as they see a future for their civil societies based on these peaks, for instance the growing commodity exports of Brazil to Asia, spearheaded by these peaks, has given the confidence to increase social spending that is creating a middle class in Brazil

When i was at Mckinsey, in 1999 i met Roberto Newell, Miami's Partner in Charge, Roberto mentioned one thing he would have liked to have encouraged the Governments he advised to do would be to create national champions

I believe this is the key micro economic difference in addition to the general macro economic hygiene factors that has been behind the sudden rise of the brics as aphenomenon