An International Business

BRICS is an acronym in Brazil, Russia, India, China and South Africa for the listed emerging industrial countries (Cooper, 2016). The five countries are among the world's developing nations and for economic purposes formed the community. BRIC was set up in 2006 and subsequently South Africa joined the BRICS party in 2011. BRICS' primary objectives are to provide financial support, infrastructural growth, the support of several initiatives, economic cooperation between Member States as well as the promotion of their commercial activities (Cooper, 2016). According to a study carried out in 2014, BRICS nations comprises of a population more than three billion which is approximately 40% of the people in the world. Remarkably, the combined Gross Domestic Product (GDP) of the five nations amounted to $16.04 trillion which is estimated to be around 20% of the world GDP. Additionally, foreign reserves were approximate $4 trillion which depicts that the countries have a significant contribution to the global economy.

The countries play a fundamental role in international trade since they dominate world market with the supply of manufactured goods as well as raw materials. Increased growth of GDP, Foreign Direct Investment (FDI) as well as the Purchasing Power Parity (PPP) has resulted in growing importance of the BRICS countries in the whole world. Therefore, this paper will analyze the economy of the BRICS countries, explain why these countries are growing importance on the international stage as well as describe internal and external forces that may influence organizational success about the BRICS nations. Finally, the paper will explain the importance of Saint Leo University stewardship core value concerning international business and rise of economies.

Brazil Economy

Brazil is the largest country in Latin America with a population of approximately 206 million people. According to the study carried out in 2010, Brazil was ranked the seventh largest in the globe based on the purchasing power parity with a GDP of $2.09 trillion (Sadler, 2017). The population hugely depends on traditional and natural resources such as pure and renewable energy. The country is a valuable global energy exporter, especially in oil products. Remarkably, many Multinational Corporations have extensively invested in the country hence boosting economic growth. For the last decades, Brazil had been experiencing economic growth until the reign of Dilma Rousseff who misused public funds hence causing a decline in GDP. Brazil engages in trading activities for commercial purposes.

For instance, the total value of imports and exports are estimated to be 27% of GDP. Economically, inflation, as well as the unemployment rate, ranges from 10%. Between 2003 and 2014, Brazil social and economic progress elevated approximately 29 million individuals out of poverty which significantly resulted in a decline in inequality (Sadler, 2017). The income level of 40% of the poor population rose by substantially 7.7%. However, the political crisis in Brazil has led to a steady deceleration of economic growth. According to Sadler (2017), between 2006 and 2011 Brazil experienced a growth of 4.5% GDP.

Remarkably, between 2011 and 2014, the annual economic growth was noted to be 2.1% which depict a drop (Sadler, 2017). In 2015, the GDP was contracted by 3% which enabled Brazil to reserve $358 billion on imports at the end of the year. Also, trading economies reported that the FDI increased by $6800 million in 2016. According to Sadler (2017), the economy of Brazil is currently growing. In January 2017, the economy rose by 0.62% while in February it increased by 1.3% which depicts that the economy will improve in 2017 (Sadler, 2017).

Russia Economy

Russia is the biggest country in the world, and it's associated with enormous natural resources such as natural gas, oil, and precious metals. In fact, studies depict that the country holds approximately 30% of the world's natural resources with an amount of $75 trillion (Hutt, 2016). The state participates in trading activities to expose the surplus production to boost the economy of the country. Based on GDP, Russia is ranked as the eighth largest economy globally.

Notably, the combination of the total value of imports and exports equals to 51% of GDP. The tariff rate is averagely applied at 4.9% while foreign investment in the economy is capped for economic purposes. The main exports are natural gas, oil products as well as high technological military equipment. For instance, natural gas, petroleum products, and crude oil comprise 58% of Russia's total exports (Hutt, 2016). The major imports include ground transport and food which respectively represent 12% and 13% of total imports. According to Hutt (2016), the exports amounted to $527 billion in 2012 while imports stood at $341 billion. Russia trades with various countries in Europe which represent 60% of export sales. A study carried out in 2012 revealed an increase in the living standards and the disposable income grew by 160% due to prudent fiscal policies and high prices of oil.

However, in 2014 the economy experienced two main blows which led to recession in GDP growth. The first shock was based on the decline in oil prices worldwide. Notably, Russia economy depends on oil exports. Also, geopolitical tensions on the Military invention in Ukraine adversely affected investments in Russia which resulted in stagnation of GDP. According to Hutt (2016), Western governments imposed economic sanctions to punish Russians for taking control of crime region in Ukraine. Furthermore, the economy shrunk by 3.7% in 2015 and further rebounded with 0.3% in 2016. Russia GDP is expected to rise to $1.370 trillion by the end of 2017 first quarter. Also, econometric models project the GDP to approximately $1.640 trillion in 2020 which depict that the economy is growing (Hutt, 2016).

India Economy

India is the second most populated country in the world with a population of Over 1.3 billion with 20.6% of its people live on low standards usually less than $3.1 in a day. However, based on nominal GDP and PPP, the country is ranked on the seventh position global wise (Iyengar, 2017). Currently, India is recognized as a newly industrialized nation with 7% average growth rate.

Remarkably, the economy’s growth is attributed to its savings, young population, investment rates, and low dependency ratio. The generation of the young people provides skilled labor force in mathematics, science, engineering and technology. According to Iyengar (2017), India majorly specializes in the exportation of software and IT services which amount to approximately $167 billion in exports.

Also, the country exports farm products which contribute highly to the country’s GDP. India has two major stock exchanges which include the National Stock Exchange of India and Bombay Stock Exchange with a market capitalization of $1.68 trillion and $1.71 trillion respectively in 2015 (Iyengar, 2017). Among the BRICS countries, India has the fastest annual economic growth of 7.5% which represent $2.38 trillion of the whole economy.

Indian economy moderately depends on trade with the value of imports and exports amounting to 49% of GDP and a tariff rate of 6.2% (Iyengar, 2017). Furthermore, India economy is growing at a faster rate and the government forecast that by the end of the 2016-2017 financial year, the economy will have grown by 7.1%. The growth is attributed to resilient government reforms through Reserve Bank of India which controls commodity price inflation.

China Economy

The population of China is of over 1.38 billion people. Based on GDP, China has the second largest economy with a GDP of $11.4 trillion (Eckart, 2016). According to IMF, China has the largest economy based on purchasing power parity. Despite the fact that the country has the second biggest economy in the world, it is still not categorized as a developed nation since its Capita GDP is below the accepted minimum threshold.

The country specializes in the manufacturing of goods hence it's referred to as a global manufacturing hub. The country is the second-largest exporter of goods with the public sector dominating in the trade market. China participates in the international trade by engaging herself in business activities with the greatest training unions such World Trade Organization, BRICS and other countries. The major exports include machinery and electronics will amount to 55% of overall exports, equipment and construction material represent 7% and garments that account for 13%. Intermediate goods dominate the countries imports.

Overall, trade plays a significance role in the entire economy of China with the total value of imports and exports amounting to 41% of GDP, and a tariff rate of 3.2% is applied (Eckart, 2016). Despite that the country has a massive economy development, people have a low standard of living as shown by low payment given to workers. In fact, small amount results in cheap products which make China goods to be more appealing in the market. Also, the country has invested in foreign investment such as in US bonds, treasury bills, and notes. According to Eckart (2016), China had $1.059 trillion in America treasury as at February 2017. Moreover, the government controls the overall economy by controlling all banks in China which are currently at the risk of nonperforming loans.

South Africa Economy

Based on GDP, South Africa has the second largest economy based on GDP. Its economy accounts for at least 35% of African GDP. The economy of the country majorly depends on trading activities. For instance, the country is endowed with natural resources such as coal, gold, diamond and chromium among other minerals. Also, Multinational corporations have invested in the oil and gas sector which highly increases the growth of the entire economy. The country trades with BRICS members, African unions, Asia and Europe. However, the unemployment rate is at 23% with more than 55 million people unemployed hence considerably affecting economic growth (Writer, 2017). Since South Africa joined BRICS, its economy has been increasing. According to World Bank report in 2014, South Africa GDP was $350.1 billion hence the country was ranked as an upper middle-income nation. In 2015, its GDP was approximately at $327 billion. The total value of imports and exports contributing to 63% of GDP (Writer, 2017). Notably, tariff rate is applied at 3.9%.

Apart from trade, the economy also depends on financial sectors such as bonds and banking markets. Remarkably, the economy of South Africa is boosted by FDI. In 2016, the economy of the country has been adversely affected due to corruption, inefficient government bureaucracy, political instability and labor regulations. However, the GDP is forecasted to grow at 1.0% in 2017. Based on econometrics model, the GDP of South Africa is projected to be $420 billion by 2020 (Writer, 2017).

Reasons why BRICS countries are growing importance on international stage

BRICS countries are gaining influence at the international level due to various reasons. The countries are noted to be the fastest and the biggest growing markets in the world. For instance, the group comprises of a larger population in the world. According to Sadler (2017), in the year 2015 BRICS countries consisting of a population of 3.6 billion individuals which is approximately 40% of the people in the world. The high population is significant since it creates a larger market for international trade through exportation and importation. In fact, increased population market creates a high growth rate hence an excellent size of the economy.

Similarly, BRICS countries are important in the international stage due to their combined GDP. Remarkably, in 2015 the combined GDP of the five countries equaled $16.6trillion which represents 22% of the Gross World Product with a combination OF $37 trillion GDP and a combined foreign reserve of $4 trillion. The increased GDP among the five countries boost global Gross product hence significantly improving the world economy. On the same note, the formation of BRICS has resulted in increased change in average GDP of each country. For instance, countries like China, India and South Africa experienced a positive average change in GDP in 2015 which amounted to 6.9%, 7.6%, and 1.3% respectively. World Bank predicts that the economy of BRICS nations will grow to 5.3% in 2017. Increased rate of GDP among the countries depicts the significance of the countries in the international trade.

Furthermore, BRICS countries are growing importance at the international level due to their increased FDI which significantly boosts the global economy (Cooper, 2016). BRICS group is a larger market that has a greater rate of direct investment. According to Cooper (2016), BRICS economies obtained a total FDI of $375 billion in 2015 which represented an increase of 59% as compared to 2010. Increased FDI results in economic development and growth internationally.

Internal and external forces that may influence organizational success as it relates to BRICS countries

Usually, various internal, as well as the external factors, affects the success of organizations. Basing the argument on the BRICS countries, both factors also influence the success of the businesses. For instance, government bureaucracy influences success of any business operation. The government control can be in the form of low tariffs as well as passing regulations that favor and support business operations. On the same note, favorable government bureaucracy regarding proper regulation of financial institutions in China has resulted in better performance of the entire economy.

Similarly, availability of raw materials and resources influence the success of an organization. Relatively, BRICS countries are endowed with sufficient raw materials which lower the cost of production during the manufacturing process (Cooper, 2016). Countries like Russia and Brazil have enough raw materials which have resulted in their increase in the quantities of exports hence great success in international trade.

Also, availability of skilled and semi-skilled labor force affect the success of an organization. For example, a country such as India has a lot of skilled labor force that has led to the production of quality products hence more exports. BRICS countries have enough skilled labor force which has resulted in significant increase in the quality and quantity of output. Notably, international exports from BRICS countries are competitive due to high quality hence resulting in increased growth of GDP.

On the same note, political stability influence success of the business. For instance, countries experiencing political turmoil encounter an adverse effect on the economy performance. Due to political crisis experienced in Brazil as well as in South Africa, the GDP of the countries declined since the countries participated little in the international trade. However, after the political crisis were over, it is noted that the economy of the countries grew leading to improvement in the entire economy of the country.

Additionally, favorable market prices result in organizational success. Internationally, the prices of goods and services are fair which has led to increased growth of BRICS countries. For instance, it is noted that decline of oil price in 2014 adversely affected Russia but later when the prices stabilized the economy of the country thrived.

Importance of Saint Leo University core value of responsible stewardship to international business and rise of these economies

Finally, Saint Leo University core value of responsible stewardship is important as it relatively plays a critical role in international trade and rise of BRICS countries' economies. The core value calls for proper utilization and optimization of the natural resources provided by the creator with the aim of improving the life standards of the community hence achieve the university's goals and mission.

Comparatively, governments, as well as international organizations such as BRICS, have an obligation to encounter challenges that face the world population hence become good stewards. The problems that need to be addressed include extreme poverty, social inequality, climatic change and water shortages. For instance, increased economic development among the BRICS nations has resulted in uplifting of poor people from poverty to middle class (Cooper, 2016).

However, there are still individuals who are still living in poverty among these countries. Private organizations as well as the national governments ought to continue doing more to ensure equality and elimination of poverty by proper utilization and optimization of the natural resources available. Furthermore, joint working between the people and the government of these nations will result in proper optimization of the resources available hence increase the growth of GDP. By so doing, the core value of stewardship will have been achieved, and equality will be fostered.

Conclusion

In summary, the BRICS countries are growing importance to the international stage because they extensively contribute to the global economy (Cooper, 2016). From the description of the each economy, it is evident that the countries have been experiencing economic growth attributed by GDP and FDI. Additionally, the econometric model shows that the GDP of the BRICS nations will increase in 2017 as well as in future. On the same note, internal and external forces such as political stability, availability of labor strength and abundant resources have tremendously contributed to the success of BRICS nations in the international trade. Finally, stewardship core value of Saint Leo University is significant to international business such as BRICS nations. According to the fundamental value, natural resources ought to be optimized for the common benefit of individuals in the society.

References

Cooper, A. F. (2016). The BRICS: A very short introduction.

Eckart, J. (2016). Eight things you need to know about China’s economy. Retrieved from: https://www.weforum.org/agenda/2016/06/8-facts-about-chinas-economy/

Hutt, R. (2016). Six things to know about Russia's economy. Retrieved from: https://www.weforum.org/agenda/2016/12/things-to-know-about-russia-s-economy/

Iyengar, R. (2017). India's red-hot economy is losing steam. Retrieved from: http://money.cnn.com/2017/05/31/news/economy/india-gdp-growth-q4/

Sadler, M. (2017). Brazil’s Economy Is Gaining Momentum in 2017: Here’s why. Retrieved from: http://marketrealist.com/2017/04/why-imf-slashed-brazils-economic-growth-outlook-in-2017/

Writer, S. (2017). Seven predictions for South Africa's economy in 2017. Retrieved from: https://businesstech.co.za/news/finance/148473/7-predictions-for-south-africas-economy-in-2017/