Wednesday, May 30, 2012

Why Are the BRICs -- and the Slowdown of China and India -- So Important

Over the last month or so, we've seen stories that the two big BRIC economies of India and China are slowing down.  However, a fundamental question that we have not answered is this: why are the BRICs -- and more importantly India and China -- so important?

The first answer is population.  Consider these charts of total population:

The combined total of the Chinese and Indian population is about 2.5 billion.  That comprises about 37% of the world's 6.8 billion population -- a very significant number.  More importantly, that number is 66% of the population of the 10 largest economies in the world.

In addition, from a purchasing power parity perspective, China is the third largest and India is the fourth largest economy in the world.

A slowdown that effects this many people is bound to hurt.  And, most importantly, there are no countries of comparable size to take the reins.