For Mr. BRIC, nations meeting a milestone
Goldman Sachs chief economist Jim O'Neill coined the term, but couldn't have imagined its impact.
NEW YORK (Fortune) -- For the first time, Brazil, Russia, India, and China -- dubbed the BRIC nations -- held a summit this week to discuss the global economy and their role in it.
But the gathering in Russia might never have happened if Jim O'Neill, Goldman Sachs chief economist, hadn't created the acronym in a 2001 paper exploring the countries' impact as emerging economic powerhouses. Fortune talked with O'Neill about the idea's evolution, its ever-increasing relevancy, and what it's like to be Mr. BRIC. Following are excerpts of the conversation.
How did BRIC come about?
I'd been co-head of economic research at Goldman Sachs (GS, Fortune 500), but after 2001, my fellow co-head left to become chairman of the BBC, so I had to run the department on my own. Goldman Sachs quite rightly puts an enormous amount of importance on this job. I thought, "Oh, my God -- I've got to put my own imprint on this department for the future."
I was searching for a theme and a new idea. So the specific thing that really led to [BRIC] was 9/11. Around the horror of that event, the underlying message was that globalization was going to continue and thrive. It was going to have to be on a more complex basis, and it wouldn't effectively be about the Americanization of the world -- because that was how it seemed to be in the eyes of many. Even though 9/11 wasn't a direct sign of this, it crystallized the thought in my head. In November of that year, I wrote a paper called "Building Better Global Economic BRICs." It showed you couldn't run the world properly without having these guys more involved.
Did you think it would have this impact?
Not this impact. It's transformed my own life. The impact really started to grow two years later, when we did our first piece looking at what the world could look like by 2050, which picked up on the theme of my earlier paper. We showed that some time between then and 2050, specifically 2037, the combined GDP of those four countries could become bigger than the G7. After that, interest from the international corporate community absolutely exploded, and it's been crazy ever since.
When did it break out of the corporate world into the mainstream lexicon?
It started post-2003. It's just grown and grown. These days, obviously on a day like this, I'm sort of proud in a strange way that these guys are meeting together. People think that my job now is being Mr. BRIC. I must get invited to go and speak at things around the world anywhere from one to eight times a day.
Why did you group these countries together?
The common thing is that all four have a lot of people, with Russia being the smallest at 140 million. Because of globalization, my basic tenet was that if these countries embrace productivity changes that go with global trade and globalization, given that they have such a large number of people, they're likely to become big. That was the simple premise.
Are there any countries that you think should be added?
We've studied that in some detail a number of times. I created a phrase after it called the Next Eleven. It's a phrase to describe the 11 developing countries with the largest populations after the four BRICs. We did it purely to see what their BRIC potential was. Mexico and Indonesia could possibly get close to the size of Russia in the future, but nobody else could get close to it and probably not those two either.
Should any be dropped?
It's very popular these days for people to say we should drop the "R." But Russia, over the seven and half years since we've had the phrase, has actually grown more than we assumed. The only one that hasn't is Brazil. The idea that we should forget Russia because it had a crisis in the last year, that's like saying the United States should be dropped from the G7 because it had a crisis. It's kind of crazy.
Do you think BRIC is more or less relevant today when we talk about these countries?
[More so,] witnessed by the fact that they've chosen to actually get together. Collectively, they're 15% of global GDP, and China's about to overtake Japan. Brazil and Russia have overtaken Canada, and India's soon going to do so. You can't think about the world without thinking about all its bricks, and these four are part of it. We radically need overhaul of the IMF, the G7, the G8, to give these guys a much bigger say in the running of the world. If they don't get it, this meeting will be the beginning of many.
Did the BRICs resist being grouped?
They've all been in their own way extremely flattered. I've met many senior people in all these countries as a result of it, and they're all delighted that we chose to put them on the global map in this way.
Do you think the terminology is the impetus behind the meeting?
Bizarrely as it sounds, I've not really thought about it, but I guess it must be. Without it, why would these guys have gotten together? It sounds slightly scary in saying it to you, but I guess it must be, really.
Did you play around with it a little? We could have had CRIB.
[Goldman chairman and CEO] Lloyd Blankfein occasionally jokes to me that I should have called it CRIB. I said I never thought of that, but even in hindsight I don't think I should have given it any consideration because it would have implied that they were just babies.