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Monday, 28 September 2009

The global crisis and the implications for developing countries

The term BRIC refers to the fast-growing developing economies of Brazil, Russia, India, and China—a class of middle-income emerging market economies of relatively large size that are capable of self-sustained expansion. However, there are concerns about how the current financial crisis will affect the BRICs, and whether Brazil should remain within this group. Senior Scholar Jan Kregel reviews the implications of the global crisis for developing countries, based on the factors driving global trade. He concludes that the key for developing countries is to transform from export-led to domestic demand–led growth. From this viewpoint, Brazil seems much better placed than the other BRIC countries because it already has a transition policy in place, along with government-sponsored infrastructure investment projects. Kregel suggests that these programs should be implemented in conjunction with a national jobs guarantee scheme.

Source: The Levy Economics Institute of Bard College