In 2007, out of the 600 strongest GDP-contributing cities in the world, 380 contributed 60% of global economic growth. McKinsey Global Institute (MGI) found out that by 2025, around 600 cities will contribute 61% of global GDP-growth, whereas only 24% of the world population will live in these cities. During the next 13 years, a minimum of 136 new cities will emerge in the current Top-600, whereas all of them will come from developing countries (e.g. 100 cities from China, 13 cities from India and 8 cities from Latin America). The enlargement of all cities in the world until 2050 is expected to equal the combined areas of Germany, France and Spain.
Jim O’Neil, chief economist for Goldman Sachs, coined the abbreviation Bric which stands for the emerging countries Brazil, Russia, India and China, with some preferring to add “S” for South Africa (“official member” since December 23, 2010). These countries show extraordinarily strong economic growth between 5%-10% per year. Around 2.8 billion people, or 40% of all humans, live in the four Bric countries, yet their contribution to the global GDP was solely 22% in 2008 – however, with a strong tendency to improve significantly over the coming years.
The economic stagnation in most industrialized nations is one of the best-selling arguments for steering the focus of investors on Brics, resulting in an increased number of financial products being emitted (coined) on those markets (not only by Goldman Sachs). Occasionally, the abbreviation Briics is referred to representing Brazil, Russia, India, Indonesia, China and South Africa, or Brick with Korea (although South-Korea already represents a developed industrial nation, yet still achieving above average growth rates continuously) or Kazakhstan (not only because of high growth rates and an increasing role as an energy supplier, but especially since Kazakhstan is located geographically between the classic Bric countries opportunely in view of an Eurasian-Pacific prospect). In the case of Russia, some experts are still indecisive as authors like Peter Scholl-Latour, rather negatively valuing the Russian Federation (due to a decreasing population, obsolete industries and infrastructure, and complex social conflicts). Another version is Bricsam (Brazil, Russia, India, South-Africa, Asean and Mexico).
Demand Driver #2: Wealth
The need for commodities not only increases with a quantitatively growing world population, but also qualitatively, because with higher wealth/incomes the consumption gets more commodity intensive. Those who walk today will buy a bicycle tomorrow – those who cycle today will switch to a car tomorrow. The more people on earth have an income and the more these incomes increase, the more is the demand for commodities. The World Bank forecasts per capita incomes in undeveloped countries to rise twice as strongly as in OECD countries during the next decades. Actually, the real per capita incomes in Asia rose by 90% between 1999-2009.