It is likely that many of you have lived in a brick house at some point in your life -especially if you hail from the east coast. However the financial term BRIC refers to something slightly different.

What are BRICs?

BRIC is the financial term that refers to the economies of Brazil, Russia, India and China.

Clever.  Who Coined That?

Goldman Sachs is cited for coining the term. Why bother grouping these counties together?  Goldman research concluded that at the current rate these countries are growing, they will eclipse the world’s largest economies by 2050. Please note, China is already the world’s second largest economy. It edged out Japan for the number two slot and currently is only behind the U.S.

A World Takeover! How Exciting.

What’s the rationale behind this explosive growth?

It is simple- it’s all about people and land. Brazil, Russia, India and China account for 25% of the world’s land and 40% of the population. Thus, they have the raw materials at their disposal.

Of the four, Brazil and Russia will likely be the world suppliers of natural resources and commodities. India and China will be the world suppliers of goods and services.

These countries should also begin to develop a middle class over the coming years, which will add to prosperity and growth.

Will they Form a Union – Like the E.U.?

Let’s hope not. The E.U. isn’t working so well right now. Further, it doesn’t look like these countries are attempting to formalize a union. However, they did have their first official BRIC summit in Russia in 2009.

It was during that same time frame that Brazil made their first contribution to the IMF (International Monetary Fund). That is important, because up until that point they had only been the recipients of funds from the IMF.

Good Tid-Bits of Information on the BRICS

All of these countries are considered to be “emerging markets”, which typically mean high risk and high returns– think of up and down 50% in a year.

Brazil, while its growth rate is not as high as other BRICs, enjoys no political or border enemies and a full democracy- very unique among the emerging markets. It will also host the 2014 World Cup and the Olympics in 2016.

China is known for its huge exports and massive foreign reserves (of mostly U.S. Treasuries). Some argue this is the most powerful of the emerging market nations and the BRICS. As David Rothkph put it in his book Foreign Policy, “Without China, the BRICs are just the BRI, a bland, soft cheese that is primarily known for the wine that goes with it.” But China’s population will begin to decline in the next few decades—currently they are battling potential inflation.

Life Outside of the BRICs?

Are the BRICs the only emerging markets to consider?

No, there are other up and coming markets out there. However, the less developed the market, the more volatile performance tends to be. A BusinessWeek article entitled, Emerging Markets: Beyond the Big Four, does a nice job describing what emerging market economies are out there beyond the BRICs and details some ETF’s that allow you get exposure to these markets.