In 2001, Goldman Sachs predicted that Brazil, Russia, India and China (labeled the BRICs) would dominate global economic markets in the 21st century. Based on those countries' economic and polictical conditions at the time, the notion seemed highly unlikely. Yet China has surpassed Japan for the world's second largest economy, and India is closing in with the fourth largest, bigger than both Germany and the United Kingdom. And China has the three largest banks in the world by market capitalization. What does this mean for the future of global trade? John Doggett, senior lecturer of management, reviewed the dramatic rise of the BRICs and the implications for the world economy during the MBA Alumni Conference on March 26. He also presented on the topic for the April installment of the McCombs Knowledge to Go webinar series. Visit the Knowledge to Go website for a recording and slides from Doggett's webinar. See below for a full video and clips of the alumni conference presentation.

Tremendous marketing opportunities are emerging with a new market of 750 million people entering the middle class in the next 10 years. China and India are developing their own secondary markets by contracting for military assistance in South America and Africa in exchange for natural resources. They then make investments in these developing countries to turn them into future markets for their products. China’s other initiatives include clean energy, establishing a colony on the moon, and military technological parity with the U.S. In the meantime, China has become our banker, to the tune of $1.16 trillion, a 91 percent increase in the last one and a half years.

Be Careful What You Wish For – China and India Are Beating Us At Our Own Game

Doggett warns us to be careful what we wish for and not to make assumptions. His history lesson explains that after WWII, much of Europe and Asia’s infrastructure and industrial production capacity was destroyed. For a short time after, the U.S. was the only source for manufacturing. For the next 50 years, we assumed that developing countries would always be poor struggling economies, incapable of producing innovative products that could compete with us. We were wrong. During the Cold War, we evangelized about capitalism and free market economies. In the mid '80s, CNN and satellite communications made it easy for the rest of the world to see that our standard of living was better than communist or socialist countries. “We are in a race with countries that have bought into our value system and they’re playing by our rule book at a time when we’re tearing our rule book up.”

The Rule of Small to Large Numbers: Why China and India’s Economic Growth Surpassed America

We are at a strategic inflection point, a time in the life of a business (or country) when its fundamentals are about to change, says Doggett. Goldman's BRIC predictions were based on population growth, the rule of small to large numbers, which was previously ignored. As of March 2010, 42 percent of the world’s population are in BRIC, 22 percent of the world’s land mass and 24 percent of global gross domestic product. This is $2.2 trillion larger than America’s GDP. By 2035, Goldman Sachs predicts that China will be the largest economy in the world and that India will be tied with America for second. How we react to this opportunity and our new competitors will affect the standard of living for future generations. “This is the greatest possible time to be alive and be a businessperson.”