Today emerging markets account for more than half of world GDP on the basis of purchasing power according to the International Monetary Fund (IMF). In the1990s it was about a third and in the late 1990s 30% of countries in the developing world managed to increase their output per person faster than America did, thus achieving what is called 'catch-up growth'. That catching up was somewhat lackadaisical. The gap closed at just 1.5% a year. Some of this was due to slower grower in America, most was not. The most impressive growth was in four of the biggest emerging economies Brazil, Russia, India and China (BRICS). These economies have grown in different ways and for different reasons. The remarkable growth of emerging markets in general and the BRICS in particular transformed the global economy in many ways. Some wrenching commodity prices soared and the cost of manufacturers and labour sank. A growing and vastly more accessible pool of labour in emerging economies played a part in both wage stagnation and rising income inequality in rich ones. Global poverty rates tumbled. Gaping economic imbalances fuelled an era of financial vulnerability and laid the ground work for global crisis. The shift towards the emerging economies will continue. But its most tumultuous phase seems to have more or less reached its end. Growth rates have dropped, the nature of their growth is in the process of changing too and its new mode will have lesser direct effects on the rest of the world. The likelihood of growth in other emerging economies having an effect in the near future comparable to that of the BRICS in the recent past is low. The emerging giants will grow larger and their ranks will swell but their tread will no longer shake the Earth as it once did. After the 1990s there followed 'convergence with a vengeance'. China's pivot towards liberalization and global markets came at a propitious time in terms of politics, business and technology. Rich economies were feeling relatively relaxed about globalization and current account deficits. America's booming and confident was little troubled by the growth of Chinese industry or by off-shoring jobs to India. And the technology etc., necessary to assemble and maintain complex supply chains were coming into their own, allowing firms to spread their operations between countries and across oceans. The tumbling costs of shipping and communication sparked ‘globalization's second unbounding' (the fiat was the simple ability to provide consumers in one place with goods from another). As longer supply chains infiltrated and connected places with large and fast growing working-age populations, enormous quantities of cheap new labour became accessible. In 2007 China's economy expanded by an eye-popping 14.2%. India managed 10.1% growth, Russia 8.5% and Brazil 6.1%. The IMF now reckons there will be a slowdown in growth. China will grow by just 7.6% in 2013 India by 5.6% and Russia and Brazil by 2.5%. Other countries have impressive growth potential. 'Next 11' (N 11) which includes Bangladesh, Indonesia, Mexico, Nigeria and Turkey. But there are various reasons to think that this N11 cannot have an impact on the same scale as that of the BRICS. The first is that these economies are smaller. The N11 has a population of just over 1.3 billion, less than half that of the BRICS. The second is that the N11 is richer now than the BRICS were back in the day. The third reason that the performance of the BRICS cannot be repeated is the very success of that performance. The world economy is much larger than it used to be twice as in real terms as it was in 1992 according to IMF figures. But whether or not the world can build remarkable era of growth will depend in large part on whether new giants tread a path towards greater global co-operation or stumble in times of tumult and in the worst case fight.
1. According to the passage which of the following is a reason for the author's prediction
regarding N11 countries?
(a) N11 countries are poorer, have less resources than BRICS countries and do not have much scope
to grow
(b) The size of these countries is too great to fuel a high rate of growth as expected by BRICS
countries
(c) The world economy is so large that the magnitude of growth from these countries will have to be
huge to equal the growth of BRICS
(d) These economies are agricultural and have not opened up their economies yet so their scope of
growth is greater than that of BRICS
(e) Other than those given as options
2. What is the author's view of globalization's second unbounding?
(a) It proved beneficial since it created a large number of jobs and tremendous growth in crossborder
trade
(b) It disturbed the fragile balance of power among BRICS nations and caused internal strife
(c) It caused untold damage to America's economy since it restricted the spread of American firms
off-shore
(d) It proved most beneficial for the agricultural sector creating huge employment opportunities
(e) Citizens in advanced countries became much better off than those in emerging economies
3. What do the comparative statistics of 2007 and 2013 for BRICS countries published by the
IMF as cited in the passage indicate?
(a) BRICS economies are contributing less to global growth
(b) As the population of these countries grows its growth rate is falling
(c) The financial practices followed by these countries will continue to pay rich dividends
(d) These countries are creating global financial imbalances to the detriment of smaller developing
economies like Africa
(e) IMF forecasts of growth rate for these countries have not been fulfilled
4. What effect did rise in economies of BRICS have on the global economy?
(a) It helped stabilize the globle economy and insulate it from the fall out of the global financial crisis
(b) Labour became more highly skilled and wages rose alarmingly reducing the off-shoring of jobs to
developing countries
(c)Though worldwide poverty rates tumbled, the gap between the rich and the poor in rich
economies increased
(d) The cost of living and level of inflation in these countries were maintained at low levels
(e) All the given options are effects of the rise in BRICS economies
5. What does the phrase "their ranks will swell but their tread will no longer shake the Earth as
it once did" convey in the context of the passage?
(a) While many countries will try and achieve the same rate of growth as BRICS they will not
succeed
(b) The growth of BRICS countries has changed the world's economy in ways that any further
growth will not have such a disruptive effect on the world economy
(c) Developing countries have strengthened their fiscal systems in such a way that they will not be
shaken to such an extent again
(d) Poverty may increase as the gap between the rich the poor increase but it will never reach the
same levels as prior to the crisis
(e) Citizens in advanced countries became much better off than those in emerging economies
6. Which of the following best describes 'catch up growth'?
(a) Emerging economies tried but failed to catch up with America which always grew at a higher
growth rate
(b) The size of emerging economies and their purchasing power has caught up with and now
exceeds as rich countries together
(c) The growth of the America economy determines the growth of emerging economies
(d) In the latter half of the 1990s some emerging economies out did America in terms of output per
person
(e) None of the given statements describes catch up growth
7. Which of the following can be said about 'convergence with a vengeance'?
A. After the 1990s advanced economies like America were open to the idea of free trade and
globalization.
B. There were huge technological advances which were conducive to allowing business to spread
their area of operations
C. Rich economies felt threatened by the competition from China.
(a) Only A (b) Only B (c) Only C (d) A and B (e) B and C
8. What is the author's main objective in writing this passage?
A. To urge emerging economies to deal with growth which can be disruptive maturely and without
conflict.
B. To point out that while the period of growth of BRICS was disruptive this disruption has almost
come to a close.
C. To criticize advanced economies for their handling of growth and promoting competition and
conflict in certain regions.
(a) A and B (b) Only A (c) Only C (d) All A, B and C (e) B and C
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MAHENDRA GURU