It looks as if the BRICs have seen their best days.

That’s the conclusion of Ruchir Sharma, head of emerging markets at Morgan Stanley Investment Management.

In a conference call Thursday, sponsored by Foreign Affairs, Sharma says that countries like Brazil and Russia, whose economies depend heavily on commodity exports, aren’t likely to fare all that well in the future.

Brazil’s high interest rates and its policy of providing a social safety net for its citizens are hurting expansion, says Sharma, the author of Breakout Nations, In Pursuit of the Next Economic Miracles.

Consider Sharma’s reasoning. He criticized Brazil for not investing more in developing its infrastructure. Comparing the South American nation to the economic and population powerhouse China, Sharma, in an article for Foreign Affairs, states: “Over the past decade, China’s domestic investment, in everything from factories to equipment and schools, climbed at a double-digit annual pace, reaching nearly 50% of [gross domestic product] last year – higher than in any other major economy, ever. . .Brazil’s total investment, on the other hand, has remained under 19% of GDP, one of the lowest figures among emerging-market countries.”

Even India, Sharma says in the conference call, has made a misstep. India believed that its recent economic boom was all about that nation’s policies instead of realizing that global expansion affected everyone. 

Sharma thinks investors should take a second and serious look at Poland, which has shown fiscal responsibility amidst the economic debacle facing the Eurozone. And, in a world where high-net-worth investors are being urged to take their portfolios global, insights from the likes of Sharma cannot be ignored.


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