A

s a marketing slogan, the BRICs concept was inspired. The acronym is short, easy to remember, and capable of being used in puns about building a new world order. The economics behind it is less easy to praise. Put simply, the idea of the four BRICs economies having common ground or behaving as a single economic group is a myth. It is not BRICs at all. It is C.

A quick examination of the four countries of the BRICs universe over course of the past quarter century shows China moving ahead significantly. From 1990, opportunity came with the opening of global trade and freer economics. Russia abandoned communism. Eastern Europe opened up, embraced democracy and joined the European Union (there are those that debate whether joining the European Union is a sign of progress). China'€™s paramount leader Deng Xiaoping'€™s earlier quotation on the benefits of mice-catching cats suddenly became party policy. The World Trade Organization came into being, and from 1990 the volume of global trade almost doubled as a share of world GDP.

The economic development opportunities this environment presented were clearly seized by China. China'€™s share of the world economy grew from below 2 percent in 1990 to over 10 percent in 2012. Of course, China'€™s population also grew over this period, so the impact on living standards was not quite so dramatic, but it was still a powerful change. There is little dispute about the broad gains in China'€™s economic prosperity over this period.

Meanwhile, Brazil, Russia and India moved from each having a roughly 2 percent share of the world economy, to each having a roughly 3 percent share in the world economy today. Moving from 2 percent to 3 percent is not quite the dramatic transformation the BRICs hype might have led us to believe '€” and again, population growth further undermines the change in the standard of living for at least Brazil and India. To treat the four countries of BRICs as in some way related or sharing significant common economic characteristics is difficult to do on the evidence of the economic data.

One reason for the failure of BRICs as an economic concept is hinted at in global trade. The World Trade Organization breaks down the world economy into 18 different sectors (agriculture, energy, textiles, machinery, etc.).

Using this structure, we can identify which countries are important when it comes to the value added in global trade. The US dominates, as one might expect. The US is a top 10 exporter (by value added) in all 18 categories of the world economy. Thus not only is the US a major exporter, but it has a breadth to the range of products that it
exports.

Next in the hierarchy comes China, with a top 10 export ranking in 17 of the 18 categories (construction is the missing category '€” given some of the reports regarding Chinese infrastructure construction quality in recent years, this is perhaps not surprising).  France and Italy have a top 10 ranking in 16 of the 18 categories, the UK and Germany are top 10 in 15 categories, Japan is top 10 in 13 categories, and Canada top 10 in 9.

What this suggests is that the exporters that matter in global trade are the G7 countries, and China. Indeed, this is why global economists tend to focus their attention on the G7 plus China, to the exclusion of other economies. Other countries may dominate in exports for some categories, but they lack the range of trade to be considered broad based world exporters.

What of the rest of the BRICs? Surely these countries have been striding ahead in the era of globalization?

Not so you would notice. Russia has a top 10 export ranking in just seven categories of the world economy. India has a top 10 ranking in five categories.  Brazil'€™s aspirations to be a global trading power are undermined by the fact that it has a top 10 export ranking in only two categories of the world economy '€” agriculture and food, which means processed or semi processed food.

This suggests global investors need to be careful about believing the hype. Other countries could join China in expanding their role in the global economy, but the other BRICs economies have had nigh on a quarter of a century to mimic China'€™s performance, without any noticeable success so far. Moreover, as the world economy trade environment settles down into the new realities of the post financial crisis, looking at the breadth of trade might turn out to be important.

Global trade has slowed, and there has been a slight protectionist element creeping into trading arrangements. Slower global trade will make mimicking the Chinese growth model difficult.  Too narrow a range of exporters risks increased volatility, if a country'€™s specialist field becomes a target of trade protection.

The writer is deputy head, Global Economics, UBS Investment Bank.