Assessing the resilience of Brazil, Russia, India, China and South Africa economies following the global financial crisis

Aurelio Hess,Tankiso Moloi,Celso Campos

doi:10.4102/ac.v19i1.659

Abstract

Orientation: Productivity is known as a good predictor of living standards, able to indicate well-being of the population and efficiency of the economy.Research purpose: To examine how the global financial crisis affected the total factor productivity (TFP) of Brazil, Russia, India, China, and South Africa (BRICS) economies.Motivation for the study: Productivity of BRICS is far below the G-7 and EU-28 countries, even though the economies of Brazil, Russia, India, China, and South Africa together are very representative of both the world gross domestic product (GDP) and population.Research design, approach and method: Observational study of a cross country panel data of five countries throughout 14 years, including the period of the 2008 crisis. Based on the Penn World Table (PWT) 9.0 database, we compared BRICS countries, from 2001 to 2014, before and after the financial crisis. Descriptive statistics, tests with Fisher–Snedecor (F) distribution, and a one-way analysis of variance (ANOVA), may bring robust evidence to construct conclusions.Main findings: Findings suggest that the TFP average growth was negatively affected. The special situation of ‘B’ and ‘S’ (Brazil and South Africa) deserves attention, with negative average growth before and after the financial crisis for Brazil, and a dramatic loss of average growth for South Africa. The global crisis seems to have separated BRICS into RIC-BS in the aftermath. Not all the TFP average growths were equal, either before or after the financial crisis.Practical/managerial implications: The TFP average growth, which is essential to economic development of the nation, is the result of managerial behaviour of companies and governments on a day to day basis. Decision makers and policymakers need to know how productivity was affected by the financial crisis.Contribution/value-add: There is a gap in economic literature about the productivity of BRICS compared, restraining the assessment of the homogeneity of the BRICS economic development, especially as an aftermath of the crisis. The main contribution to the field of business and economics is giving evidence-based information to policymakers and decision makers of the BRICS about the extension of the 2008 financial crisis’ impact, offering a new perception of the block’s resilience both individually and combined.

Highlights

When focusing on a country’s economic development and growth, some of the most important tasks are to observe and to grasp the productivity trends and behaviours and production factors
The importance of this research lies in the in-depth study of productivity and other indicators of BRICS economies precisely at the 2008 global financial crisis
Afterwards, it can show us what happens to economies when they are faced with crises

Summary

Introduction

When focusing on a country’s economic development and growth, some of the most important tasks are to observe and to grasp the productivity trends and behaviours and production factors. This is fundamental to any economy and still more important in developing countries, as clearly stated in seminal works such as Bohm-Bawerk (1907), Jorgenson and Griliches (1967), and Kaldor (1966), among others. These authors show that productivity plays a key role in the economic development. The main objective of this study is to fill this gap in economic literature, with evidence from the effects and the resilience of Brazil, Russia, India, China and South Africa (BRICS) to the world financial crisis, both as a block and individually

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