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Brics Countries

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TABLE OF CONTENTS

1 INTRODUCTION ........................................................................... 3
1.1 INTRODUCTION AND STRUCTURE ................................................................ 3

2 MILITARY EXPENDITURES – BRIC COUNTRIES
2.1 BRASIL .......................................................................................................... 5
2.2 RUSSIA ......................................................................................................... 5
2.3 INDIA ............................................................................................................................................. 6
2.4 CHINA ........................................................................................................... 7

3 MILITARY EXPENDITURE - NATO ............................................................. 8
4 CONCLUSION ............................................................................................9
BIBLIOGRAPHY

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3

1.1 INTRODUCTION AND STRUCTURE
The acronym BRIC summerize countries: Brazil, Russia, India and China. The BRIC countries are promising due to its huge population and the long-lasting economic growth, that’s why expectations of the market development are high. The inventor of the BRIC concept, Jim O'Neill, chief economist at the investment bank Goldman Sachs, published the study,, Dreaming with BRICs: The Path to 2050
" in 2003. His sensational report predicted:,, Over the next 50 years, Brazil, Russia, India and China
,the BRIC economies, could become a much larger force in the world economy”. O'Neill forecasts that already in 2040 the BRIC countries could achieve together a stronger economic power than the G6 countries USA, Japan, Germany, France, Great Britain and Italy. ( O`Neill, 2003, S.3 ff.)
After the dissolution of Soviet Union, the bipolar world is no longer existing. Since that time the military operations by the United States have been increasing. Since the beginning of 21th century, all the attention is paid to the BRIC countries, a new world order can be assumed - a multipolar world order. Are the BRIC countries just challenging just economically the Western world? The goal of this essay paper is to find out whether the BRIC countries represent military challenge to the Western countries. This essay paper will provide an overview of the activities of the BRIC countries and the Western countries regarding to their military weapons and equipment as well as defense budget. First the military expenditure is going to be analysed on the global level. Subsequently, we are going to take a closer look on the military expenditure of the individual BRIC countries and the Western countries.

The basis of the report the "SIPRI Military Expenditure Database". The database is based on publicly accessible information. In countries that don’t publish or provide any information about its military spending, SIPRI estimates the numbers on available sources such as international organizations or media reports. To the military expenditure of a country counts: staff costs for soldiers and civilian employees, the cost of equipment and property, the cost of military operations and missions as well as spending on military research and development aid. Since 1966 the Swedish International Peace
Research Institute SIPRI research to international conflicts, armaments, arms control and disarmament. The Institute is financed mainly by the Swedish State, but is independent from the state.
(bpb, 2014 )

As you can see in the SIPRI yearbook 2015, a report which appears annual, the global military expenditure is assumed to be around 1776 Billionen US-Dollar for the year 2014.

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The global military expenditure are localy devided, as shown in the picture 1. Figure 1 shows, that military expenditure of central and west europe has decreased by 2 % in comparison to last year. As opposed to this the expenses in east europe are increased to 8,5%. Like in Western and Central
Europe, the situation is also in North America, where spending on armaments in 2014 decreased by
6,5 % compared to last year. A remarkably strong increase in expenditure can also be observed in
North Africa. The main reason for this is Algeria. This circumstance can be explained by the increased income from the export of oil. ( Antony, 2015, S.2 ff.)
Figure 1: Changes in military expenditure by region in precent( year 2013-2014)

Editored by the author. Source: SIPRI yearbook 2014
The data descended from the SIPRI. It must be said that this ranking "only" lists the absolute spending in dollars in the military. But it would be interesting to see the expenditure as a percentage of GDP. It is noticeable that, that all BRIC countries can be found in figure 3. Further on the United States spends with $ 711 billion about five times as much on the military issues as China. The United States that can be anticipated - is by far the largest military power in the world. Summed up military spending of all European states would come to a total of around $ 407 billion. From this perspective,
Europe's second largest military power. (Antony, 2015, S.2 ff.)

Following the current situation in term of armament of the individual BRIC countries is going to be discussed. Especially the focus is going to be on the military expenditure and development of military expenditure. 5

The data on military expenditure, which were used for many of the charts below, derived from the database of the Stockholm International Peace Research Institute SIPRI.

If there are no official data are available - the information from the SIPRI was estimated. This case applies to China, for example. China informs about the defense budget, but these are given far too low.
To explain the data needs to be noted that the years 2014 - 2015 were counted from SIPRI at the exchange rates of 2014. For better comparability of every year for all years SIPRI used the exchange rates of the year 2014.

2.1 BRASIL
In 2014 Brazil spend about 31,7 Billions USD. The level of military spending rose from 1981 to 1991 to more than double from 2.378 billion USD to 5.295 billion USD.( Tanania, 2014, S.130)
In 2010 Brazil spend 73 % of the defense budget for personnel expenses, mainly salaries and pensions. The remaining 27 percent was invested for example in the purchase of weapons. Similar to other countries in the region, Brazil invested especially in the modernization of the armed forces. The
National Defense Strategy of 2008 includes a plan to increase the military potential and revitalize the domestic defense industry. Important in this context, for example, is the contractual agreement with
France in 2009, in which it comes to the purchase of four Scorpene submarines and Brazil's first nuclear-powered submarine. In addition, it came to an agreement of the acquisition of 50 EC725
Super Cougar helicopters . The remarkable thing is that this should be made in the course of a technology transfer in Brazil. ( Han, 2010, )

In 2002 was started the program so called “FX-2 program” with the invitation to tender, to find a suitable product and a suitable corporation that manufactures aircraft in the course of a technology transfer in Brazil. It was said the winner of the tender would be announced in the year 2011. The cuts in the budget also delayed this about 5-6-billion dollar deal. (Kimla, 2013, S.19 )

Brazil has a huge regional importance and trying to gain international importance, both economically as well as militarily. During the years 2001 to 2010, GDP rose by 41 percent. The rapid economic recovery and political stability - Brazil is one of the most stable democracies in South America - the
Brazilian government always hope for a permanent seat in the UN Security Council. Brazil will

6 continue to invest in future in armor. The reason mainly the potential to be able to defend itself.
(Piehler, 2013, S. 253)

2.2 RUSSIA

In the year 2010 Russia overtook Great Britain and France and moved to third place in the list of countries with the highest military expenditure. (Freeman, Cooper, Ismail, Sköns, Solmirano, 2011 S.
8f.) In 2014 Russia spend a total of 84,5 billion USD for the equipment. According to SIPRI The increase in military spending goes mainly due to the efforts of Moscow to modernize its outdated arms industry. The further increase in the coming years is to be expected.

According to Putin, the Russian army will be unprecedented upgraded. Specifically provides his plan, that the armed forces will be modernized about 600 trillion rubles( 9 billions USD) in the next decade.
This modernization includes the purchase of 400 ICBMs, 600 combat aircraft, 2300 tanks and 20 submarines by the year 2020. By the year 2017 the Russian army will count one million soldiers.
According to Putin, this upgrade is necessary in order to respond to the planned missile defense system by the US and NATO (Tan, 2013)

It is clear that Russia tried everything to return its former (military) strength. After the collapse of the
Soviet Union, Russia had to accept a drastic reduction in the defense budget. Since Putin came to power, he tries to position Russia again as a force to be reckoned with. (Rukhavishnikov, 2013, S161179)
Another important reason for the investment in the Russian armed forces is closely linked to economic interests. Putin announced, that Russia is going to use its armed forces to defense the raw materials. In the near future Russia is going to deploy troops to the Arctic to secure there probable reserves of oil, gas and precious metals, which should be accessible by the global warming and the consequent melting of the ice. (Stalin, 2015 S. 24-26)

2.3 INDIA
The defense budget of India was 50 billion dollars in 2014.

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Similar to China, India rose to a strong regional power thanks to the rapid economic development in recent years. India used to have traditionally close contact to Russia. In recent years, they dissociated and built a strong strategic partnership with the US, which also includes military cooperation. This partnership serves both countries. First, thus partnership creates a balance to China, which is getting more powerful. Second, India want to gain more acceptance worldwide by a cooperation with the US superpower. (Pilny, 2007, S.109-115)

Three trends can be identified regarding to the budgets of the Indian Army. Spending on equipment and infrastructure have increased by 37 % during the financial year 2003/2004 23 % during the financial year 2004/2005. Since then there has been a constant increase in this area by around 34 % every year. This expenditure was mainly invested in the modernization of the Indian armed forces, as they previously existed mainly from Soviet technology. In addition, the proportion of research and development of the entire military spending increased since the financial year 2001/2002 has increased fourfold with 1.3 % to 5.6 %in financial year 2010/2011. Especially the Indian defense industry should benefit from this investment. In addition to the areas mentioned above, the part of air forces was increased by the total expenditure. With the modernization of the Air Force, which involves mainly the purchase of new fighter aircraft, radar systems, satellites and drones, Indian army mainly showcases its power Pakistan and China. The increase of the military potential and the security and the information procurement are the chief purpose. Furthermore invested heavily in the Navy. The budget for this sector increased in recent years rapidly. (Mitra, 2010, S. 66-70)

In 2014 China spend 216 billion USD. In 2010, the official defense budget of China amounted approximately 78 billion USD. Estimated by the Stockholm International Peace Research Institute the real expenditure should have been about $ 119 billion in the defense sector in 2010. According to the annual report of the SIPRI China has invested in the following year $ 143 billion (according to exchange rates in 2011). China is now in second place of the countries with the most military spending, clearly behind the US. The global share of Chinise military spending amounts around 8 %

China tries to fill the technological gap for branches of military services. This is evident, for example, by the acquisition of technology for the development and construction of aircraft carrier. China has acquired the unfinished Russian aircraft carrier "Admiral Kuznetsov" and immediately rebuilt it afterwards. It can be assumed that this ship will strengthen decisively China`s combat effectiveness of the deep see fleet. The same applies to the aviation sector. In this production area, China has purchased the most modern combat aircraft manufactured in Russia and is developing them to their own priority. ( Pöcher, 2010)

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China lost an important arms supplier since Ukraine crisis. Russia took the place of Ukraine and substitutes the deliveries. These imports have become progressively less and in the future China will try to boost its own arms industry and develop native arms. In spite of great efforts China still remains dependent on deliveries from Russia and Europe, especially by engines for military aircraft and hightech equipment. Another sector that increasingly invested in China is the navy. (Moritz, 2014)

3 MILITARY EXPENDITURE - NATO
It would take too much time to compare the military expenditure of every single Western countries.
For this reason it is appropriate at this point to illustrate on base of NATO military expenditure.
The North Atlantic Treaty Organization ( NATO) is an international organisation, composed of US,
Canada and number of european contries, established for purposes of collective security. None of
BRIC countries is member of NATO. ( thefreeonlinedictionary)

Figure 2 shows that NATO states reduce their spendings in military. USA spends 711 billion USD on military. It should be emphasizeid that the milityry spending declinded first time since 1998 in the year 2011. The reason for that must be the budgetdisput within congress or withdrawl oft he troops of
Irak and reduced army presence in Afghanistan.

Figure 2: NATO defence spending as a precentage of world defence espenditures

Editored by the author. Source: Worldbank 2012 – NATO calculations

In the US, military spending, fell by 6.5 percent to 610 billion USD in the year 2011. Since the highest level in 2010, the decline was 20 % annualy, In the European NATO countries declined spendings also. Since the Ukrainian crisis NATO strives to increase the military expenditures.

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4 CONCLUSION
The aim of this essay paper was to illustrate the military expenditure of the BRIC staates and the states of the Western world.
All the BRIC countries have similarities. Each one is investing into the military equipment. The main aim of the countries is to modernise its arms equipment. Furthermore are the BRIC countries already the military leader in their region.
At the same time are NATO-countries reducing their investment into the armament. Ragarding to
Ukrainian conflict, which take place in Europe, there are growing expenditures on the part of NATO possible. Generally is it difficult to say wether are the BRIC countries going to pose a military danger to the old etablished powers. BRIC countries were recognized as extremly fast economically growing powers.
Based on growing population and economy BRIC countries should be recognized as a member in the world polics, with which ist o count.

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BIBLIOGRAPHY
Bundeszentrale für politische Bildung. Militärausgaben: Der Westen spart, die Welt rüstet auf. 15
August 2015 http://www.bpb.de/politik/hintergrund-aktuell/182645/sipri-militaerausgaben-2013
Han, A.(2010). The Global Arms Trade: A Handbook. (1., Aufl.). Routledge
Freeman, Cooper, Ismail, Sköns, Solmirano, (2011).SIPRI yearbook. Armaments, disarmament and security. Kimla,D. (2013). Millitary - Offsets & In-Country Industrialisation Top 20 offsets markets. pdf.
Kleinwächter, K. (2015). NATO-Militärbudget im Widerstreit. 15. August 2015: http://www.heise.de/tp/artikel/44/44479/1.html Mitra,K (2010). Politics in India: Structure, Process and Policy
Moritz, R (2014). China profitiert von der Ukraine-Krise. 15 August 2015 : http://www.tagblatt.de/Home/nachrichten/wirtschaft/ueberregionale-wirtschaft_artikel,-ExperteMoritz-Rudolf-China-profitiert-von-der-Ukraine-Krise-_arid,258807.html O`Neill, J. (2003).Goldman Sachs Global economic paper. Dreaming with BRICs:The path to 2050,
(03)99.
Piehler, K. (2013).Encyclopedia of Military Science. SAGE Publications
Pilny, K (2007). Dance of the giants: India and China dominate the world.
Pöcher, K. (2010) Die europäische Rüstungsindustrie. Vom Weltmarktführer zum nachhinkenden
Konkurrenten..(10)316
15 Augst 2015: http://www.bundesheer.at/truppendienst/ausgaben/artikel.php?id=1036
Rukhavishnikov, V (2013). The military and society in post-communist Russia.. A comporative
Analysis.
Stalin, J. Russia's Arctic Strategies and the Future of the Far North. Routledge.
Tanania, R. (2014). Transition in Brasilien: Eine Analyse des politischen Systemwechsels.(1.,
Aufl.)Disserta.

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...Case Study #2 – Black Angus Steakhouse 1. What variables need to be considered in developing a list of potential countries ? There are multiple variables to consider when a company wants to expand its operations outside the United States : market potential, customer characteristics, business cycles, competition (is there any competitors already in this market), local culture (make some research about the culture, to fit the needs of people), economic and political outlook (what is the situation of the country at that moment), government policies, financial requirements, labor markets, taxation, legal environment (what are the laws in that specific country), crime and corruption (if this is a safe place to work), infrastructure, foreign trade environment and current and future costs of building a business and brand (is it profitable to expand there). 2. From the list of top “candidates” what data should you collect on each market? The marketing department should collect data for each market about overall population and target buyer population, spending power per capita, category penetration rates, overall growth of categories, share of each brands, media costs, previous marketing expenditures, category profitability, competitor metrics. Thanks to this data, Black Angus Steakhouse can build predictive models in order to know which market will be the most profitable and what will be their future position in each market. 3. What market entry strategy would...

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International Business

...investments and actions? BRIC companies are on the verge rapid growth of their consumer markets. History shows when consumer demand takes off when GNI per capita reaches levels between $3,000 and $10,000 per year.) In Russia there is already significant evidence of the growth of consumerism during the past decade. There are also early signs of similar trends in China and India, but they have yet to cross the threshold. However the BRICS stated that Russia middle class is showing rapid growth. It is expected that within a decade or so, each of the BRICs will show higher returns, increased demand for capital, and stronger national currencies. Thus, foreign firms will want to monitor major economic indicators such as GNI, PPP, and the Human Development Index, as well as developments in the cultural, political, and legal environments of those nations. The indicator that companies might monitor to guide their investments and actions is the futures of widespread poverty and distorted income distributions. What are the implications of the emergence of the BRICs for careers and companies in your country? The emergence of the BRICs effect on our country has some advantages and disadvantages, because it may create new career opportunities, more product options, and better price and/or quality for products because of competition. But on the other hand it may affect negatively the domestic firms more over it may cause some kind of monopoly as the BRICs taking the lead. Do you...

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