Even though Brazil, Russia, India and China all face ``significant challenges'' and are at ``different inflection points'' in their economic crossroads, U.S. businesses need to benchmark themselves against those four countries when gauging their global competitiveness, said Erik Peterson, senior vice president of the Center for Strategic and International Studies and director of the Global Strategy Institute.
``If there are four countries to watch, these are the ones,'' Peterson told a group of executives and business leaders Oct. 24 in Washington.
U.S. businesses will need to learn how to navigate through the plethora of issues ``likely to evolve as a result of changes in these countries,'' he said.
``We need to be thinking about structural issues occurring in these four countries that will have a global effect. They cannot be ignored.''
For example, Peterson said, India is projected to have a larger economy than Japan by 2030 and China, already the fourth largest economy at $2.27 trillion, is projected to have a larger economy than the United States by 2040.
At the same time, however, Peterson pointed out that each of those four countries is wrestling with difficult issues associated with their economic growth, population and demographics.
India, which already accounts for 22 percent of the world population, has ``remarkable economic vitality,'' but one-third of its people live in poverty, said Peterson, with many unable to read beyond a fifth-grade level.
Frankfort-based Deutsche Bank AG projects an average annual growth rate in real gross national product for India of 6 percent or more, at least through 2025, he said. However, there is concern that there will be greater disparities between the various states as the country grows, making coalition politics more challenging. Also, India is expected to replace China as the most populated country by 2040 and grow to 1.5 billion people by 2050.
China's population of 1.3 billion, by contrast, is topping off because of the government's one-child-only policy, Peterson said. That could create a financial liability by as early as 2015 because of an aging population, he said.
The situation also could impact economic growth in a country where ``any growth rate under 7.5 percent would be uncomfortable to its leaders,'' said Peterson. There are also concerns, he said, that ``the income gap in different regions is too wide, making it difficult to maintain growth'' - and potentially creating a clash of poor vs. rich and rural vs. urban.
Add to that, infrastructure problems with roads, poor air quality outside of Beijing and 300 million people who are estimated to be drinking contaminated water, he said.
Russia - which for seven years has enjoyed a growth rate of 6.4 percent or more - is struggling under the weight of health, population and financial troubles, according to Peterson. It is 100th in life expectancy among countries, 110 million of its 143 million people are breathing contaminated air and 50 percent are drinking bad water, Peterson said.
Russia's population, which was 146 million in 2000, is projected to decline to 100 million by 2050 because for each birth in the country, there are 1.5 deaths, plus 50 percent of its people are more than 40 years old.
In addition, the Organization for Economic Cooperation and Development estimates that Russia needs $25 trillion to bring its infrastructure up to the levels of Westernized standards.
Brazil is expected to account for one-third of all the 750 million people in Latin America and the Caribbean by 2050, but it also will be dealing with a population where the average age will be approaching 40, he said.
In addition to assessing how changes in those four countries will affect the ways U.S. firms do business, Peterson stressed the importance of all countries playing by the same economic rules.
``We have to have a level playing field. We have to bring everyone on board with a common set of rules, particularly with respect to currency,'' he said, referring to the protection China gives its currency to obtain a marketplace advantage.
``The U.S. trade deficit is drawing down our macroeconomy. We have to correct that,'' he said.
One other issue that bears watching, Peterson said, is the impact on energy demand, especially by China and India.
``By 2025, there will be a 50 percent increase in global demand for energy, with China and India driving this demand,'' he said.
China alone is expected to import 10 million barrels of oil a day by then - which is what the U.S. currently imports.
``We will look back and identify our lack of action on developing alternatives to fossil fuels as one of our major policy failures,'' Peterson said.