Low-Income Countries' BRIC Linkage: Are there Growth Spillovers?

November 1, 2011

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Issouf Samaké, and Yongzheng Yang. Low-Income Countries' BRIC Linkage: Are there Growth Spillovers?, (USA: International Monetary Fund, 2011) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

Trade and financial ties between low-income countries (LICs) and Brazil, Russia, India, and China (BRICs) have expanded rapidly in recent years. This gives rise to the potential for growth to spill over from the latter to the former. We employ a global vector autoregression (GVAR) model to investigate the extent of business cycle transmission from BRICs to LICs through both direct (FDI, trade, productivity, exchange rates) and indirect (global commodity prices, demand, and interest rates) channels. The estimation results show that there are significant direct spillovers while indirect spillovers also matters in many cases. Based on these results, we show that growing LIC-BRIC ties have significantly helped alleviate the adverse impact of the recent global financial crisis on LIC economies.

Subject: Balance of payments, Commodity prices, Econometric analysis, Financial sector policy and analysis, Foreign direct investment, Oil prices, Prices, Spillovers, Vector autoregression

Keywords: Africa, Asia and Pacific, BRIC, BRICs, BRICs to LICs, Commodity prices, Demand, Eastern Europe, Exchange rate, Foreign direct investment, Given BRICs, Global, Global VAR, Growth response, Help LICs, LIC economy, LIC export, LIC growth, LIC output, LIC policymaker, LIC trade, Low-income countries, Low-income country, Middle East, Oil prices, Region VAR, Spillovers, Structural VAR, Trade shock, Vector autoregression, WP

Publication Details

Pages:

35
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2011/267
Stock No:

WPIEA2011267
ISBN:

9781463924669
ISSN:

1018-5941

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