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

36 Pages Posted: 20 Dec 2011

See all articles by Yongzheng Yang

Yongzheng Yang

International Monetary Fund (IMF) - African Department

Issouf Samaké

International Monetary Fund (IMF)

Date Written: November 2011

Abstract

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.

Keywords: Brazil, Business cycles, China, Economic growth, Economic models, India, Low-income developing countries, Russian Federation, Spillovers

Suggested Citation

Yang, Yongzheng and Samaké, Issouf, Low-Income Countries' BRIC Linkage: Are There Growth Spillovers? (November 2011). IMF Working Papers, Vol. , pp. 1-35, 2011. Available at SSRN: https://ssrn.com/abstract=1974835

Yongzheng Yang (Contact Author)

International Monetary Fund (IMF) - African Department ( email )

1700 19th Street, NW
Washington, DC 20431
United States
202-623-4339 (Phone)
202-623-4237 (Fax)

Issouf Samaké

International Monetary Fund (IMF) ( email )

700 19th Street, N.W.
Washington, DC 20431
United States

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