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23 Table 9Parameter Estimates for the Bivariate EGARCH Model with Dynamic CorrelationChina EquityMarket Returns and WTI PricesChina WTIMean equation

j,0

0.0018 (1.72)oil,0

0.0022 (1.31)

j,1

-0.0337 (-1.61)j,2

0.0082 (0.41)oil,2

-0.0491 (-1.60)Variance equation

j,0

-0.2675 (-2.66)oil,0

-0.4420 (-2.32)

j,1

0.2151 (2.94)oil,1

-0.0860 (-1.42)

j,2

0.0068 (0.05)oil,2

0.0991 (1.73)

j

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Positive size bias test0.316 0.118

Joint test0.496 0.680z represents the standardised residual for the corresponding equation i.e. either

country index return or regionalor world index return. z

1.z2

indicate product of the two standardised residuals.

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24Figure 1: Time Varying Conditional Correlation between Brazil EquityReturns and Oil

Price ReturnsJan 1995Feb 2007

-0.5-0.4-0.3-0.2-0.100.10.20.30.40.5

2 5 / 0 1 / 1 9 9 5 2 5 / 0 1/ 1 9 9 6 2 5 / 0 1 / 1 9 9 7 2

5 / 0 1 / 1 9 9 8 2 5 / 0 1 / 19 9 9 2 5 / 0 1 / 2 0 0 0 2 5 /0 1 / 2 0 0 1 2 5 / 0 1 / 2 0 0

2 2 5 / 0 1 / 2 0 0 3 2 5 / 01 / 2 0 0 4 2 5 / 0 1 / 2 0 0 52 5 / 0 1 / 2 0 0 6 2 5 / 0 1 /

2 0 0 7Brazil_Oil Correlation

Figure 2: Time Varying Conditional Correlation between Russian EquityReturns and Oil

Price ReturnsJan 1995Feb 2007

-0.5-0.4-0.3-0.2-0.100.10.20.30.40.5

2 5 / 0 1 / 1 9 9 5 2 5 / 0 1/ 1 9 9 6 2 5 / 0 1 / 1 9 9 7 2

5 / 0 1 / 1 9 9 8 2 5 / 0 1 / 19 9 9 2 5 / 0 1 / 2 0 0 0 2 5 /0 1 / 2 0 0 1 2 5 / 0 1 / 2 0 0

2 2 5 / 0 1 / 2 0 0 3 2 5 / 01 / 2 0 0 4 2 5 / 0 1 / 2 0 0 5

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2 5 / 0 1 / 2 0 0 6 2 5 / 0 1 /2 0 0 7

Russia_Oil Correlation

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25

Figure 3: Time Varying Conditional Correlation between Indian EquityReturns and WTIOil Price ReturnsJan 1995Feb 2007

India

-0.5-0.3-0.10.10.30.5

2 5 / 0 1 / 1 9 9 5 2 5 / 0 1/ 1 9 9 6 2 5 / 0 1 / 1 9 9 7 2

5 / 0 1 / 1 9 9 8 2 5 / 0 1 / 19 9 9 2 5 / 0 1 / 2 0 0 0 2 5 /

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Key Indicators and StatisticsOriginal BRIC Articles and Related Content

BRICs, Emerging Market Consumer InsightsChina in Africa: South Africa Joins BRICsSummitChinas Development Plans Lead World, BRICsChina and IndiaPlanning vs.

JugaadGlobal Science Research and CollaborationGlobalizationBackground, Rankings and Articles

Country pages:China,India (all with live news feeds, country background and statistics, andlinksto original articles)

Economic Growth and Development of theBRICs

From 2000 to 2008, the BRIC countries combined share of total world economic outputrosefrom 16 to 22 percent. Together, the BRIC countries accounted for 30 percent of the increase

inglobal output during the period.To date, the scale ofChinas economy and pace of itsdevelopment has out-distanced those of itsBRIC peers. China alone contributed more than half of

the BRIC countries share and greater than 15 percent of the growth in world economic outputfrom 2000 to 2008. The chart above onkey development indicators for the BRIC countries shows

the sharp contrast in GDP,merchandise exports and the UNDPs Human Development Index(HDI) between China and theother BRIC countries.

http://www.globalsherpa.org/bric-emerging-market-research-china-brazil-indiahttp://www.globalsherpa.org/china-africa-bricshttp://www.globalsherpa.org/china-africa-bricshttp://www.globalsherpa.org/china-africa-bricshttp://www.globalsherpa.org/china-indiahttp://www.globalsherpa.org/china-indiahttp://www.globalsherpa.org/china-indiahttp://www.globalsherpa.org/china-indiahttp://www.globalsherpa.org/research-science-technology-internationalhttp://www.globalsherpa.org/globalization-globalisationhttp://www.globalsherpa.org/globalization-globalisationhttp://www.globalsherpa.org/globalization-globalisationhttp://www.globalsherpa.org/globalization-globalisationhttp://www.globalsherpa.org/chinahttp://www.globalsherpa.org/indiahttp://www.globalsherpa.org/indiahttp://www.globalsherpa.org/indiahttp://www.globalsherpa.org/chinahttp://www.globalsherpa.org/globalization-globalisationhttp://www.globalsherpa.org/research-science-technology-internationalhttp://www.globalsherpa.org/china-indiahttp://www.globalsherpa.org/china-indiahttp://www.globalsherpa.org/china-africa-bricshttp://www.globalsherpa.org/china-africa-bricshttp://www.globalsherpa.org/bric-emerging-market-research-china-brazil-indiahttp://www.globalsherpa.org/bric-emerging-market-research-china-brazil-india

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Growing BRIC Middle Class

The rapid economic growth and demographics of China and India are expected to give rise toalarge middle class whose consumption would help drive the BRICs economic developmentandexpansion of the global economy. The charts below depict how the increase in the middleclass population of the BRIC countries is forecasted to more than double that of the developed

G7economies. (Click on the images below to view the full-size charts in separate tabs orbrowser windows.)

Science and Technology in the BRICs

The BRIC countries of China, India and Brazil account for much of the dramatic increaseinscience research investments and scientific publications. Since 2002, global spending on

scienceR&D has increased by 45 percent to more than $1,000 billion (one trillion) U.S. dollars.From2002 to 2007, China, India and Brazil more than doubled their spending on science

research,raising their collective share of global R&D spending from 17 to 24percent.Chinasdevelopment planning has targeted a number of scientific fields and related industries,includingclean energy, green transportation and rare earths, among others. Since 1999, Chinasspending

on science R&D has grown 20 percent annually to more than $100 billion. By 2020,China plansto invest 2.5 percent of GDP in science research.

Next 11 Emerging Markets

http://www.globalsherpa.org/research-science-technology-internationalhttp://www.globalsherpa.org/research-science-technology-internationalhttp://www.globalsherpa.org/research-science-technology-international

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Many analysts and commentators have suggested expanding the original group of fourBRICnations to include other emerging markets. Goldman Sachs has resisted conferring BRIC

statuson other developing countries on the grounds that their demographics andeconomiccharacteristics do not hold the potential for them to rival the economic size or

influence of theBRIC countries or todays leading economies (e.g., U.S. and Japan).In a nod to

the interest in other emerging markets, Goldman Sachs identified another group of economicallydynamic and promising developing countries creatively labeled the Next11 inits 2005Economics Paper No. 134 How Solid are the BRICs? The Next 11 consists of a broader group

of emerging markets with the potential to play significant roles in the global

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Hong Kong, South Korea and Singapore. Combined with China and India, these fiveeconomies are likely to be the world's five most influential economies outside of the G6.

On the other hand, when the "R" in BRIC is extended beyond Russia and is used as aloose term

to include all of Eastern Europe as well, then the BRIC story becomes morecompelling. At issue

are the multiple serious problems which confront Russia (decliningpopulation, potentially

unstable government, environmental degradation, critical lack ofmodern infrastructure, etc), and

the comparatively much lower growth rate seen in Brazil.However, Brazil's lower growth rate

obscures the fact that the country is wealthier thanChina or India on a per-capita basis, has a

more developed and global integrated financialsystem and has an economy potentially more

diverse than the other BRICs due to its rawmaterial and manufacturing potential. In terms of

GDP per capita, Brazil ranks 65th,Russia 59th, China 86th and India 118th. By comparison

Korea currently ranks 36th,Singapore 25th, and Hong Kong 27th.

Brazil's stock market, the Bovespa, has gone from approximately 8,700 in September2002 to

over 70,000 in May 2008. Government policies have favored investment(lowering interest rates),

retiring foreign debt and expanding growth, and a reformulationof the tax system is being voted

in the congress. The British author and researcher MarkKobayashi-Hillary is editing a new book

titled 'Building a Future with BRICs' forEuropean publisher Springer Verlag that examines the

growth of the BRICs region andits effect on global sourcing. Contributors to the book include

Nandan Nilekani, and ShivNadar, with publication scheduled for October 200740

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Findings:

India will become third largest economy in world after China & United States in

2050.41

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India will be in G-7 countries by 2027 about 10yr sooner than initially believed.

India and Brazil are demographically in a substantially more favourable positionthan China and

Russia... India, by contrast, will enjoy a very favourabledemographic momentum for another

three decades.

BRICs

a

10%

player

in

the

global

economy.

Total land area: 29%. Population: 43% of the world.Nominal GDP: 9%. Exports10% share. Foreign direct investment 6%. Foreign reserves: 24% of the world.

Primary energy consumption among the BRICs rose 61.7% from 1985 to 2004,while global

primary energy consumption increased 42.1% (contribution byBRICs: 33.2%). As a result, the

percentage share of BRICs primary energyconsumption in the world rose from 22.7% in 1985 to

25.8% in 2004

CONCLUSIO