“Projected BRIC GDP growth should come from rising exchange rates” What does this mean?
its believed that exchange rates / currencies of developing countries are currently under-valued and below the levels predicted by their PPP (purchasing power parity) levels. as a country progresses through its growth phase and transitions to a developed country status, its curency will also gradually apreciate to levels predicted by PPP.
THanks for the explanation, but they are not necessary that they are undervalued.
true but they are more likely to be so … just like not all developing countries face all of the problems related to poor infrastructure, corrupt govts, uneducated workforce and so on. even some of the developed countries might have one or two of these characterstics (like corrupt govts) but their +ves outweigh them to place them in developed nation status. i believe these should not be viewed in isolation, that if a country’s currency is devalued, it has to necessarily be a back-ward nation. other factors also have to be considered simultaneously. these -ves only tip us off to form some judgements from a neutral stance.