Photo Gallery The Second Wave
Twelve years ago, former Goldman Sachs investment banker Jim O'Neill coined a new term: BRIC. It stands for Brazil, Russia, India and China, a quartet of countries that enjoyed impressive economic growth in the ensuing years. The term changed to BRICS with the addition of South Africa in subsequent years.
With growth slowing, there's a new term for them today: "The Fragile Five." Here, a demonstrator holds up a Brazilian national flag during a protest in June against higher public transportation fares and the use of public funds to finance the World Cup.
In recent years, hundreds of billions were invested in sovereign bonds of developing nations because returns in established Western markets were comparatively weak. But last May, then-Federal Reserve head Ben Bernanke reversed the flow. The Fed has tightened its monetary policy, causing a wave of investors to flee the developing world. A second wave has now begun and it is no less than a tsunami.
Last week, Turkey raised its prime lending rate to 10 percent. Developing countries have become uneasy and are doing all they can to slow investor flight and the collapse of their currencies. Pictured here is a foreign exchange booth in Istanbul.
The tightening of US monetary policy is an extremely dangerous development for the countries affected. That may explain why Brazilian President Dilma Rousseff unabashedly courted international investors at the World Economic Forum in Davos in mid-January.
Reserve Bank of India Governor Raghuram Rajan (center) has attacked the US and Europe for their monetary policies. He argues that industrialized nations must assist developing countries with their currency problems -- especially given that India, China and Co. helped dampen the global economic crisis in 2008.
An anti-government protest in Rio de Janeiro: In emerging economies around the world, a rising middle class is demanding a larger piece of the pie. Although Brazil has made significant social progress in recent years, its people are still concious of corruption among leaders and the ruling class; they are outraged when they see money wasted on lavish construction projects like the ones underway for the upcoming World Cup in the country.
Last year, China became the world's greatest trading power. But the country still faces plenty of challenges, particularly the next, more challenging level of development.
A woman and child are seen through an art installation in the shape of a horse in a Beijing park. One worry shared by BRICS countries and Western politicians alike is the possibility of an economic collapse in China.
China has also seen the rapid emergence of a middle class. Here, Chinese shoppers buy food at a supermarket.
A few years ago, the Tata Nano car, marketed to first-time car owners, became a symbol of India's emerging middle class. But economic growth in the country is slowing.
In India, many business leaders are hoping to see the election of Narendra Modi as prime minister this fall. He is viewed as effective and business friendly, and many hope he can help spur the economy. But Modi is a controversial figure and is even banned from entering the United States.
A significant worsening of the economic situation in the BRICS countries might not only create instability among 40 percent of the global population. It could also have significant consequences for the West. Companies like BASF and Siemens now generate a significant portion of their profits in the Far East. Volkswagen, whose new factory in Foshan, sells more cars in China than in Germany.
