Since the 1970's and particularly the 80's and 90's, we've seen the rise of countries like Brazil, Russia, India, China, and South Africa (the so-called BRICS). I've had a previous post on the rise of China during this period, but this post will entail the other emerging markets/less developed countries (LDCs). These countries are primarily Brazil, Russia, and South Africa (India needs to be discussed separately), but I'll also discuss other key commodity exporters like Australia and Canada.
It's important to notice that countries like Brazil, Russia, and South Africa are heavy commodity exporters. In the case of Russia, almost half of the Russian government revenue comes from natural gas exports (much of it to Europe). Countries like Brazil, South Africa, Australia, and Canada are also heavy commodity exporters. As I mentioned in my post detailing the workings of capitalism, it's common to see specialization lead to certain economies across the world that become reliant on commodity exports. Usually, we see this kind of specialization happen in countries that're either rich in natural resources or countries without proper capital inputs (or both).
In the case of Brazil, Russia, and South Africa, we've had natural resource rich countries who are still developing the capital inputs necessary in the post-industrial world of today. Keep in mind that much of the natural resource extraction that occurs in the developing world is banned in the developed world because either the extraction or refinement of certain natural resources can be extremely damaging to the environment. Developed countries often have restrictions on such kind of behavior because the risk coming from possible environmental degradation usually outweighs the short term benefits from importing those materials while these countries often have the capital inputs required for a post-industrial economy. LDC's, on the other hand, don't have those inputs while their social and political systems are often not developed enough to respond to these long term risks.
The reason I bring up countries like Australia and Canada is because of the global mining boom that's been happening. In my economic and geopolitical posts on China, I speak about how China has effectively been driving the market for commodities--particularly industrial commodities like iron ore, tin, copper, and a whole host of other metals. These raw materials are being exported from countries like Brazil, Russia, South Africa, Australia, and Canada. As China becomes forced to rebalance its economy and growth rates start to fall (as they already have), the worldwide demand for industrial commodities will fall. Iron ore prices already peaked at around $190/dry metric ton and iron ore is currently trading at around $100/dry metric ton.
This brings us to the next question: what are the consequences of falling commodity prices on these particular countries? As the prices of commodities falls, the demand to hold currencies of countries who export commodities will fall. In other words, we're likely to see the currencies of these countries (Brazil, Russia, Australia, Canada, etc.) fall in terms of foreign exchange (FX). Not only are the currencies of these countries likely to fall, but these countries are also likely to experience decreases in production stemming from a world with falling aggregate demand and falling production. So the countries in question (Australia, Russia, Canada, Brazil, and South Africa) will see input cost inflation stemming from their falling currencies while simultaneously seeing falling output and rising unemployment.
Keep in mind that many of these countries (ex. Australia, Canada) have large asset bubbles stemming from capital inflows and their currency strength over the past decade or so. These countries will have to deal with falling production and falling currencies while their asset bubbles would be bursting. On the plus side; however, Australia and Canada will experience inflation that could help prevent the real debt burden (debt/NGDP ratio) from ballooning.
I suspect that many of these countries are likely to experience stagflation or stagflation-like effects. They're likely to see falling real growth combined with input price inflation, falling output, and falling employment levels. In the case of Brazil, Russia, and South Africa, we could see significant social and political unrest.