Washington: The speedy economic growth of Brazil, Russia, India and China (BRIC) has helped to create the global commodity boom and has strengthened its trade ties with Low Income Countries (LIC).

A policy paper of the International Monetary Fund (IMF) said that the value of LIC-BRIC trade has grown six-fold over the past decade.

As bilateral trade has expanded, financial flows from BRICs to LICs-both in the form of foreign direct investment and development financing- have also increased rapidly. The IMF policy paper states the bilateral trade, which grew exponentially over the past decade, is the "backbone of LIC-BRIC relations."

During the same period, LIC economies have grown at an annual average rate of 4.7 per cent, the paper stated.

While improved macro-economic management has been critical to this strong economic performance, the more favorable external environment -- the emergence of BRIC was an important contributing factor, IMF noted.

Economic expansion in BRIC nations and the strong economic complementarities between the two groups of countries have underpinned the rapid growth and high intensity of bilateral trade, the paper said.

"Many LICs in general have a strong comparative advantage in commodities while most BRICs are competitive producers of manufactured goods."

BRIC demand for commodities resulted in a significant improvement in LICs' terms of trade.

Over time, however, investment appears to be spreading to agriculture, manufacturing, and service industries. Many 'non resource-rich' countries have also attracted significant investment.

Moreover, private companies, particularly small and medium-sized ones from BRICs, have become active investors, with the potential to form industrial clusters in some LICs as seen in East Asia, it said.

A key challenge for LIC policymakers is to ensure BRIC FDI inflows, as well as FDI from other sources, continue to boost local firms' links with the global economy and help enhance domestic resource mobilisation, the paper stated.

(Agencies)