As part of the framework contract for the preparation of the annual European Competitiveness Reports led by WIFO, the wiiw and other research partners provided a detailed analysis of trade, foreign direct investment, and knowledge flows between the EU and the four largest fast growing emerging countries, i.e., Brazil, Russia, India and China (BRICs). The BRICs' common features include: big land size, large population, relatively low income levels but also fast economic growth and catching-up to the industrialised countries. Moreover, several years of BRICs' high growth have led to the emergence of a prosperous local middle class, inducing rapidly changing consumption patterns and education levels as well. The study explains the particular economic development characteristics of Brazil, Russia, India and China and their implications for the economic interaction with the EU in terms of new opportunities and challenges to European competitiveness.