Will BRICS make a sizable impact on the global economic order?

The BRICS (Brazil, Russia, India, China and South Africa) group has gained a lot of traction in the past few years. The five countries are some of the most powerful in their regions and together account for close to 40 percent of the world’s population. The group has regional powers, both nuclear weapons and non-nuclear weapons states as permanent members of the United Nations Security Council (UNSC) within it. The level of their political clout, the strength of their security forces and the stage of economic development vary among the five nations. 

The recent global economic slowdown has had different effects, with Brazil and South Africa looking for new markets, the U.S. war on traffic has affected primarily China, but India is not immune to those effects, and sanctions on Russia will be detrimental to the long term growth of the country. Nonetheless, the five nations together continue to move past these hurdles to take advantage of their strengths. The BRICS nations together account for close to 30 percent of global GDP, which economists predict will not only reach the economic potential of the G-7 nations in the next decade, but will surpass them by 2050. 

The BRICS members continue to work together to build an alternative to the established liberal economic global order. Will the BRICS change that order? highly unlikely. Will it be able to modify and challenge it? very likely. 

The BRICS nations have a strong foundation of bilateral relations with a focus on mutual benefit and non-interference. While the level of economic development may vary, trade between BRICS can be highly complementary. Brazil and Russia are strong in the commodity and natural resources sectors, while China and India are net importers in these areas. India and China have cheap labour. China dominates the manufacturing sector. Indiaʼs strength lies in generic pharmaceuticals, software engineering, textiles and business process outsourcing. With close to 50 percent of the world’s labour force and approximately 40 percent of the world’s population, the BRICS group could continue to trade and invest within themselves to stimulate mutual growth. The purchasing power within the five nations is enormous, making them an attractive market to be engaged with. Equally, the BRICS nations are engaging with other countries to build their economic footprint. 

The New Development Bank or the BRICS bank was set up in the Fortaleza Summit in 2014, with a view to provide resources for infrastructure and sustainable development projects in BRICS and other emerging economies, as well as in developing countries. The aim was to provide an alternative to other leading multilateral institutions such as the World Bank, while also assessing projects and approving them in a vastly short time frame. Projects have to be sustainable, climate resilient and built with accountability and transparency.

Despite the fact that the five countries do not have high credit ratings, the bank has been rated at AA+.  The bank is still in its infancy and one has to wait to see if it is truly able to establish itself at the level of other such institutions like the World Bank and IMF. For the moment, it is expanding its horizons in terms of both membership to the bank and also financing projects beyond the BRICS nations to other developing nations. 

With the next BRICS Summit to be held in November in Brazil, questions of its relevance and possibility to survive come to the forefront. While the five nations may have differing political views, BRICS is essentially an economic platform. The fact that the five nations have met annually since the first meeting in 2009 and the various ministries continue the dialogue process throughout the year, point to the robustness of the organisation. Critics have stated that China has come to dominate the group. It cannot be refuted that as the largest economy within the group, China has a powerful position. Nonetheless, the group works on consensus and the other four members together counter the dominance of China. 

In the recently concluded Foreign Ministers Meeting, the statement released reaffirmed the group’s commitment to reforms of multilateral organisations such as the UN, strengthen conventions against weapons of mass destruction, especially biological weapons, move to prevent the weaponization of space, work together to counter terrorism and commit to assist in international efforts for peace in Afghanistan, the Middle East, etc. This is an indication of the world view of the group and the desire to work on common areas of interest.

The narrative on the group has been to view the BRICS as only a negative challenge to the established liberal order led by the U.S. and other western nations or the ‘West’. While the BRICS is challenging the system, and will likely persist in this, it is not at odds with it. Rather, it has goals very similar to that of the ‘western’ liberal order in terms of free trade practices, promoting international norms and regulations, sustainable global development, people-focused development, etc. The challenge posed by the BRICS to the established institutions is an understanding of the needs of the developing nations, as they themselves face similar challenges. The BRICS group is a reality which has been accepted, the need is to identify shared areas of interests which can be promoted rather than continue to view the BRICS from the ‘West’ vs ‘East’ narrow prism. 

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*Dr. Stuti Banerjee is a Research Fellow at the Indian Council of World Affairs, New Delhi. At the Council, Dr. Banerjee is engaged in research on US and Latin America & the Caribbean, the Indo-Pacific and the Arctic. This includes producing analytical articles on the politics, economy and strategic issues of the region. She is also engaged in providing policy recommendations papers for concerned departments of the government.

Photo credit: Saulo Cruz/Flickr

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