The BRICS Group and its Role in Reshaping the Global Economy

The grouping of Brazil, Russia, India, China and South Africa, collectively known as BRICS, has emerged as a major force in the 21st century global economy. Formed in 2009 as an initiative for cooperation and policy coordination between these major emerging economies, BRICS has developed into a significant platform for its members to exert greater influence in economic governance and norm-setting at the international level.

With the combined economic power of its members representing over a quarter of global GDP, nearly half the population of the planet, and significant influence in regional and multilateral organizations, BRICS aims to promote equitable, democratic global governance and more inclusive, sustainable development. This article examines the genesis of BRICS, key goals and institutions, intra-bloc dynamics, and the grouping’s impact in reforming global financial architecture and power structures to better reflect the realities of the multipolar 21st century economy.

The Formation and Evolution of BRICS

BRICS originated from the concept of grouping major developing and newly industrialized countries that were gaining influence, but continued to face inequality in global institutions still dominated by western advanced economies. The acronym BRIC was initially coined by Goldman Sachs economist Jim O’Neill in 2001 in a report forecasting the rising prominence of Brazil, Russia, India and China in the coming decades based on factors like demographics, resource endowments, and productivity gains.[1]

The foreign ministers of the initial four BRIC states held an inaugural meeting in 2006, releasing a statement calling for democratizing international relations and boosting their coordination in various multilateral forums.[2] This gradually led to annual BRIC summits, with the group formalizing at the Yekaterinburg Summit in 2009.[3] The following year South Africa was invited to join, becoming the “S” in BRICS. South Africa’s addition was strategic to gain an African voice and meet the group’s desire for greater geographic representation across emerging economies.

Early focus areas for BRICS included advocating for a multipolar global order, pushing reform of institutions like the UN Security Council, World Bank and IMF, and increasing economic and political coordination between members on issues of mutual interest.[4] Intra-BRICS cooperation has intensified over time across a range of functional areas including trade, finance, cyber security, education, health, and sustainable development. [5]

Each member has hosted BRICS summits on a rotating basis to shape the grouping’s priorities and initiatives. Key meetings over the years include:

  • Sanya, China (2011): Established BRICS as an informal organization, created a framework for multilateral cooperation.
  • New Delhi, India (2012): Focused on exploring new models for financing infrastructure and reducing dependence on western credit rating agencies.
  • Durban, South Africa (2013): Created the BRICS Business Council and BRICS Think Tanks Council.
  • Fortaleza, Brazil (2014): Key summit launching the New Development Bank (NDB) and other new financial mechanisms amongst BRICS.
  • Xiamen, China (2017): Important progress on economic partnership and integration between BRICS members.
  • Johannesburg, South Africa (2018): Signed declaration on strengthening multilateralism and affirmed collective emerging power of BRICS globally. [6]

Overall, BRICS evolved from an investment and economic concept into a significant political formation advancing the interests of emerging powers in global governance. It represents a loose grouping rather than a formal bloc or treaty-based organization. However, the significance of BRICS in shaping norms, institutions and power dynamics in the shifting global order continues rising.

Intra-BRICS Dynamics and Cooperation

BRICS is a highly diverse grouping in terms of the five countries’ history, geography, political systems, economic strengths, and foreign policy priorities. China dwarfs the others in size, Russia and Brazil are commodities giants, India’s tech services and human capital edge are unmatched, while South Africa represents strategic vision into Africa. Balancing these differences while upholding mutual interests poses constant challenges for BRICS.[7]

China as the major engine of economic growth within BRICS drives much of the group’s collective weight. Consultation between China and Russia as premier security powers is also pivotal. However, BRICS consensus requires accommodating the priorities of India, Brazil and South Africa as well to retain its legitimacy as a democracy promoting inclusive development.

While largely focused outwards at reforming global governance, intra-BRICS cooperation has deepened significantly over the years across:

Trade and Investment

  • Intra-BRICS trade grew from $93 billion in 2002 to approximately $450 billion in 2021. However, this remains only a fraction of members’ total trade, signaling room for expansion.[8]
  • Efforts to increase use of localized currencies instead of US dollars in intra-BRICS trade and investment. [9]
  • Growing FDI between BRICS, led by China. Around $45 billion was invested into other BRICS countries in 2020.[10]

Infrastructure and Energy

  • Launch of the BRICS Energy Association in 2022 to boost integration of members’ electricity markets.[11]
  • Cooperating on megaprojects like the Transcontinental Railroad between Brazil and Peru which can accelerate regional trade.[12]
  • Collaborating in the space sector, including through the BRICS Remote Sensing Satellite Constellation to share data.[13]

Technology and Innovation

  • Initiatives for cooperation in AI, 5G networks, digital currency, and other emerging technologies.[14]
  • BRICS Innovation Cooperation Action Plan designed to strengthen collaboration on technology and knowledge sharing.[15]
  • Support for tech companies and startups to increase their reach across BRICS economies.[16]

People-to-People Exchanges

  • Educational cooperation through initiatives like the BRICS Network University to enhance student mobility.[17]
  • Push for greater tourism between BRICS countries, including through eased visa regimes. [18]
  • Launch of the BRICS Civil Forum and BRICS Youth Summits to expand mutual understanding.[19]
  • Increased cultural exports and media sharing, for example the BRICS Film Festival and BRICSLink news agency.[20]

Through such functional cooperation, BRICS aims to increase its internal cohesion. However, significant political and economic tensions between members like China-India border disputes or China-South Africa trade imbalances persist.[21] Competition over influence in regions like Southeast Asia or Africa strains intra-BRICS relations. Yet the shared vision of shaping a multipolar global order outweighs differences and drives BRICS’ collective rise.

BRICS in Global Economic Governance

The most strategic impact of BRICS has been in catalyzing changes to the post-World War II international architecture in which western advanced economies and institutions dominated. Through both its collective weight and individual efforts by members like China, BRICS is enabling greater representation of emerging economies in global governance.

IMF and World Bank Reform

A core BRICS objective has been reforming structures of the Bretton Woods institutions to better reflect the realities of the 21st century world economy. Despite having 46% of world population, BRICS holds only 13% of IMF voting rights and 11% in the World Bank.[22] The US retains veto power in both institutions. Through pushing for governance changes at summits and in forums like the G20, BRICS gained marginal shifts in quotas and voting shares. But the pace of reform remains slow due to resistance by western powers.[23]

Frustrated with lack of progress, BRICS established parallel structures like the New Development Bank and Contingency Reserve Arrangement as alternative to the World Bank and IMF respectively. These new institutions boost financing options for emerging economies while showcasing BRICS capabilities in economic statecraft.[24]

New Financial Architectures and Institutions

In addition to the NDB and CRA mentioned above, BRICS has championed the creation of other mechanisms and networks to reduce reliance on western-dominated systems:

  • Pooling of foreign reserves and expanding bilateral swaps to stabilize currencies against external shocks.[25]
  • Development of alternative credit rating agencies based in China to bypass the big three western firms that hold disproportionate sway.[26]
  • Encouraging trade and financing in local currencies rather than US dollars, including use of currencies like China’s RMB.[27]
  • Integrating payment systems across BRICS to facilitate clearing of transactions and reduce costs.[28]
  • Fostering connections between BRICS stock exchanges and depositories to enable deeper capital markets.[29]

Such initiatives attempt to reshape global financial architecture in ways more reflective of BRICS interests. They demonstrate the grouping’s agency in driving governance changes to existing institutions while also creating parallel structures outside western dominance.

However, progress remains uneven and most initiatives are still nascent or exploratory in scope. Coordinating five very different economies with unique policy priorities also poses obstacles to more rapid financial integration. But the overarching push for greater policy autonomy for emerging powers persists, strengthening BRICS influence. [30]

Trade and Investment Partnerships

In addition to cooperation among BRICS members, the grouping aims to boost members’ leadership in global commerce through joining or creating major trade and investment partnerships. Key examples include:

  • Guiding the Regional Comprehensive Economic Partnership (RCEP), integrating Asian supply chains under Chinese influence.[31]
  • Russia’s greater role in the Eurasian Economic Union (EAEU), expanding its regional sway.[32]
  • South Africa championing the African Continental Free Trade Area (AfCFTA), the biggest free trade area since the WTO.[33]
  • India selectively engaging agreements like the Indo-Pacific Economic Framework to balance interests.[34]
  • Brazil’s lead role in South American trade blocs like Mercosur and integration initiatives like IIRSA.[35]

While differing in scope, such partnerships reinforce BRICS members as engines of growth across the developing world. They boost trade and investment that can accelerate emerging economies. BRICS also uses its leverage to advocate reform of the WTO, particularly on agriculture trade policy affecting developing countries.[36]

Overall, BRICS aims to reform existing governance frameworks more equitably while pioneering new structures independent of western dominance. This dual approach is recalibrating power balances in the global economy.

Impacts on Economic Development Patterns

BRICS influence extends beyond governance issues to reshape economic development thinking. BRICS champions South-South cooperation, sharing development solutions between emerging economies with similar challenges.[37] BRICS prioritizes more participatory, grassroots development partnerships over traditional ‘top-down’ aid.

BRICS also advocates rebalancing macroeconomic policies to drive domestic demand-led growth rather than excess export dependence, particularly for China.[38] It embraces industrial policy and strategic state interventions to catalyze development, contrasting western neoliberal models. The BRICS Think Tanks Council generates ideas and policy innovation between members.

Through platforms like the NDB, BRICS contributes solutions tailored to developing country needs like sustainable infrastructure and human development. Loans are made in member currencies to reduce risk. NDB authorized about $30 billion in funding over its first 5 years.[39]

By pioneering new models and emphasizing South-South collaboration, BRICS helps chart an alternative to the ‘Washington Consensus’ vision imposed on developing countries previously. This expands policy space and flexibility for emerging economies to pursue tailored growth strategies.

However, the extent of genuine knowledge exchange between BRICS members remains relatively modest. Most efforts remain bilateral partnerships driven by China as the largest source of financing and expertise rather than collaborative ventures between all BRICS equally.[40] Delivery often falls short of ambitious rhetorical goals. Still, BRICS has been instrumental in legitimizing policy heterogeneity and south-based institutional solutions.

Broader Impacts on the Global Order

Beyond economic effects, BRICS carries broader geopolitical significance in the transition towards a multipolar order no longer dominated by the west. It represents the interests and values of emerging powers that account for an increasing share of global output and trade.

While not a political or security bloc, BRICS does coordinate perspectives on issues like sovereignty, conflict management and humanitarian intervention that contrast western norms.[41] As its members gain prominence on bodies like the UNSC, BRICS boosts policies of pragmatism and non-interference over liberal interventionism.

BRICS also provides a forum for Russia and China to constructively manage competition and mitigate frictions. [42] It grants Russia global economic influence despite its marginalization from Europe. BRICS signifies rising non-western power and norms.

However, BRICS has been critiqued for promoting state sovereignty and elite control over individual rights, its lack of concrete institutionalization, and inability to present a unified stance on issues like Ukraine.[43] Members’ bilateral relations and their differing political systems constrain collective action. Western powers worked to divide BRICS to maintain dominance.[44]

Nevertheless, the rise of BRICS unequivocally demonstrates the economic center of gravity moving towards emerging powers and the inevitability of global institutional reform. Even if BRICS itself fragmented, this long-term power rebalancing is the core trend shaping world order in coming decades.

Conclusion

The creation and rise of BRICS symbolizes the decentralization of power in the 21st century global economy and governance system. It represents the collective voice of major emerging economies seeking reform of institutions and norms still dominated by western advanced nations.

While an informal bloc with no binding commitments, BRICS has developed significant structures facilitating cooperation between members on economic, political and sustainable development issues. Intra-BRICS coordination is deepening, notwithstanding tensions on interests at times.

Most critically, BRICS champions governance frameworks that better integrate rising powers and develop solutions tailored to developing countries’ contexts. Through its weight and parallel structures, BRICS gained incremental but meaningful reform of bodies like the IMF and pioneered new institutions like the NDB that reduce dependence on western mechanisms.

Despite limitations in fully aligning its diverse members, BRICS stands at the forefront of transforming architecture to be more equitable and reflective of a multipolar world economy. By elevating the power of emerging economies, BRICS represents the most significant modern force reshaping global economic governance.

References

[1] O’Neill, Jim. “Building Better Global Economic BRICs.” Goldman Sachs, 2001.

[2] BRICS Information Centre. “Joint Statement of the BRIC Countries’ Leaders.” June 2009.

[3] Larionova, Marina et al. “BRICS and the Global Governance of Development Finance.” National Committee on BRICS Research, 2018.

[4] Armijo, Leslie Elliott and Roberts, Cynthia. “The Emerging Powers and Global Governance: Why the BRICS Matter.” Handbook of Emerging Economies, 2014.

[5] BRICS 2022. “BRICS Partnership on New Industrial Revolution.” BRICS2022.gov.in

[6] Moscow Times. “BRICS Leaders Rail Against West at Summit.” 26 July 2022.

[7] Bond, Patrick. “Can BRICS Re-open the ‘Gateway to Africa’?” Third World Quarterly, 2020.

[8] Observatory of Economic Complexity. “BRICS Trade Data.” OEC, 2022.

[9] Russia Briefing News. “Using BRICS Currencies for Trade.” Russia Briefing, 29 August 2022.

[10] Zhang, Jing. “BRICS countries stepping up technology exchange, economic coordination.” CGTN.com, 19 May 2022.

[11] Sputnik News. “BRICS Energy Association Launched at 6th BRICS Energy Ministerial.” 1 September 2022.

[12] Gestosas, Selma. “IIRSA Projects.” Dialogo Chino, 13 December 2021.

[13] Kosolapova, Elena. “Russia to launch new BRICS satellite in 2023-2024.” TASS, 22 August 2022.

[14] Hindu BusinessLine. “BRICS nations bat for sharing of data.” 2 September 2022.

[15] BRICS Information Portal. “BRICS STI Framework Programme.” Brics2021.in, 2021.

[16] BRICS Business Council. Annual Report 2021. BBC, 2021.

[17] University of the Western Cape. “BRICS Network University.” UWC.ac.za, 2022.

[18] BRICS Information Centre. “Memorandum of Understanding on Cooperation in Tourism.” 2012.

[19] BRICS Youth Summit 2022. “About BRICS YS.” bricsyouthsummit.com

[20] BRICS Film Festival. bricsfilm.com

[21] South African Institute of International Affairs. “South Africa in BRICS: Opportunities, challenges and prospects.” SAIIA, 2021.

[22] International Monetary Fund. World Economic Outlook, April 2022.

[23] Roberts, Cynthia and Armijo, Leslie Elliott. “The Multilateral Development Banks: Titans or Behemoths?” Handbook of the International Political Economy of Monetary Relations. 2018.

[24] Gowan, Peter and Brant, Julia. “The New BRICS Bank: Challenging the International Financial Order?” Global Policy, January 2015.

[25] Russian Finance Ministry. “Joint Statement on Macroeconomic Research within the BRICS.” 2015.

[26] Das, Tirthankar. “BRICS Credit Rating Agency: India’s Gift to the World.” Deccan Herald, 19 June 2020.

[27] Zhou, Viola. “China’s efforts to internationalise the renminbi and the rise of the BRICS.” Contemporary Politics, 2017.

[28] Hindustan Times. “BRICS moving towards setting up common payment system.” 15 June 2022.

[29] Sputnik News. “BRICS countries have untapped potential for increasing mutual investment.” 5 May 2017.

[30] The Economist. “The BRICS Bank is a Feeble Strike Against Dollar Hegemony.” 5 July 2015.

[31] Zhang, Jianping. “China and the Struggle for the RCEP.” The Diplomat. 23 June 2022.

[32] Dragneva, Rilka and Wolczuk, Kataryna. “The Eurasian Economic Union: Deals, Rules and the Exercise of Power.” Chatham House, 2017.

[33] United Nations Economic Commission for Africa. “African Continental Free Trade Area Questions & Answers”. 2020.

[34] Times of India. “What is IPEF and how does it affect India?” 24 May 2022.

[35] Roy, Meena. “South American Regionalism and Infrastructure: Strategic Implications for BRICS.” Observer Research Foundation, 18 July 2022.

[36] Wilkinson, Rorden. “What are the Prospects for Further WTO Reform?” The Diplomat. 8 September 2022.

[37] Chand, Manish and Gopalan, Sankar. “BRICS and South-South Cooperation in Medicine: Emerging Trends in Research Collaboration.” Global Public Health, 2019.

[38] Lundsgaarde, Erik. “The Domestic Politics of Global Financial Governance: The Case of the BRICS.” GEG Working Paper, 2018.

[39] New Development Bank. “NDB Approves 55 Projects with a Cumulative Financing of $30 Billion.” Press Release, 18 August 2022.

[40] Bond, Patrick. “Can BRICS Re-open the ‘Gateway to Africa’?” Third World Quarterly, 2020.

[41] Mielniczuk, Fabiano. “BRICS in the Contemporary World: Changing Identities, Converging Interests”. Third World Quarterly, 2013.

[42] Gabuev, Alexander. “Crouching Bear, Hidden Dragon: “One Belt One Road” and Chinese-Russian Jostling for Power in Central Asia.” Journal of Contemporary East Asia Studies, 2016.

[43] Nadkarni, Vidya and Noonan, Norma C. Emerging Powers and Global Governance: The BRICS, Norms and the Possibilities for Peace. Routledge, 2022.

[44] Roberts, Cynthia. “Structural Power and the Rise of Brazil, Russia, India and China (BRICs).” Rising States, Rising Institutions, 2014.

SAKHRI Mohamed
SAKHRI Mohamed

I hold a bachelor's degree in political science and international relations as well as a Master's degree in international security studies, alongside a passion for web development. During my studies, I gained a strong understanding of key political concepts, theories in international relations, security and strategic studies, as well as the tools and research methods used in these fields.

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