BRICS: Redefining Global Economics and Power Dynamics for the 21st Century

Is BRICS revolutionizing economic trends? How it is compelling and shaping a “global economic order” of its own? What can be the significant outcomes and implications of the recent 15^th BRICS summit? What is the future trajectory? These questions necessitate an analysis of various development aspects of the BRICS in order to predict the changes it might induce in the global economic system in the near future.

BRICS, an acronym for Brazil, Russia, India, China and South Africa is a grouping of 5 nations, the original nomenclature for which was proposed by a Goldman Sachs Economist Jim O’ Neil in 2001 to collectively refer to the fast-growing economies of the world; these economies were deemed financially sound enough (generally in terms of technology investments and trade innovation) to dominate the global economy by the year 2050. Although BRICS was formed in September, 2006 at the 61^st occasion of UNGA session, its inaugural session however was held, later in 2009.

The fact that the BRICS countries make up half of the world’s population, boasting a combined GDP contribution about 31.5% (surpassing that of the G which is 30.7%) perhaps indicates the enormity of its economic aptitude. Unlike western financial institutions, perhaps the most unusual strength of BRICS is that it is fostering various operational mechanisms towards infrastructure and development campaigns being carried out in poor countries or the ones particularly facing payment difficulties, without actually pursuing any manipulative political agendas. The capability of BRICS to shift the existing western monopolized economic order can be determined by the recent performance of the individual nations which have embarked on long-term infrastructure projects, as well as their transcendence towards sustainable development. For example, China’s Belt and Road initiative is a trans-continental connectivity platform linking nations through maritime and land routes. India has planned 100 smart cities linked by trains, uplifting its IT sector tremendously (the IT and BPM industries’ revenue is estimated at US$ 245 billion in FY 2023) and accelerating its merchandise scope. Meanwhile, Russia is building up advanced special economic zones to provide new corridors linking Asia and Europe. However, South Africa and Brazil are more dedicated towards their sustainable farming and industrial growth. Other than this, the BRICS countries have established new multilateral financial institutions such as the Silk Road Fund, the BRICS New Development Bank (NDB) and the Asian Infrastructure Investment Bank (AIIB) aiming to increase additional liquidity for infrastructure developments. The mutual agreement amongst the BRICS nations to trade in non-dollar currencies clearly creates concerns for the dollar based cross-border trade, currently applicable. It, however, signifies the efforts of BRICS and other Global South countries in the establishment of a more diversified and independent trading system. The BRICS countries fared better both in terms of inter-mutual trade as well their share in global trade; the latter has hiked drastically in terms of world export of goods and services, mainly in from 2007-2009 and 2015-2019, with China’s and India’s counts almost doubled. Meanwhile, in world merchandise trade the BRICS countries reported an increase of approximately 70%. Between 2000 and 2017, the BRICS countries saw their portion of the South’s total trade rise from 28% to 44%, marking a significant growth. Notably, the combined trade of BRICS nations with the South demonstrated a consistent annual growth rate of approximately 11% during the same period.

However, the role of BRICS at the geopolitical stratum is becoming assertive principally in the sectors of sustainable development, bringing attention towards climate change and in areas such as international negotiations, peacekeeping measures and conflict resolution. This increasing influence is substantially due to the economic impact of the BRICS nations, altogether through joint investments in education, research and development, and transfer of technology and expertise. Their investments in emerging technologies such as Artificial Intelligence, renewable energy, sustainable growth and block-chain can certainly position them as major drivers of global economic growth and innovation in the near future as well putting them in a lead role in global politics. For instance, China, being the world’s second largest economy has recently marked up its expenditure on AI chat-bots to almost 14.75 billion USD in this year alone, a rise of nearly 50% in two years. Meanwhile its budget allocation for research and development is projected to reach 328 billion yuan, i.e. 42 billion USD in 2023. Similarly, the gross budget of India in R&D was 65.2 billion USD, a share of 0.65% of total GDP in 2022 and for Russia, the internal cost of R&D reached around 1.3 trillion rubles according to 2021 statistics.

BRICS has played a pivotal role in reshaping global financial institutions. During the Seoul Summit in 2010, the G20 reached an agreement on overhauling quotas and management of the IMF and World Bank. This primarily entailed redistributing quotas by 5% and 6% to cater to developing nations’ interests, following the application of a new formula for calculation. In January 2016, the quota decision took effect, necessitating increased coordination among BRICS nations for position reforms and sustained collective growth within the G20 and IMF. As a result, BRICS significantly contributed to establishing and organizing new financial regulation and monitoring standards, representing the emerging economies as well as consolidating the interests of developing nations.

BRICS also plays a substantial role in global governance; it is committed to ongoing institutional reform and is positioned to become a long-term cooperation mechanism for enhancing global governance, rather than just risk reduction. In the upcoming “golden decade,” BRICS must further innovate, tapping into diverse sources of wisdom to offer unique solutions and elevate collaboration to enhance their global impact.

BRICS can therefore, serve as a model of multilateral cooperation for the 21^st century. The group possesses the necessary tools to elevate globalization to a higher level in terms of economic strength and global governance rules. Economically, BRICS stands as the driving force behind global economic prosperity, as demonstrated by IMF data indicating that in 2016, 60% of global economic growth came from emerging markets, including the BRICS. Consequently, BRICS is well-equipped to transition from a participant to a leader in globalization.

In the BRICS 15^th Session, held between 22-24 August, 2023 in Johannesburg, South Africa the scope of the meeting enlarged to such an extent that the invited bodies included representatives from the African Union, the Arab-Maghreb union, the OIC and the United Nations. The most groundbreaking development was in fact the announcement by South African President Ramaphosa, inviting 6 countries to join BRICS, namely Iran, Argentina, Egypt, Ethiopia, Saudi Arabia and the UAE. Full membership shall take effect on 1^st January 2024. The congratulatory and welcoming remarks by President Xi Jinping and PM Narendra Modi exhibited the staunch confidence of the BRICS leaders in their rapidly growing impact on the global economic and power dynamics. Other key agendas included the trade and business forum discussions in multiple segments, as well as the affirmations of PM Modi and President Xi to resolve the Indo-China western border disputes. Additionally, Brazilian President Luiz Inacio Lula Da Silva, called on the BRICS countries to create their own common currency for trade and investments to reduce their vulnerability to dollar exchange rate fluctuations.

In fact, the BRICS nations have become a major force in the upheaval of international globalization and governance. The BRICS framework is a remarkable example of innovation that has been achieved in a relatively short time period of ten years. For instance, the BRICS New Development Bank (NDB), from its creation until issuing its first loans, has worked smoothly and efficiently, in strong contrast with the West-controlled institutions such as the World Bank and the IMF. Some analysts assume that the BRICS can introduce an improved system of global governance, serving higher international public goods and services, and playing a more effective role in global governance.

In conclusion, it is evident that the BRICS nations are working towards developing a new global model of governance, a new economic pathway that is consolidated, equilateral and constructive rather than unipolar. The initiative brought up by the BRICS to trade in their home currencies can turn out to be a groundbreaking paradigm, accelerating the process of de-dollarization and the share of the BRICS countries in Global GDP can further increase up to 50% by the year 2030. The success of the BRICS has attracted the passionate motivation of other countries such as Algeria and Mexico from Latin America to invest in this bloc, which definitely shows the further magnification of its trans-continental scope and a further manifestation of South-South Cooperation. Another prominent feature of BRICS in appealing to the under-represented nations is the advocacy of reforms in the multiple global institutions. Broadly, they emphasize the need to restructure various dynamics of the United Nations to accommodate the necessities of the underdeveloped nations especially in Africa, revisit the mechanisms of shareholdings in the World Bank and International Monetary Fund as well as the renewal processes to empower global organizations like WTO and WHO. While BRICS has a journey ahead to fully realize its potential, it has effectively laid the groundwork for an alternative global order within the prevailing Western-dominated system. Expanding beyond economics, the group now addresses global political and security issues, including counter-terrorism. This evolution underscores BRICS’ growing influence, positioning it as a potent multilateral forum in the global economic landscape over time.