2022 marked the 21st anniversary of the introduction of the term BRICS which represents the alliance between the developing nations of China, India, Russia, Brazil and South Africa. In 2001, Jim O'Neill, an economist from Goldman Sachs, introduced the term and stated that by 2050 this alliance of nations would rise to take over as global leaders. The five nations, combined, account for 25% of the world economy in terms of GDP as of 2021. All of the countries have witnessed strong growth over the years with China and India leading the way and the others maintaining pace and meeting most expectations of the international community. However recently, the combined toll of the Covid-19 pandemic and some other international events and internal factors has raised questions if the group will actually be able to meet the expectations that have been set forth for them.
The alliance has massive built-in potential for growth and has the capacity to take over as economic leaders if the right steps are taken. All of the economies have good growth potential and are in the developing phase. If the correct steps are taken, the alliance can easily place itself on top of the world economy. However various international and internal factors stand in the way of this goal.
Covid-19 pandemic has damaged the economies of all the nations. Lockdowns leading to artificially induced slowdown in the economies has led to decreasing growth rates and falling confidence and rising discontent in every country. Massive layoffs, businesses shutting down both temporarily and permanently, flaws in the health infrastructure and other essential infrastructure and other similar reasons have been the cause. On top of this the increased government expenditure on welfare and supportive activities to control the spread of the pandemic, while businesses and production lines remained closed due to lockdowns has brought the GDP growth figures into the negative range for the countries.
In addition to the pandemic, Russia’s invasion of Ukraine, and the consequent economic sanctions by most of the international economic powerhouses like the USA and Western European countries, has made growth prospects even more bleak for the nation. Most nations across the globe have cut trade ties with Russia, their capital resources across the world are being blocked, Russian companies are being blacklisted from engaging in trade in most countries, many Russian banks are being disconnected from the SWIFT network, etc. These sanctions and worsening international relations will inevitably drag down growth in Russia and thus the overall performance and growth of the alliance. This is compounded by the fact that the political regime in the nation is not on good terms with most western nations.
The individualistic policies of China are a big burden to the growth progress of the nations. Various political and military policies of the socialist nation act as a hurdle in full cooperation and accelerated growth of the member nations. China’s constant military clashes with India and their feigned ignorance on the matter has always created tension among the top 2 in the alliance. On the other hand, their expansionary military policies and their ‘debt trap’ lending policy is creating a lot of tension among the group as well as with countries all around the world. Moreover, the worsening economic relations of China with the US and other western nations has created a massive hurdle for its growth which impacts the growth of the group as a whole.
Among the five nations, only India and China have shown respectable growth in the past decade, before the crash caused by the Covid pandemic. The graph showing the percentage GDP growth per annum of all the countries clearly represents this. Up until 2010, all the nations were keeping pace with each other. However in the past 10 years, Brazil, South Africa and Russia have lagged behind significantly.
In addition to the slow growth pace in Brazil and South Africa, both nations are suffering from severe economic problems like corruption, crime and unemployment. The unemployment rates in all the member countries can be seen in the following graph. While India and China have managed to keep their unemployment levels low and Russia has managed to bring it under control, the same cannot be said for Brazil (unemployment level nearing 15% in 2021) and South Africa (all-time high unemployment level of 33.6% in 2021).
These economic problems and lack of growth are a major bottleneck in the path of the BRICS alliance.
Political instability in Brazil is another reason for concern. After Jair Bolsonaro came to power in Brazil, the country that boasted as the 5th largest democracy in the world, has moved towards a more controlled, militaristic rule. This has caused rising internal and international tensions.
Other economic issues like the collapsing housing industry in China, supply shortages in electronics in all countries, the US-China trade war, etc. are a major cause for concern. Complementing these is the fact that all of the member nations to the BRICS alliance, other than China to a certain extent, can be considered more or less backward in terms of technological development. The lack of a ‘tech hub’ in any of these nations creates a massive divide between them and someone like the USA who holds a near monopoly when it comes to tech, acting as a base for multinational companies like Google, Apple, Intel, AMD, Facebook, etc. To be clear, India does have a good base in the IT sector, but it is mostly in regards to providing complementary services to other multinational giants while we seriously lack in hardware development. In a time when tech is the main industry in the world, this factor undermines the economies of the nations massively.
The way forward
All the five nations to the BRICS alliance have their own national and international problems to deal with. If these issues are not dealt with properly, they can lead to the downfall of the alliance. In terms of growth, each nation has a bright prospect as the economies are still in the developing phase and have abundant resources in their possession like abundant natural resources, massive and cheap working populations, etc. However, in order to harness this potential, all of the countries have to work together, share their resources, strive towards inclusive growth and cast aside individualistic ideals and policies. It is necessary that the governments undertake policies to improve growth and solve the prevailing economic problems. These ideals can bring the group to the forefront of the global economy within the next 2 to 3 decades. However, if the current situation prevails, the alliance will not amount to any appreciable growth in the economies of the member nations.
From an overview of the latest discussions and summits held by the BRICS alliance, it seems that the group is trying to move towards the correct direction. The 13th Summit, hosted by India, focused on political and national security, economic and financial growth and cultural growth. Under these main pillars the priority sectors were:
Political and National Security - Reform of the Multilateral System & Counter Terrorism Cooperation
Economic and Financial Growth - Focus in on intra-BRICS cooperation in sectors such as trade, agriculture, infrastructure, small and medium enterprises, energy and finance & banking with priority on implementation of BRICS Economic Partnership Strategy 2020 - 25, operation of the BRICS Agriculture Research Platform, cooperation on Disaster resilience, innovation cooperation and digital health and traditional medicine
Cultural growth - Discussion on cultural and personnel exchanges to enhance intra-group bonding.
The results of this discussion was highlighted in the BRICS New Delhi Declaration 2021.
The latest 14th BRICS Summit will be convened in China and will be attended by the Prime Minister of India, Narenadra Modi, the Russian President, Vladimir Putin, the Chinese President Xi Jinping as well as the leaders of Brazil and South Africa. As per the Indian Ministry of External Affairs, "Discussions during the 14th BRICS Summit are expected to cover intra-BRICS cooperation in areas such as counter-terrorism, trade, health, traditional medicine, environment, science and technology, and innovation, agriculture, technical and vocational education and training, and MSMEs," as well as issues like the reform of the multilateral system, combating the COVID-19 pandemic and global economic recovery, amongst many other issues. Discussions on these issues among the member nations shows that the group is moving in the right direction and is focusing on inclusive development and advancement of various sectors in all economies. However the actual outcomes of these discussions in terms of actual economic development is yet to be seen.
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