As attention is now being shifted towards Eastern Europe and the Middle East with mounting tensions between the world’s great powers there’s been a quiet shift to bring about global order. Large developing nations are exerting greater influence in world economic affairs and are starting to build alternative Western-led institutions. At the movement’s core is the formal intergovernmental BRICS countries grouping. Let us take a deeper dive into what the BRICS countries consist of and how they aim and change the future of global trade among many other reformations.
BRICS as a New Economic Powerhouse
The BRICS countries group mainly includes 5 major countries such as Brazil, Russia, India, China, and South Africa as well as the other five that joined in January 2024. Together these ten countries account for around 40% of both exports and crude oil production. They also account for about one-quarter of the global GDP, nearly half of the world’s population, and two-fifths of global trade in goods.
If there is another addition of nations who have applied for memberships such as Vietnam, Thailand, and Bangladesh it would raise the group’s share to about one-third of global GDP. BRICS creates a forum that at minimum provides emerging markets an opportunity to align on global topics and new opportunities to promote mutual economic development and growth. This has been evolving steadily and it has begun building political and financial institutions and a payment mechanism for executing transactions.
Reshaping Global Financial Systems
BRICS countries are rather keen to develop greater independence from the Western-led international monetary system. Approximately 90% of the global foreign exchange transactions are mainly conducted in dollars which flow primarily through European and US banks. Western financial sanctions on Russia also show the powerful systemic influence that is held by the US and its central role in the global financial systems. To steer clear of this NDB also called New Development Bank was initiated. It capitalized about $100 billion. It also helps gain significant revenue for BRICS-based companies. The global financial systems hence had a shift in terms of transactions in several non-dollar currencies. This also led to ease of reliance on US-based companies.
Political Influence and Global Governance
The BRICS partnerships are to play quite an important role in terms of global governance which addresses the multiple challenges that have been faced by developing countries through advocacy and policy coordination. By completing this ambitious development agenda, BRICS nations will be able to demonstrate the efficacy of South-South cooperation especially in driving sustainable development. Through collaborative research and development initiatives, it is also possible to generate innovative solutions to pressing global issues such as education and climate change.
Geopolitical Rivalries and Challenges
The effectiveness of BRICS is further complicated due to the rising rivalries and differences in priorities of the member nations. Countries such as China and Russia are highly eager to reduce their reliance on Western-dominated financial systems. On the other hand, countries such as the UAE and India prefer a more cautious approach that will allow for their individual currencies to rise during global trade.
Geographic rivalries also further complicate the collaboration especially when it comes to India and China where there are ongoing territorial disputes. Additionally, Brazil’s views on environmental issues may serve to clash with the priorities of resource-rich nations such as Russia.
There might also arise issues due to the US-China rivalry. As China tries to expand its influence through initiatives such as Belt and Road Initiative other BRICS members may feel quite apprehensive regarding China’s growing economic power. This concern may also lead countries such as Brazil and India to be more cautious in fully embracing Chinese leadership within the group.
BRICS and Regional Development
The main reason why BRICS was started was for cooperation among the nations belonging to this group. The factors that drove this was the financial crisis of 2008. The crises raised a lot of doubts with regard to the sustainability of the dollar-dominated monetary system. The BRICS hence called for the reform of multilateral institutions in order that they will reflect the structural changes in the world economy and the increasingly central role that emerging markets now tend to play.
BRICS managed to hence push forward for institutional reform which led to IMF or International Monetary Fund quota reform in 2010. Thus the financial crises have momentarily reduced Western legitimacy and briefly let the BRICS countries become agenda-setters in multilateral institutions.
The Future of Global Trade with BRICS
BRICS has now agreed to strengthen their trade and financial settlement in local currency, study the feasibility of an independent cross-border settlement and depositary infrastructure, and a BRICS reinsurance company. The leaders have also agreed to jointly develop the New Development Bank into a new type of multilateral development bank in the 21st century that will help further the expansion of the bank.
Since the leaders have also understood the widespread benefits of low-cost, faster, more efficient, safe, and inclusive cross-border payment instruments, the BRICS countries have now been focusing on the principle of minimizing trade barriers and non-discriminatory access. The use of local currencies in financial transactions between trading partners and BRICS is also encouraged. The only way forward to resolve conflicts has also been stated to call for dialogue and diplomacy between the conflicting countries.
Conclusion
With the recent years of new geopolitical tensions, instability, and economic ambitions, trade wars and a pandemic have clearly brought lasting challenges and structural changes to the business landscape that we once knew. The growth of BRICS countries however shows that after decades of strong economic development, emerging markets are now ready for a larger role in the world order one that helps better reflect their interests. Companies that also adapt to this movement will be more likely to thrive in the ever-evolving era of multipolar competition.
FAQ
How many countries are in BRICS?
There are in total 5 countries in BRICS such as Brazil, Russia, India, China, and South Africa with 5 more new additions or those who have been invited to join such as Egypt, Ethiopia, Saudi Arabia, Iran, and the UAE.
What is the main purpose of BRICS?
The main purpose of BRICS is to promote security, development, peace, and cooperation between the member nations.
Who is joining BRICS in 2024?
The new additions who are ready to join BRICS are as follows:
- UAE
- Saudi Arabia
- Iran
- Ethiopia
- Egypt
Where is BRICS headquarters?
The headquarters of BRICS is located in Shanghai, China.
