Why do so many countries want to join BRICS?

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Group that brings together Brazil, Russia, India, China and South Africa is seen as a counterweight to traditional institutions led by the West. But what is the Brics and what is its relevance in the international scenario? Lula in China: why Brazil resists the expansion of Brics EPA-EFE via BBC Starting this Tuesday (22/08), leaders of Brazil, Russia, India, China and South Africa will meet in Johannesburg for the summit BRICS Annual Report. This year’s edition gained prominence amid expectations that the group of emerging countries may add new members, while China and Russia seek to increase their political influence in the face of rising tensions with the United States and allies. How did BRICS come about? First came the acronym BRIC, coined in 2001 by economist Jim O’Neill, from the US investment bank Goldman Sachs, to group together four of the fastest growing economies of the time. O’Neill wanted to emphasize how these four nations – Brazil, Russia, India and China – could collectively become a global economic force in the next decade. Investors got the message, as did policymakers in the countries concerned. Putting aside their political and social differences and driven by a common desire to restructure global political, economic and financial systems led by the United States, the four nations committed themselves to an ideal of “fairness, balance and representation”. The first annual meeting of the BRIC was held in 2009 in Yekaterinburg, Russia. A year later, they invited South Africa to join the political group, and an ‘s’ was added to the end of the acronym. What is the importance of BRICS? The member countries of the BRICS represent more than 42% of the world’s population, in addition to accounting for almost a quarter of the global gross domestic product (GDP) and 18% of trade. China boosts investment in the Brics UNCTAD FDI database For some, the grouping serves as a counterweight to Western economic and political forums and institutions such as the G7. The expectation is that the Brics could use its political and economic influence to push through long-needed reforms in entities such as the World Bank and the International Monetary Fund (IMF) in order to provide a more realistic representation of a currently multipolar world. What were the main achievements of the Brics? The group of emerging countries has struggled to live up to its potential to offer an alternative to traditional financial and political systems. Among its most notable achievements is the creation of the New Development Bank (NDB) – or Banco Brics –, which is currently chaired by Dilma Rousseff. The multilateral development bank has US$ 50 billion (about R$ 250 billion) in subscribed capital to finance infrastructure and climate-related projects in developing countries. Since its creation in 2015, the financial institution, which includes both members of the Brics as well as Bangladesh, Egypt and the United Arab Emirates among its shareholders, has already approved more than US$ 30 billion in loans. For comparison purposes, the World Bank alone has committed more than US$100 billion in 2022. BRICS has also created a US$100 billion Contingency Reserve Arrangement, a foreign currency liquidity facility that members can take advantage of during eventual phases of global financial turmoil. There are also rumors about the creation of a common currency among its members, which would be an attempt to challenge the hegemony of the dollar. But as this is not expected to happen anytime soon, the Brics decided to focus on deepening the use of local currencies. “Apart from the creation of Banco Brics [… ], it’s hard to say what the group has been doing other than meeting annually,” opined Jim O’Neill in a 2021 article. The group’s limited success can be explained by the often divergent and competing interests of its members, especially China and India. The two countries, which already share a disputed border, have seen their ties deteriorate in recent years. How trade and investment evolve in the Brics? The Brics have seen their economic clout increase over the past two decades, thanks largely to years of growth boom in China, the world’s second-largest economy by GDP, and the rise of India, which has emerged as the fifth-largest global economy and is now the fastest-growing economic power, while the economies of Russia and Brazil have lost momentum and have fallen to where they were in 2001 in terms of share of global GDP. The South African economy has also struggled to catch up since joining the BRICS. Although the group is now a major force in international trade, commercial transactions between its members have remained relatively low in the absence of any free trade agreement for the BRICS. Economic growth of BRICS countries World Bank On the investment front, the bloc has seen annual foreign direct investment (FDI) inflows more than quadruple from 2001 to 2021. Inward investment, however, remains subdued, representing a share of less than 5% of total stock of FDI inflows in 2020. Why do other countries want to join BRICS? Brics expansion is among the main topics of the annual summit in South Africa. Twenty-three countries have formally applied to become permanent members of the group, including Saudi Arabia, Iran, United Arab Emirates, Argentina, Indonesia, Egypt and Ethiopia. Among the advocates of an expansion is China, which is seeking to increase its political influence amid growing rivalry with the United States. As for Russia, it is about seeking new allies at a time when the country is suffering Western sanctions because of the war in Ukraine. Brazil and India, on the other hand, have long opposed the bloc’s rapid expansion, with New Delhi especially concerned about China’s growing influence in the group. While it has been struggling to realize its economic potential, the Brics are projecting themselves as a geopolitical alternative to a US-led world order, positioning itself as a representative of the Global South. And all the accession candidates now want is to capitalize on the economic influence of the BRICS.

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