From humble beginnings to steady growth during the last 13 years, BRICS is taking center stage to set off spiraling impacts on the global economic landscape.
Since its first steps in 2006, BRICS has transcended its economic acronym. It has given new meaning to world economic governance. Being an economic powerhouse among recent blocs and alliances, it has shown its mettle with resilience despite challenging financial volatility.
Analyzing its anchoring role in shaping new designs of infrastructural mechanism, financial management, and banking discipline, the world’s economic powers have been acknowledging BRICS’ future potential and development vitality.
Defying all odds, BRICS countries have made solid strides in multiple directions. As its feats have made everybody sit up and take notice, the BRICS summit 2018 in Johannesburg, South Africa is the focus of global attention.
No doubt BRICS is under close watch by the international community due to its robust influence on the world economic stage. Being an effective economic conglomerate and home to 43 percent of the world’s population, its combined contribution to global GDP has spiked to approximately 24 percent so far. IMF forecasts this contribution to swell to 26.8 percent by 2022.
The BRICS, a partnership of the emerging economies of Brazil, Russia, India, China, and South Africa, has produced encouraging results. Along with making up 12 percent of global foreign investment, it offers lots of commitments on the energy and environment sectors too.
What distinguishes BRICS from other global economic blocs is its natural forte to grant equal rights to everyone with respect and trust. Meanwhile, it gains traction being a trail-blazer in protecting the theme of globalization with entirety. It has inbuilt characteristics to bolster an open world economy, repelling all forms of protectionism and barriers.
BRICS seems to be a strong stand against the US stance on globalization. If compared to the United States, keeping in view size alone, BRICS has a total population of about 3.6 billion people. The USA is home to just 325 million people. The U.S. GDP stands at more than US $18 trillion. BRICS has a cumulative GDP of US $37 trillion. The U.S. expects to have a growth rate of around 2 percent over the next few years while BRICS sees a growth of around 5 percent.
In an article in The Atlantic published in 2012, Goldman Sachs foresaw that China's GDP alone would be equal to America's by 2027. With regard to economic development trajectory, BRICS nations have solid credentials to take a lead soon.
According to IBR, a publication of the Indiana Business Research Center at IU’s Kelley School of Business, BRICS’ total growth is highly likely to give an impactful push to overall emerging economic growth from 4.3 percent to around 5 percent by the end of 2018.
This is not just speculation; rather the logic lies in how China, India, Brazil, Russia, and South Africa have been advancing on their development goals and strategizing their working plans.
In order to let five emerging economies to flourish with full might, freedom, and peace of mind without any interference of world financial institutions like IMF and World Bank, BRICS has built up its own financial institution. The New Development Bank (NDB) is the financial model initiated in 2015. With a subscribed capital base of US $50 billion, the Bank is obligated to dole out funds to BRICS nations. Fulfilling burgeoning needs of multilateral finances, it has been expanding its budgetary pocket and involved in a number of projects. A team of 150 professionals is a quite remarkable addition to NDB, headquartered in Shanghai.
In making noticeable strides, NDB issued first a green bond, raising RMB 3 billion in the Chinese bond market, enabled by the achievement of an AAA domestic credit rating in China.
With the main pivot to channelize resources for infrastructure and sustainable development in BRICS countries, NDB plans to commit US $10 to 15 billion in loans for various projects by 2021. What the Bank has targeted in the future as its key milestone is to achieve an international credit rating and widen its membership beyond BRICS countries.
BRICS is a complete success owing to that it believes in equality. For instance, one of the significant set of rules in running affairs of the NDB is to keep an equal share of all stakeholders in management, governance, and funding distribution. No country has a veto in any form. Funding is available in even local currency besides US dollars to help partnering countries avert any loss.
In 2013, a McKinsey Global Institute report observed that the world needs US $57 trillion in new infrastructure investment to avert saturation and stagnation up to the period of 2030. As per such estimations, there is a requirement of US $3.2 trillion in investment per year. Technically speaking, the IMF, World Bank, and other financial institutions are unable to keep such investment momentum intact, leaving huge financing gaps. The answer to this solution is definitely BRICS’s NDB, and AIIB (Asia Infrastructure Investment Bank).
It is convincing that BRICS is a full-grown package of development using a set of mechanisms to stay relevant under competitive economic environments. It has made initiatives in establishing the Business Council, the Environmental Cooperation Conference, the Parliamentary Forum, and the Think Tank Board.
The newly-formed BRICS Anti-Terrorism Working Group, BRICS Agricultural Research Platform, BRICS Tourism Conference, Center for China in the World Economy, and the Tsinghua University BRICS Economic think tank BRICS Friendship Cities Forum, feature more sense of synergic cooperation among the five countries.
BRICS has also formulated pragmatic schemes for a BRICS Network College and the BRICS College Alliance. More commendable jobs are to give birth to the BRICS Economic Research Award, BRICS Rating Agency, BRICS Young Scientist Innovation Award, and BRICS Sports Council.
In the international realm, BRICS nations have effective roles to play when it comes to dealing with global issues including terrorism, cyber security protocols, and climate changes.
Since environmental change is a daunting global challenge, NDB made available first loan projects of up to US $811 million to cut emissions of 4 million tons of carbon dioxide by building a renewable energy power system which has the capacity to generate 2,370 MW of green energy power. It also has preferential investment suggestions to promote green growth in the field of environmental protection, resource and energy conservation, and new energy development.
The BRIC came into being taking inspiration of an idea coined by Goldman Sachs in a 2001 paper titled “The World Needs Better Economic BRICs.” After South Africa joined BRIC, it became BRICS eventually in 2010. Now South Africa is hosting the BRICS 2018 summit in Johannesburg to open a new chapter of progress to pursue sustainable, shared fortunes ahead.
YASIR HABIB KHAN is a senior journalist who writes about the economy, international relations, and human rights in CRI and China Today as a special contributor. He also writes for national dailies in Pakistan like The Nation, The News and Daily Times. He is a fellow of ICFJ. He may be reached at firstname.lastname@example.org. He tweets @yasirkhann