Relevance of BRICS

The BRIC (Brazil, Russia, India and China) idea was first conceived in 2001 by Goldman Sachs as part of an economic modeling exercise to forecast global economic trends over the next half century; the acronym BRIC was first used in 2001 by Goldman Sachs in their Global Economics Paper No. 66, "The World Needs Better Economic BRICs". BRIC Foreign Ministers at their meeting in New York on 21st September 2010 agreed that South Africa may be invited to join BRIC. Accordingly, China, as the host of 3rd BRICS Summit, invited South African President to attend the Summit in Sanya on 14 April 2011 with the concurrence of other BRIC Leaders. The BRICS countries - originally Brazil, Russia, India, and China, and now South Africa - have turned out to be a source of global economic development and essential to future generations. The center of global economic activity is shifting from industrialized nations in the west to emerging economies in Asia, Africa, and Latin America. South Africa joined BRIC at the end of 2010. And Indonesia should be included in BRICS to represent the large developing countries that are increasingly central to global production and consumption.

BRICS is used in economics to refer to the combination of Brazil, Russia, India, and China & South Africa which make up over 48% of the world's population. These nations are going to play a major role in the future of global economy. In 2000, the four countries in BRIC (along with Indonesia), contributed just 18 percent of global GDP, while industrialized nations contributed about 65 percent. By 2010, BRIC countries provided more than a quarter of the world's GDP, at 27 percent. The rich countries' share had shrunk to 56 percent. Between 2000 and 2010, BRIC's GDP grew by an incredible 92.7 percent, compared to a global GDP growth of just 32 percent, with industrialized economies having a very modest 15.5 percent. The rising importance of BRICS economies can be seen in the growth of imports. Their import and service demands, at over $2 trillion, accounts for 13.5 percent of global imports, up from just 6 percent 10 years ago. This represents a 277 percent growth in imports. Global growth of imports during the same period was just 92 percent, while imports in industrialized economies grew only 72.3 percent.

BRICS countries have also diversified their source of imports and are trading more with other large emerging economies and developing countries. They play an important role in the global economy, and their role in the future of global economics seems more evident. In the area of new businesses, the market capitalization of BRIC companies grew from $1.2 trillion to $6.4 trillion between 2000 and 2010, a massive 641 percent increase. Their companies now account for over 18 percent of global market capitalization, up from a very modest 3.8 percent in 2000. If this trend continues, by 2025, BRICS companies will account for more than half of global market capitalization. Demographic shifts are taking place and BRICS states, especially India and China, will have much of the world's youth, a driving force behind growth of consumer spending and innovation.
Their large domestic markets will create economies of scale that make BRICS' geographies central to global production and demand. And they will emerge as centers of innovation and new product development. India-China ties have undergone a significant change in the last two decades: They are broader and with more substance. A key element of that is the economy. China has gone from insignificant player to India's largest trade partner with, $62 billion of goods traded in 2010. Indian manufacturing and IT companies are making serious moves in China, and demonstrating their ability in high-tech engineering, software development, banking and foreign exchange trading.

BRICS countries will need to work together closely to evolve strategies for the future. This could include cooperation in a wide variety of issues like energy, food security, access to natural resources, climate change, global governance, and international trade policies. What is essential to maintaining this wide-ranging cooperation is for BRIC countries to have a stake in each other's economy. And increasing trade and business relations among them is a major part of that.

The Fourth BRICS summit was held in New Delhi on 29 March 2012. The theme of the summit was BRICS partnership for Global Stability, Security and Prosperity. The summit was participated by India, Brazil, Russia, China and South Africa. At the end of the summit, Delhi Declaration was issued. Development banks of BRICS signed two agreements- i) Master agreement on extending credit facility in local currency. ii) BRICS Multilateral letter of credit confirmation facility agreement. The five participating banks are Banco Nacional de Desenvolvimento Economico e Social- BNDES, Brazil; State Corporation Bank for Development and Foreign Economic Affairs-Vnesheconombank of Russia; Export-Import bank of India; China Development Bank Corporation, and Development Bank of Southern Africa. These two agreements are expected to enhance cooperation among the BRICS development banks and to significantly promote intra-BRICS trade.

Highlights of Delhi Declaration

• BRICS nations agreed on the reform of IMF and world bank.
• Brazil, India, China and South Africa congratulated the Russian Federation on its accession to the WTO.
• BRICS nation said they were committed to playing their part in the global fight against climate change and will contribute to the global effort in dealing with climate change issues.

In the New Delhi summit, leaders of the BRICS group [Thursday, 29 March 2012] pressed Western powers to cede more voting rights at the IMF this year and flayed the rich world’s reflationary monetary policies for putting global economic stability in jeopardy. Promised changes to voting rights at the IMF have yet to be ratified by the United States, adding to frustration over reform of the G7 and the U.N. Security Council, where India and Brazil have been angling for years for permanent seats. The BRICS leaders also accused rich countries of destabilizing the world economy five years into the global financial crisis by creating excessive global liquidity. It also recognised the right of Iran to pursue peaceful nuclear energy. They said that the crises over Iran’s nuclear programme should be resolved diplomatically and should not be allowed to escalate.

China hopes the summit will continue to display the BRICS spirit of unity and win-win partnership, continue to enhance coordination and cooperation on global economy, finance, development and other major issues of common interest, push forward practical cooperation in various fields, send a joint message of confidence for world economic stability and recovery, provide impetus for improved global economic governance and make a contribution to common development in the whole world. We also hope the summit will help strengthen institutional building of BRICS cooperation, map out plans for the future, and lay a solid foundation for the long-term growth of BRICS cooperation. Currently, a large number of emerging markets and developing countries have achieved rapid economic growth and become an important force in promoting world peace and common development. Firmly committing to the path of peaceful development, cooperative development and harmonious development, these countries form an important part of common development of the world, which is conducive to a more balanced world economy, more reasonable international relations, more effective global governance and more durable world peace.

Since the outbreak of the international financial crisis in 2008, these countries have spearheaded the global recovery through their own development. The steady increase of their representation and the greater say they acquired in global economic governance have moved the international order in the direction of greater fairness and rationality. What has happened testifies once again that without the rise of emerging markets and developing countries, there will be no universal prosperity in the world; and that without the stability of these countries, there will be no world peace and stability. The development of these countries has a constructive impact on the international landscape. The international community should look at these countries from a long-term and strategic perspective and actively support their development.

BRICS countries are the defender and promoter of the interests of developing countries. In their cooperation, BRICS countries have committed to promoting South-South cooperation and North-South dialogue, endeavoured to implement the U.N. Millennium Development Goals, worked for early realisation of the goals set out in the mandate for the Doha development round negotiations, strived to secure a greater say for developing countries in global economic governance and fought all forms of protectionism. Cooperation among BRICS countries is made necessary by the ongoing economic globalisation and democratisation in international relations. It is consistent with the trend of the times characterised by peace, development and cooperation, and fully conducive to building a harmonious world of durable peace and common prosperity.
As for BRICS practical cooperation in the near future, China wants to see efforts made in the following two areas: First, building a solid foundation. We should beef up the existing cooperation programmes in the spirit of practicality and efficiency and build a number of flagship projects. Second, being innovative. We should properly explore new areas of cooperation in light of the needs of economic and social development in BRICS countries, tap the cooperation potential and inject new vitality into the mechanism of BRICS cooperation.

Go Back To Main Page