BRICS Expansion: Implications and Opportunities for Emerging Economies

 

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Adil Javed

South Africa is hosting the Foreign Ministers of BRICS on 1-2 June, 2023. BRICS is considered as the group of emerging economies including Brazil, Russia, India, China and South Africa. At the time of creation, it was expected that the BRICS has the potential to create a power economic bloc.

Goldman Sachs claimed that the global economy will be dominated by the members of BRICS by 2050. 

The reason behind the claim was the ranking of blocs’ members as the world’s fastest growing economies.

The meeting of Foreign Ministers of the bloc is scheduled to discuss:

• Important Geopolitical Issues

• Expansion of the Bloc

• Positioning itself as the Representative of Global South

• Providing an alternative model to the Group of Seven (G7)

• Efforts to boost trade in local currencies.

According to South African Ambassador to BRICS, Anil Sooklal said the top diplomats of the bloc at their meeting in Cape Town will discuss the formal and informal applications of at least twenty states and the modalities for future enlargement of the bloc. 

Expansion of the BRICS:

The group’s enlargement for the first time was proposed by China during a meeting chaired by itself last year.

The planned enlargement would increase representation from the countries in Africa, Latin America, the Middle East and Asia.

The few among the applicants includes Egypt, Nigeria, Mexico, Iran, Indonesia and Turkiye.

Anil Sooklal termed it a positive news for the bloc as it demonstrated the confidence of Global South in the leadership of BRICS.

Global South:

The term Global South refers to the loose grouping of about 100 countries who are considered as developing and have not aligned themselves with any of the major power.

According to Sooklal, large portion of Global South os marginalized in terms of global decision-making.

He further added that BRICS is trying to create a more inclusive world order that aims at addressing the existing fault lines on the global, geopolitical, geoeconomic, and financial architecture.

More inclusive World Order:

The South African Ambassador to BRICS said that the interest of the global south in the bloc shows that they want to have a greater say in the evolving global order.  In addition, they would like to see a multipolar, multicultural and multicivilizational world where they have more independence and choices to determine their behaviour, and they are vying for a multipolar world.

According to Ryan Berg, Director of Americas Program at the Washington-based Centre for Strategic and International Studies said that Russian invasion of Ukraine has made the BRICS more relevant to the Global South that want to resist the West’s “Autocracy vs Democracy” narrative.

By being aligned with the BRICS can offset pressure on them to align with US or China. He added.

It is important to note that the countries who seeking membership of BRICS are not necessarily the rival to Group of Seven (G7) or do not oppose the liberal order. They just want to eliminate their risk due to increased geopolitical and geoeconomic uncertainties, Japan Times reported. Majority of the observers also believe in this idea.

A former White House official, Joe Sullivan said the main reason behind this focus is that Global South countries perceive the International Monetary Fund (IMF) and World Bank (WB) as failing to give them voice of their concerns.

For decades, these countries were lacking a credible alternative that they have find in the BRICS initiative to expand itself.

A planned expansion of BRICS:

The planned expansion would give BRICS more leverage and credibility, and with that credibility, cone bargaining power. Joe Sullivan.

Some experts are predicting that the countries would be able to access financing with minor restrictions through BRICS mechanisms, possibly through New Development Bank (NDB) instead of IMF or World Bank.

 According to Stefanie Kam, a research fellow in Singapore based S. Rajaratnam School of International Studies, the BRICS aims to provide these groups with:

• A close Coordination

• Common Economic Issues

• Common Developmental Issue

• Less Political and Security issues.

According to Kam, reasons behind this move of BRICS are:

• China being the emerging force shaping development in many of these countries, including in extractive, infrastructure and trade sectors.

• Emerging Economies are looking for alternative sources of capital.

• Due to concerns over the West’s pivot to Asia.

• The BRICS Purchasing Power Parity (PPP) with 31.5 percent, recently overtaken with that of G7’s 30.7 percent. This can be increased more if more members are included in the BRICS.

• BRICS members are pushing non-dollar-denominated world. Because the world with diverse currencies would give more policy autonomy.

• New Delhi had already settled agreements with 18 countries, including Russia, in Indian rupees.

• Brazil and Argentina has signed agreements with Beijing to trade in Chinese Yuan.

Challenges:

However, there are certain challenges, including:

• Expansion will result in diluting benefits as well.

• The growing diversity will also lead in difficulties in consensus on key issues.

All these discussions are expected to take place in upcoming BRICS summit scheduled in August this year.

(Courtesy: Japan Times)