The BRICS and a Changing World

This July and August, I led an international group of experts in preparing an Economic Report on the role of the BRICS countries (Brazil, China, India, Russia and South Africa) in the world economy and international development.  The Report was commissioned as an input to the Summit of BRICS countries that took place in early September 2017 in Xiamen, China.

It surveys the BRICS countries’ sizable contribution to global growth, trade and investment, evaluates the prospects for this to continue in the future, and explores the possible role that these countries can play in bolstering the global economy, in reshaping international economic arrangements and in contributing to the Sustainable Development Goals and to international development generally. An important conclusion in the report is that continued BRICS growth as well as policy initiatives can substantially benefit other developing countries (the report uses the IMF category of Emerging Market and Developing Countries, or EMDCs) – and developed countries too.  I will  be pleased if the report will be circulated widely, and welcome all reactions.

The experts making contributions to the report included Zhiyuan Cui, Martin Guzman, Arjun Jayadev, Inge Kaul, Terry McKinley and Paulo dos Santos. They were supported by a number of other contributors, including Joana Avritzer, Francis Cripps, Pablo Gluzmann, Rahul Lahoti, Neva Nahtigal and Xiao-Zhuang Zhou. Peter Dimock was the editor and Mohamed Obaidy was the project manager. (The report could not have been produced without either of them).  The design of the report was undertaken by Twist Open Innovations. The report was commissioned by the New Development Bank but neither it nor any individual contributor bears responsibility for all of its contents.

Here is the Executive Summary of the report:

Brazil, Russia, India, China and South Africa (collectively the BRICS countries) constitute over 40% of the global population and their combined economic weight in 2015 equaled almost a third of the global Gross Domestic Product in PPP terms (or roughly the same as the G-7 countries). The BRICS are emerging as a new centre of gravity in the international economic system.

The emergence of a multipolar world in which the BRICS have become and are likely to continue to be the central source of economic dynamism is an event of historical significance. The BRICS accounted, on average, for an impressive 56% of the growth of global GNP (at 2005 $PPP) during 2008-17. The BRICS are expected to continue to account for more than half of global economic growth through 2030.

The BRICS share of world trade has nearly tripled over the last twenty years. BRICS imports and exports have continued to grow even in a context of shrinking world import and export totals (2008-16). Connectivity among the BRICS and between the BRICS and other Emerging Market and Developing Countries (EMDCs) has also increased, through enlarged trade and investment.

The BRICS contribution to global economic growth through 2030 is expected to be higher if investment rates within BRICS countries increase. Faster BRICS growth will lead to higher growth rates in all countries, especially EMDCs.

The BRICS contribution to world poverty reduction has been sizeable. Continued BRICS growth remains important for poverty reduction as well as for reducing international inequalities.

BRICS activities to promote other global development goals can also be of substantial importance. BRICS development cooperation and actions to reshape the global economic system so that it is more supportive of EMDCs can play an important role in expressing BRICS commitment to international development, alongside the role of BRICS trade and investment in propelling economic growth.

The BRICS can play an important role in enabling the better provision of global public goods (GPGs), which affect shared economic, social and environmental circumstances. Many underprovided GPGs are of great importance for EMDCs in particular but are of concern to all countries.

There is a need for new global governance arrangements that can be more conducive to growth and development. These arrangements include reserve pooling, the strengthening of alternative reserve currencies, new multilateral development banks and new principles for the governance of sovereign debt, among others.

The growing contribution of the BRICS to the world economy and the rising importance of the economic relations between the BRICS and other EMDCs create an opportunity for new initiatives that would better help to support sustainable and inclusive growth and development. For example, measures to strengthen alternative reserve currencies are made possible by the increased economic ties. The BRICS can also support pathways for sustainable and inclusive development with conscious and strategic initiatives.

The BRICS offer a new multilateralism that can help to advance global economic and social development. Cooperation to achieve common goals, both among the BRICS and between the BRICS and others, is likely to be a key feature of international development in the coming decades.

Click here to download the report.

Sanjay G. Reddy is Associate Professor of Economics at The New School. Read about the report on Sanjay Reddy’s own blog.

 

 

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