Understanding BRICS: An Overview
BRICS, an acronym encompassing Brazil, Russia, India, China, and South Africa, represents a significant coalition of nations with shared economic aspirations. The term BRIC was originally coined by economist Jim O’Neill of Goldman Sachs in 2001, envisioning that these four economies would emerge as dominant global players by 2050. Subsequently, South Africa was included in 2010, leading to the formation of BRICS as we know it today.
Initially, O’Neill’s perspective gained considerable traction, becoming a widely accepted belief in the market during the early 2000s. Nevertheless, skepticism existed, with some individuals suggesting that the BRIC concept was merely a marketing strategy employed by Goldman Sachs. This doubt eventually led to the closure of Goldman’s dedicated BRICS investment fund in 2015, which was merged with a broader fund focused on emerging markets.
As a collective, the BRICS nations operate as a loosely structured organization, aiming to enhance economic collaboration among member countries and elevate their global economic and political influence. This alliance signifies an ongoing effort to foster cooperation and solidarity in the pursuit of shared goals.
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BRICS Members List-2023
| Country Name | Membership Date |
|---|---|
| Brazil | Joined in 2009 |
| Russia | Joined in 2009 |
| India | Joined in 2009 |
| China | Joined in 2009 |
| South Africa | Joined in 2010 |
| Argentina | Membership will take effect on January 1, 2024 |
| Egypt | Membership will take effect on January 1, 2024 |
| Ethiopia | Membership will take effect on January 1, 2024 |
| Iran | Membership will take effect on January 1, 2024 |
| Saudi Arabia | Membership will take effect on January 1, 2024 |
| United Arab Emirates | Membership will take effect on January 1, 2024 |
Key Points About BRICS
Origin and Expansion: BRICS was initially introduced as BRIC in 2001, an acronym coined by Goldman Sachs to represent Brazil, Russia, India, and China. South Africa joined the coalition in 2010, leading to the formation of BRICS.
Economic Dominance Projection: The term BRIC was based on the prediction that these nations’ economies would collectively take the lead in global economic growth by the year 2050.
Investment Appeal: BRICS nations provided a platform for foreign expansion opportunities for companies and yielded substantial returns for institutional investors.
Economic Collaboration: The primary goal of BRICS is to strengthen economic cooperation among its member countries. This collaboration stands in contrast to the traditional Western sphere of power.
Broadening Membership: In 2023, BRICS extended invitations to Saudi Arabia, Iran, Ethiopia, the United Arab Emirates, Egypt, and Argentina to join the coalition, reflecting a potential expansion of its influence.
Understanding BRICS
Emerging Market Growth: Brazil, Russia, India, China, and South Africa have been recognized as rapidly expanding emerging market economies due to factors such as cost-effective labor, favorable demographics, and ample natural resources. This growth occurred during a period of global commodities prosperity.
Economic Bloc Concept: The concept introduced by Goldman Sachs did not imply that these nations would establish a political alliance akin to the European Union or a structured trading association. Instead, the focus was on their potential to create a formidable economic bloc. Goldman’s predictions acknowledged the optimism and the substantial policy assumptions underlying these projections.
With each others’ interests.
Implicit Connection: While not explicitly stated, the underlying implication of the BRICS concept was that gaining economic strength would translate into enhanced political influence on the global stage.
Summits and Cooperation: Leaders of BRICS nations frequently participated in joint summits, fostering a sense of unity. Additionally, they often collaborated in alignment with each other’s interests, showcasing a level of concerted action.
Evolution of the BRIC Thesis at Goldman Sachs:
Emergence of BRIC Thesis: In 2001, Goldman Sachs’ Jim O’Neill introduced the concept of BRIC, forecasting that these nations (Brazil, Russia, India, China) would outpace the economic growth of the G7 countries (advanced economies). He predicted that their combined economic power could become dominant on the global stage.
Initial Outlook: O’Neill’s 2001 paper “Building Better Economic BRICs” highlighted the accelerated growth rate of BRIC nations compared to the G7. This marked the beginning of the BRIC thesis, emphasizing their potential economic prowess.
Expanding the Vision: In 2003, Goldman analysts Dominic Wilson and Roopa Purushothaman extended the thesis in “Dreaming with BRICs: The Path to 2050.” They envisioned that by 2050, the BRIC economies could surpass the G6 in size, reshaping the world’s economic landscape.
Shift from Income to Size: Wilson and Purushothaman’s report highlighted that the future economic landscape wouldn’t be solely determined by per capita income. Instead, the largest economies would be those with substantial size and growth potential.
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BRICS Summits:
| Summit | Year | Host Country | Brazil | Russia | India | China | South Africa |
|---|---|---|---|---|---|---|---|
| 1st | 2009 | Russia | Lula da Silva | Dmitry Medvedev | Manmohan Singh | Hu Jintao | — (Guest in 2010) |
| 2nd | 2010 | Brazil | — | — | — | — | — |
| 3rd | 2011 | China | Dilma Rousseff | — | Jacob Zuma | — | — |
| 4th | 2012 | India | — | — | — | — | — |
| 5th | 2013 | South Africa | — | — | — | — | Vladimir Putin |
| 6th | 2014 | Brazil | — | — | Narendra Modi | — | — |
| 7th | 2015 | Russia | — | — | — | — | — |
| 8th | 2016 | India | — | — | Michel Temer | — | — |
| 9th | 2017 | China | — | — | — | — | — |
| 10th | 2018 | South Africa | — | — | — | — | Cyril Ramaphosa |
| 11th | 2019 | Brazil | Jair Bolsonaro | — | — | — | — |
| 12th | 2020 | Russia | — | — | — | — | — |
| 13th | 2021 | India | — | — | — | — | — |
| 14th | 2022 | China | — | — | — | — | — |
| 15th | 2023 | South Africa | Luiz Inácio Lula da Silva | — | — | — | — |
Closure of Goldman’s BRICS Fund:
- Post-Crisis Slowdown: Following the global financial crisis and the 2014 oil price collapse, growth in the BRICS economies decelerated. The attractiveness of investing in the BRICS acronym waned, leading to the shutdown or merger of funds targeting these economies.
- Goldman’s Response: Goldman Sachs merged its BRICS-focused investment fund, aimed at generating returns from these economies, with the broader Emerging Markets Equity Fund in 2015. The BRICS fund had lost a significant portion of its assets, declining by 88% from its peak in 2010.
- Reasons for Merger: An SEC filing by Goldman Sachs indicated that the bank did not anticipate substantial asset growth in the BRICS fund in the foreseeable future. The fund’s performance had declined, losing 21% over five years.
BRICS Developments:
- Informal Grouping: BRICS operates informally, with member nations convening annually to enhance economic cooperation. The leadership rotates annually, with the head of state of a member nation serving as the chairman.
- Counter to Western Order: BRICS perceives itself as an alternative to the traditional Western-led global order. Member states view the organization as a means to amplify their global influence. However, differences in factors like transparency and balanced approaches can hinder growth.
- Expansion: Due to the economic prowess of BRICS nations and the desire to reduce dependence on the West, BRICS has attracted interest from over 40 countries. In 2023, Saudi Arabia, Iran, Ethiopia, the United Arab Emirates, Egypt, and Argentina were invited to join.
Key Questions about BRICS:
- Member Countries: The core BRICS nations include Brazil, Russia, India, China, and South Africa. Additionally, in 2023, Saudi Arabia, Iran, Ethiopia, the United Arab Emirates, Egypt, and Argentina were invited to join.
- Origins of BRICS: Goldman Sachs initiated BRICS as an analytical grouping of emerging markets projected to dominate the global economy by 2050. It has since evolved into an organization fostering economic ties among member nations.
- Main Goals: BRICS aims for cooperation, development, and global influence. This includes economic collaboration, development financing, political coordination, cultural exchanges, technology innovation, sustainable development, and peace and security.
BRICS Extends its Reach: 6 New Countries Invited to Join, Including Iran and Saudi Arabia
The BRICS alliance, consisting of Brazil, Russia, India, China, and South Africa, is set to expand its ranks as leaders of the group have extended invitations to six additional nations. Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates have all been invited to become members of BRICS, according to South African President Cyril Ramaphosa. This decision, announced at the three-day summit held in Johannesburg, is scheduled to take effect on January 1, 2024.
Ramaphosa emphasized the interest of other countries in forging partnerships with BRICS and revealed that Foreign Ministers have been tasked with developing a model for partner countries, along with a list of prospective partners.
This expansion underscores the challenges in deepening the existing BRICS alliance, marked by diverse interests among the current member nations. China’s ascent as a global powerhouse, India’s nonalignment policy, and Brazil’s identity as a significant agricultural exporter have led to differing priorities within the group. The inclusion of new members, such as Saudi Arabia and Iran, both with complex histories and strained relations, may introduce further complexities and may primarily contribute to the representation of the Middle East and Africa in the alliance.
The 15th summit of BRICS, hosted in Johannesburg, marked the first in-person meeting since the outbreak of the COVID-19 pandemic. Notably, Russian President Vladimir Putin participated virtually, choosing to avoid potential legal implications surrounding his indictment by the International Criminal Court for Russia’s actions in Ukraine.
Reports indicate that over 40 countries have expressed interest in joining BRICS, with 22 formal requests for membership received earlier this month. As BRICS evolves, its expansion opens new avenues for economic cooperation and political influence among a broader set of nations.
Bottom Line:
BRICS is an informal alliance of emerging market countries striving to strengthen economic bonds and collaborate on trade and growth. The group seeks to balance against Western influence, pursuing mutual growth and influence on the global stage.
FAQ
Q 1: What is BRICS?
- Question: What does BRICS stand for?
- Answer: BRICS stands for Brazil, Russia, India, China, and South Africa, a group of major emerging economies.
Q 2: Why was BRICS formed?
- Question: What was the purpose behind creating BRICS?
- Answer: BRICS was formed to highlight and foster economic cooperation among fast-growing emerging economies.
Q 3: What is the significance of BRICS?
- Question: Why is BRICS important?
- Answer: BRICS holds economic influence, aims to balance global power dynamics, and fosters mutual development among member countries.
Q 4: What is the main goal of BRICS?
- Question: What does BRICS aim to achieve?
- Answer: BRICS seeks to promote economic collaboration, development financing, political coordination, cultural exchange, and sustainable growth.
Q 5: How has BRICS evolved over time?
- Question: Has BRICS changed since its inception?
- Answer: Yes, BRICS has expanded from an economic concept by Goldman Sachs to an informal grouping of nations promoting cooperation, development, and global influence.