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What is meant by BRICs nations? How does India gain from it?
The bloc of nations known as BRICS (Brazil, Russia, India, China, and South Africa) has been the emergent force in the global economy this millennium. Why do they pack such a potent punch?
Publish Date: May 02nd, 2019
By: Sandhya Kannan, Head – Content
What are BRICS nations?
The term BRIC is an acronym for Brazil, Russia, India, and China. This term was coined in 2001 by a Goldman Sachs economist, Jim O'Neill who claimed that the economies of these countries were poised for rapid development. The letter “S” was added to this acronym following the inclusion of South Africa in 2011.
Despite the differences in the characteristics of these economies, these countries have shown a significant increase in their economies over the last few years.
Know more about India’s GDP growth
A brief history of BRICs
The place of the BRICS in the global economy has continued to grow over the last two decades. In 1990, their weight in world GDP reached barely 10% against 21.8% in 2015. As of 2018, they have a combined nominal GDP of more than 18.6 trillion dollars, and they are home to more than 3 billion inhabitants, which accounts for 42.1% of the world population.
According to the reports by the International Monetary Fund (IMF), as of 2018, China is the second largest economy in the world; the Indian economy is the 6th largest economy of the world, and the economies of Brazil and Russia rank 8th and 11th, respectively. The South African economy occupies the 33rd place.
Based on a broad set of indicators, most economists project that by 2050, these countries will have reached a level of development similar to that of Western nations. According to some estimates, the BRICS will account for almost half of the world economy by 2025.
Why were they formed?
These five countries show real differences in size, culture, resources, population, and political system. Despite these differences, they have common ambitions for growth and independence from the West. They are driven by common interests, which translate into collaboration through mutual and growing exchanges in different sectors.
Thus, China and India are establishing themselves as major suppliers of manufactured products at attractive prices, while Russia, Brazil, and South Africa are suppliers of energy and agricultural raw materials. China and Russia, for example, signed an energy agreement in 2014 for the construction of a gas pipeline linking the two countries. Out of the total trade, 14% of Brazil's trade is with China through the import of manufactured goods. On the other hand, Brazil benefits from the sale of Brazilian commodities since China is the largest buyer of oil and minerals from Brazil. India, for its part, is interested in anchoring its position on the African continent, which is a vast storehouse of raw materials and is starting closer trading ties with South Africa. The trade between these two nations went from $3 billion to $70 billion in 15 years.
The collaboration of this group goes beyond the commercial alliance, by the creation of a development bank "New Development Bank" and a reserve fund "Common Reserve Fund". These institutions give the BRICS access to a certain autonomy vis-à-vis existing institutions such as the International Monetary Fund (IMF) or the World Bank The objectives of the NDB are to finance infrastructure projects within these five countries and to guarantee them financial stability.
What are their benefits?
The BRICS nations as a bloc have put together considerable economic weight. This drives them to have a greater say in global governance. In 2015, China, India (US $7,965 billion), Russia (US $3,717 billion), and Brazil (US $3,192 billion) were among the seven countries with GDP per Purchasing Power Parity the highest in the world, ahead of France (US $2,646 billion) and the United Kingdom (US $2,679 billion). China (US $19,392 billion) surpasses the United States (US $17,947 billion). These countries have been estimated to contribute more than 50% to global growth during the last ten years with China being the world's second largest economic power, Brazil being the leading economic power in Latin America, and South Africa, a regional power on the African continent with a 20% share in African exports.
BRICS are distinguished from other countries by their population and their size. The group consists of large countries ranging in size from 1 million square kilometers to 17 million square kilometers and with populations ranging from 55 million to more than one billion. Each of these countries has remarkable assets in the different continents they represent.
The BRICS are key players in global governance and they work together to achieve common goals.
Recent events around BRICs
In analyzing BRICS relations, it is impossible to ignore the mistrust and even the competition that exists among the member states. We can, for example, evoke the Sino-Russian and Sino-Indian rivalry that is historical. These elements constitute a fault line within the group. In the recent period, several events illustrate these rivalries and show the primacy of national interests.
Even the BRICS have had their share of difficulties lately. In its outlook for the global economy 2018, the IMF notes that the fastest growth is that of India, followed closely by China. India is expected to have a growth rate of more than 7%, South Africa and Brazil are struggling, in particular, because of political uncertainties for both countries and the decline in commodity prices.
Russia's firm commitment to make the G8 operate independently of the G20 before it was suspended, also demonstrates the commitment of these countries to a special relationship with the West, sometimes to the detriment of cohesion and the strength of the group.
Conclusion
The concept of BRICS and its relevance seems to have been blunted after the slowdown in the growth of some of its member countries. The combined economies of these nations have grown significantly, but almost all the constituent nations have suffered internally because of slowing economic growth and political or social turmoil. The transition by the BRICS to a powerful block of the global elite like G-7 remains elusive and fragile because of a business climate that has not improved much in the last decade.
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