BRICS have been under the radar since quite a while with its slow but sure downfall post 2011. The motive behind the formation of BRICS has not been able to see the light of the day, which brings forth the burning question ‘Is it time for the breakup of BRICS’?
BRICS is a group of states comprising of the Federative Republic of Brazil, the Russian Federation, the Republic of India, the People’s Republic of China and the Republic of South Africa – a composition of the emerging economies and political powers at the regional and international level. Initially conceptualized as ‘BRIC’, the acronym was first coined in 2001 by Goldman Sachs chief economist, Jim O’ Neill when it came to light that while global GDP was set to rise 1.7% in 2002, BRIC nations were forecasted to grow more quickly than the G7, the seven most advanced global economies.
The World Bank’s Data on GDP brings forth the fact that BRICs countries’ economic evolution during the first decade of the twenty-first century—when their combined growth rate represented nearly 60 % of the global growth rate—seemed to indicate their emergence as relevant actors on the world stage.
Through their annual summits, BRICS had evolved in areas of consensus amongst its members, strengthening its two main pillars: (i) coordination in meetings and international organization, with a focus on economic and political governance; and (ii) cooperation among members.
But the mechanism has made little progress toward building a collective identity. It has also failed to set up a strategic agenda, with concrete propositions and actions, or a new conceptual framework for trade negotiations. Beyond diplomatic statements, the BRICS has not proved a very useful instrument for pursuing foreign policy objectives and interests. Even Goldman Sachs had to shut down its BRIC investment fund in late 2015 after its assets plunged in value by 88 percent from their 2010 highpoint.
During the course of the BRICS roughly nine-year history as an overtly political grouping, it has clearly appeared that the political drive behind the grouping has waned in some of its member economies. One of the obvious drivers of this volatility has been changes in the leadership of the five BRICS economies. Of the five heads of state that attended the first full BRICS Summit in 2011, only South African President Jacob Zuma remains in office. In the seven years that have lapsed since, there has been a seismic disruption in both Brazilian and Indian politics and leadership changes in Russia and China have been destabilising.
Moreover, recent border disputes with China fueled with India continuously refusing to sign for China’s Global Belt and Road Initiative send BRICS future down the line. South Africa’s rising corruption levels in public procurement along with Brazil and Russia being downgraded to junk status by S&P fails in procurement of a positive image for BRICS.
Is China too big for BRICS?’ is another question that presents itself as a cause to the drop off in BRICS. China forms around 65% of the combined GDP whereas Russia stands at 8%. The disparity in economic size between the BRICS economies has undermined its aspirations to build a platform for genuinely equal emerging world engagement. These inequalities have emerged as one of the challenges in establishing an equal operating and funding model for the BRICS’ New Development Bank (NDB), aimed at financing infrastructure and sustainable development projects in the BRICS and other developing countries.
The ‘commodity curse’ is cited as another one of the factors that overthrew the BRICS growth. Brazil, Russia and South Africa rose mainly on the back of their vast natural wealth. But the fall in the commodity prices of recent years has done significant damage in all three countries with their three-year average GDP plummeting to -2.29%, -0.77% and 1.09% respectively.
The concept of BRICS, as a grouping of emerging economies of development, has almost ceased to exist.The 9th BRICS summit was held on September 5-7, 2017 in the city of Xiamen (China). However, the final declaration contains only general proposals for the further development of integration processes between member states. As real steps to strengthen integration, it aims an increase in the assets of the BRICS Investment Bank from 1.5 billion USD to 4.0 billion USD, which is not enough to finance significant investment projects within the organization.
The GDP of the BRICS countries, as sourced from IMF, shows an improvement for Brazil, Russia and South Africa but falls short when compared to the growth rates of China and India.
A Wharton article suggests rumblings of the next emerging markets, namely Vietnam, Philippines and Bangladesh. Korea, Taiwan and Singapore have also shown potential as developing countries, according to IMF and UNCTAD, with their rate of economic development being higher than Brazil, Russia and South Africa. Thus, the investors have been toying with the idea of replacement of BRCIS with TICKS, with replacement of Brazil, Russia and South Africa with Thailand/Taiwan, Korea and Singapore. The replacement of economies are touted to be in line with the modern global economy along with a constant growth in foreign investments and GDP.