The Expansion of BRICS: What Future it Holds for the World Economy?

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The BRICS (Brazil, Russia, India, China, and South Africa) group has emerged as a prominent force in the global economy, fostering cooperation among emerging economies and challenging the dominance of established powers. The BRICS, formed in 2009, initially represented a vision for the economic collaboration of five major emerging economies. Over time, the group has demonstrated remarkable growth and influence, expanding its scope beyond economics to include political and strategic cooperation. The current BRICS five now contribute 31.5% of global GDP, while the G7 share has fallen to 30%. By 2030, it is anticipated that the BRICS will contribute more than 50% of the world’s GDP, and the proposed expansion virtually probably moves that goal up. Other rising economies are interested in joining it since it is now regarded as an alternative to the Bretton Woods model. Many countries are presently on the list of contenders: Algeria, Argentina, Bahrain, Bangladesh, Egypt, Indonesia, Iran, Saudi Arabia, the United Arab Emirates and many others. If membership is given to those countries, the new proposed BRICS members would create an entity with a GDP 30% larger than the United States, over 50% of the global population and in control of 60% of global gas reserves. Before extending BRICS, it is vital to take into account a number of variables, even though some of these nations do genuinely have considerable economic influence and regional significance.

This brief examines the potential benefits and challenges associated with the expansion of BRICS by incorporating new member countries. It analyzes the economic implications of such an expansion for the world economy, explores the potential impact on global trade, finance, and development, and provides policy recommendations to ensure a sustainable and prosperous future for BRICS and the world. To further solidify its position on the global stage, the possibility of BRICS expansion by inviting new member countries has been a topic of discussion. This brief assesses the potential implications of such an expansion on the world economy. It Is obvious that all the nations applying to join the BRICS group have a variety of strategic advantages to offer the organization. Huge amounts of natural resources are available in nations like Argentina, Venezuela, and the UAE, including fresh water, rare earths, oil, gas, farmland, and fisheries. Other political and economic organizations that these potential members belong to include OPEC, the Arab Trade Zone, Mercosur, the Gulf Cooperation Council, the African Continental Free Trade Area, and ASEAN. These memberships will strengthen the current BRICS countries’ economic footprint, increase their market penetration, and expand their global influence.

The inclusion of new member countries with diverse economic strengths and resources can foster overall growth within BRICS. Synergies from different industries and markets can lead to increased investment and technological advancements. New member countries would gain access to the vast consumer markets of BRICS nations, promoting export-driven growth and economic diversification in their own economies. An expanded BRICS can attract higher foreign direct investment (FDI) and facilitate greater investment in infrastructure projects. This can spur economic development and enhance regional connectivity. BRICS countries should prioritise the strengthening of its New Development Bank (NDB) to promote financial and economic inclusion on a global scale. The NDB can play a crucial role in providing funding for infrastructure projects, sustainable development initiatives and other priority areas within BRICS countries and beyond. By enhancing its capacity, expanding its lending capabilities and ensuring efficient governance, BRICS can contribute to reducing the development gap and fostering inclusive growth. Addressing economic inequalities and policy divergences among member nations is necessary for the alliance to expand. Although difficult, harmonizing trade laws, legal systems, and intellectual property rights is essential for a seamless integration. The formation of a food exchange that would bring together several of the present and prospective BRICS nations could be another significant development. Argentina could provide corn and wheat, Russia could provide sunflower oil and barley, India could provide rice, Brazil could provide sugar, soybeans, beef and poultry meat, and China could provide grain. A number of nations that currently experience significant food insecurity, including certain African nations, may benefit from this.

An expanded BRICS can exert greater influence in international trade negotiations, shaping the global trade agenda to benefit developing economies and promoting fairer trade practices. An enlarged BRICS could explore the creation of a common currency system or financial mechanisms to reduce reliance on traditional reserve currencies and mitigate currency volatility risks. The idea of a BRICS currency for trade and internal payment settlements is worth exploring. A shared currency could facilitate trade and investment, reduce transaction costs and enhance economic cooperation within the bloc. However, implementing a global common currency would necessitate dealing with issues including monetary policy coordination, exchange rate stability, and the development of suitable financial infrastructure. Additionally, it would require substantial discussion and consensus-building among the member states, particularly in light of the currency’s inherent value.

A currency-commodity basket would be a great idea, reflecting the intrinsic strengths of this currency for global acceptance, beyond internal settlement. The US dollar, the current reserve currency of the world, would suffer greatly from the growth of BRICS. Most international transactions are conducted in US dollars, which are also many nations’ preferred currencies when they have foreign reserves. Other rising economies, in addition to BRICS, would increase its global influence, resulting in a more balanced multipolar world order. An expanded BRICS can reinforce multilateral institutions like the World Trade Organization (WTO) and International Monetary Fund (IMF) to strengthen global economic governance. The expansion of BRICS may lead to trade diversion as member countries prioritize intra-BRICS trade over engaging with non-member countries. Mitigating this risk requires a commitment to open trade policies and avoiding protectionist measures. The BRICS nations were supposed to have the fastest-growing economy, but that hasn’t quite happened. Instead, the alliance is now providing a diplomatic venue and finance for growth, outside of the Western mainstream.

An expanded BRICS should collaborate to address environmental challenges and promote sustainable development. Joint efforts to invest in green technologies and combat climate change can set a positive example for the world. The expansion of BRICS should prioritize inclusive growth strategies to uplift marginalized populations, reduce income inequality, and ensure social stability. The alliance should facilitate technology transfer among member countries to bridge the innovation gap and foster technological advancements in emerging economies.

BRICS should establish a formal institutional framework to address governance issues, streamline decision-making, and enhance cooperation among member countries. BRICS must prioritize sustainable development and work towards achieving the United Nations Sustainable Development Goals (SDGs). BRICS should be open to considering new member countries that align with the group’s principles and contribute positively to the alliance’s objectives. BRICS should engage in constructive dialogue with established powers to foster cooperation and avoid unnecessary geopolitical tensions.

The expansion of BRICS has the potential to reshape the world economy and global governance. By leveraging their collective economic strengths, the alliance can play a more significant role in promoting inclusive growth, sustainable development, and fairer trade practices. To achieve these objectives successfully, BRICS member countries must address internal challenges, prioritize sustainable policies, and foster cooperation on a global scale.

– Arman Mohammad Sazzad is an Intern at the KRF Center for Bangladesh and Global Affairs (CBGA).

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