BRICS vs G7: Some Insights

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In the realm of global economic and geopolitical dynamics, multilateral cooperation is increasingly playing an important role in shaping the future trajectory of world politics. The BRICS and G7 represent two different groups that hold conflicting views on the existing economic order and how it benefits certain nations. The intricate dynamics between these two groups encapsulate a complex interplay of cooperation, competition, and ideological divergence within the realm of global governance. Originating from differing historical contexts and representing different stages of economic development, the BRICS and G7 pursue overlapping goals of economic prosperity and geopolitical stability but often diverge in their approaches and priorities. While the G7 historically championed liberal international order and market-oriented economies, the BRICS emerged as proponents of multipolarity and an alternative to the West-led development model. The rapid economic growth of China and India, coupled with growing interest from other developing nations towards the BRICS, has led many to speculate about the BRICS potentially challenging the dominance of G7 in the existing world order. However, such a claim remains premature as the BRICS face internal challenges, hindering their ability to fully realize their potential. Nevertheless, it is safe to say that the BRICS is further accelerating the transition to a more inclusive, multipolar world order where different voices are heard, rather than the predominance of a singular Western narrative.

A Comprehensive Overview of BRICS vs G7

For a long time, the G7 wielded substantial influence in global economic governance. However, the rapid economic growth and development observed in the BRICS nations have introduced a notable counterbalance to the established dominance of the G7. These groups, with differing backgrounds, economic capacities, and visions, frequently find themselves on opposite sides within the existing international system.

Different Historical Contexts of Origin

In 2001, economist Jim O’Neill introduced the concept of “BRIC” to highlight the remarkable economic growth and potential of Brazil, Russia, India, and China. The group was formally established in 2009 under the name “BRIC.” Later, when South Africa joined the group in 2010, the name was changed to “BRICS” to incorporate South Africa, thereby broadening its representation to include five diverse economies across multiple continents. The emergence of BRICS signifies a departure from the prevailing Western-dominated global order, reflecting a shift in global power dynamics. It aims to serve as a platform for emerging economies to express their interests, foster economic collaboration, and push for reforms within international institutions.

On the other hand, the origins of the G7 can be traced back to the early 1970s. Following the collapse of the Bretton Woods System, major economies sought to establish a global financial framework. In 1975, a coalition of six nations—comprising the United States (US), France, Italy, Japan, the United Kingdom, and West Germany—was formed to address economic challenges stemming from events like the OPEC oil embargo. Canada joined the group the following year, with discussions inevitably influenced by the Cold War’s geopolitical dynamics.

Differences in Economic Prowess

Both BRICS and G7 consist of the world’s largest countries and economies. However, BRICS nations have been witnessing significant growth in population and economic expansion compared to G7 countries. India and China, both BRICS members, are the top two countries in the world with the most population. The combined population of BRICS, including its six new members Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates, now totals 3.5 billion, representing roughly 45 percent of the global population. In contrast, the G7 nations account for a population of approximately 776 million.

In terms of economic growth, the average annual growth of gross domestic product (GDP) was significantly higher in the BRICS nations compared to the G7 from 1990 to 2022. Specifically, the G7 exhibited an average growth rate of 1.5 percent, while the BRICS saw a much higher average growth rate of 4.5 percent. China and India stood out within the BRICS group, with extraordinarily high average growth rates of 12.3 percent and 6.4 percent, respectively

Figure 1: GDP Growth of G7 and BRICS Nations

In terms of total GDP, the BRICS bloc boasted a cumulative GDP of $27.7 trillion, accounting for a 26% share of global GDP. However, with the addition of new members, the bloc’s collective GDP is set to surpass $30 trillion, representing approximately 29% of the world’s GDP. Despite this expansion, BRICS still falls short of the G7’s share of global GDP, which stands at 43%.

Figure 2: GDP Comparison Between G7 and BRICS

Similarly, BRICS countries lag significantly behind the G7 nations in terms of per capita income. The combined per capita income of G7 countries amounts to $45,916, whereas it stands at $30,767 for the 11 BRICS nations combined.

Figure 3: Per Capita Income of G7 and BRICS Nations

BRICS had already surpassed the G7 in terms of Purchasing Power Parity (PPP) even before the inclusion of new members. In 1995, the G7 countries collectively accounted for 44.9% of the global GDP at PPP, compared to only 16.9% for the BRICS nations. However, by 2023, BRICS had recorded a 32.1% share of global GDP at PPP, surpassing the G7’s 29.9%. Projections suggest that BRICS will continue to experience an upward trend in its share of global GDP at PPP, while the G7 is expected to see further decline.

Figure 4: BRICS and G7 Share of Global GDP at PPP

Competing Visions

Both BRICS and G7 harbor competing visions and objectives, often placing them at odds against each other. BRICS was initially formed to facilitate consultation and coordination among emerging economies, aiming to promote the voices of the Global South into a multipolar system. As articulated by Brazilian President Luiz Inacio Lula da Silva, BRICS seeks to “organize” the Global South, indicating its ambition to bolster the collective voice and agency of developing nations on the world stage.

The defining factor of the BRICS group lies in the shared aspiration of its member countries to distance themselves from Western dominated so called “rule-based order.” Some of the political characteristics of BRICS can be traced back to events such as the 1955 Bandung Conference and the Non-Aligned Movement during the Cold War, where those countries sought to protect their sovereignty and assert their autonomy. Similar to this, the expansion of BRICS signifies the Global South’s determination to enhance its strategic autonomy and assert control over its sovereign affairs without any external interference from the West.

In contrast, the G7 predominantly consists of countries with white majority populations, led by the US. This coalition serves as a platform for these nations to engage in discussions and collaboration across a spectrum of global issues, placing significant emphasis on democratic principles, market-oriented economies, and addressing issues related to economic stability, security, and sustainable development. The G7’s dedication to upholding democratic values is evident in metrics such as the Liberal Democracy Index, where none of the BRICS nations come closer to those of the G7. On a scale from 0 to 1, the average score for the G7 stands at 0.77, significantly higher than the 0.31 recorded for the BRICS (with higher scores indicating stronger adherence to democratic principles).

Figure 5: BRICS and G7 Nations in Liberal Democracy Index 2022

Another critical facet of the G7 is its emphasis on market-based economies. The group serves as a forum for deliberations on trade liberalization, regulatory harmonization, and the elimination of impediments to commerce based on liberal economic model. Moreover, the G7 assumes a pivotal role in tackling global challenges, including non-traditional security threats such as economic instability, counterterrorism efforts, and initiatives aimed at curbing the proliferation of weapons of mass destruction. After all these years, the G7 remains steadfast in its commitment to preserving the current rule-based international order. In contrast, BRICS countries are dedicated to amplifying the voices of the Global South and creating a truly multipolar world by challenging existing systems that favor the West.

BRICS Quest for Transforming World Economic Order

A mounting discontent is palpable among countries in the Global South concerning the prevailing Western-dominated economic order. These nations have long borne the burden of reliance on US-led financial institutions like the International Monetary Fund (IMF) and the World Bank. Despite contributing significantly to global GDP, BRICS countries hold merely 15 percent of the voting power at the IMF. Many nations perceive alignment with these institutions does not serve their own interests, viewing it instead as a pretext for Western interference in their internal affairs. Of particular concern is the pervasive influence of the US dollar, often leveraged to enforce sanctions to achieve some diplomatic goals. Clear support for the BRICS agenda for change was shown before last year’s summit, as over 40 Global South countries expressed interest in joining BRICS, with 23 formally requesting membership.

During last year’s summit, the group advocated for a shift in the global order away from Western dominance. The BRICS nations, regarded as symbols of change, aimed to convey a powerful message to the world that traditional approaches are inadequate for addressing contemporary challenges. S. Jaishankar, India’s External Affairs Minister, urged BRICS states to demonstrate their dedication to reforming multilateral institutions, particularly the UN Security Council, as contemporary issues highlight the “deep shortcomings of the current international architecture.”

BRICS advocates for the reform of international financial institutions to better reflect the changing global economic landscape. Dissatisfied with the performance of the IMF and World Bank in meeting the needs of the Global South, BRICS took action by establishing the New Development Bank (NDB), funded with $50 billion from each of its member countries. The NDB offers accessible loans to developing economies for sustainable development and infrastructure projects. These initiatives not only appealed to BRICS nations but also resonated with many other developing and emerging economies disillusioned by the IMF’s structural adjustment programs and austerity measures. Additionally, BRICS developed a “liquidity mechanism,” also known as a “Contingent Reserve Arrangement” (CRA), to assist members facing financial difficulties.

Since the aftermath of World War I, the dollar has established itself as the primary international currency for trade. This development not only reinforced American hegemony but also bolstered its influence over the Global Value Chain (GVC). In response to this scenario, there are growing calls for de-dollarization and the establishment of a common currency within BRICS. For instance, India and Bangladesh have begun using the Chinese yuan for settlements when purchasing Russian oil, while Brazil and China have announced plans to implement a yuan-clearing arrangement for certain trade transactions between the two countries. Additionally, BRICS nations have been working on developing “BRICS pay” – a payment system designed for transactions among BRICS countries without the need to convert local currencies into dollars.

However, the potential of BRICS to challenge the US-led global order is hindered by internal disputes among member states. Examples include simmering border disputes and China’s assertive foreign policy in the Bay of Bengal region, leading to growing tensions between China and India, the two largest members. Aside from the establishment of a development bank, BRICS has made limited progress in policy coordination to enhance their collective economic endeavors. Eight years after the creation of the NDB, the bank still heavily relies on the US dollar and has encountered challenges in establishing a common currency within BRICS. Globally, the US dollar constitutes 59 percent of central bank foreign exchange reserves.

There is also a lack of consensus among BRICS countries regarding engagement with Western partners. For instance, Narendra Modi and Cyril Ramaphosa were guests of German Chancellor Olaf Scholtz at the G7 Summit. This may have raised concerns in Beijing and Moscow that these two BRICS members could be swayed by the G7. Disagreements over the expansion of membership were evident among member states, with Brazil expressing reluctance towards expansion out of fear of diluting its influence. India also expressed discomfort with the issue of expansion.

Furthermore, with the inclusion of more countries, coordination, and consensus-building become more challenging among a larger and more diverse group. Each potential new member introduces their own priorities, interests, and perspectives, which may not necessarily align with those of existing members. In terms of cohesiveness, it’s worth noting that not all BRICS countries are geographically located in the Global South, and not all of them fit the traditional notion of being “emerging” economies as implied at the beginning of the 21st century.

While there has been a recent push from BRICS to establish an alternative model to the existing system, the G7 continues to maintain unparalleled influence on the global stage. Nominally, the G7 still commands a larger share of the global economy at $46 trillion compared to the BRICS’ $27.7 trillion. Moreover, from coordinating sanctions on Russia to providing military aid to Ukraine, the G7 retains significant financial and political influence. However, completely dismissing the potential of BRICS would be wrong. With China and India increasingly developing their economies and other developing nations expressing support for BRICS, there is potential for the group to challenge the existing system and foster a new order that is more equitable and diverse.

In conclusion, the comparison between BRICS and G7 offers valuable insights into the evolving dynamics of global governance. While the G7 remains a formidable force with unmatched influence in financial and political spheres, BRICS presents a compelling alternative, advocating for a more inclusive and multipolar world order. Despite facing internal disputes and challenges, BRICS nations have made significant progress in establishing alternative financial institutions and promoting South-South cooperation. However, any significant change is yet a distant dream as G7 still holds significant influence in the political and economic arenas of world politics. To move forward, BRICS must prioritize resolving internal disputes and disagreements among member states. By fostering unity and solidarity within the group, BRICS can effectively amplify its voice and bring some positive changes in existing system to benefit all countries equally.

– Muhammad Estiak Hussain is a Research Assistant at the KRF Center for Bangladesh and Global Affairs (CBGA).

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