BRICS

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  • BRICS is an acronym for the grouping of the world’s leading emerging economies, namely Brazil, Russia, India, China and South Africa.
  •  The term BRIC was first coined by O'Neill, the former chief economist for Goldman Sachs. Earlier it was known as BRIC before the inclusion of South Africa in 2010 at BRIC Foreign Ministers' meeting in New York
  • The First Summit (2009) – Russia – Focused on discussing economic and financial issues arising out of the 2008 financial crisis and with emphasis on reform of international financial institutions.
  • The main areas of dialogue between the member countries include – Finance & Central Bank, Trade, Business Forum & Council, Financial Forum, Academic & Think Tanks Council, Health, Science & Technology, Security, Agriculture, and Statistics. 
  • The BRICS Leaders’ Summit is convened annually.

Structure

  • The five members will have an equal share for each in the bank, so no one member dominates the institution.
    – Headquarters – Shanghai
    – Bank will have an African Regional Center in South Africa.
    – Chairman of the Board of governance will be Russian
    – The emergency reserve fund – which was announced as a “Contingency Reserve       Arrangement” will also have $100bn and will help developing nations avoid short-term liquidity pressures. New Development Bank will have an initial subscribed capital of $50 billion which will be raised to $100 billion.
    – It will have $41 billion from China, $5 billion from South Africa and $ 18 billion from remaining nations.
  • BRICS does not exist in the form of an organization, but it is an annual summit between the supreme leaders of five nations. 
  • The Chairmanship of the forum is rotated annually among the members, in accordance with the acronym B-R-I-C-S.
  • The New Development Bank (NDB), formerly referred to as the BRICS Development Bank, is a multilateral development bank operated by the BRICS states. The bank's primary focus of lending will be infrastructure projects with authorized lending of up to $34 billion annually.
  • The BRICS Contingent Reserve Arrangement (CRA) is a framework for providing protection against global liquidity pressures. This includes currency issues where members' national currencies are being adversely affected by global financial pressures. It is found that emerging economies that experienced rapid economic liberalization went through increased economic volatility, bringing an uncertain macroeconomic environment.

Objectives

  • The BRICS countries act as one to promote a more legitimate international system, including advocating reform of the UN Security Council.
  • The BRICS group is a South-South framework for cooperation.
  • BRICS takes into consideration each member’s growth, development, and poverty objectives to ensure relations are built on the respective country’s economic strengths and to avoid competition where possible.
  • The BRICS group also acts as a bridge between developed and developing countries. For example, in the WTO, the BRICS countries are trying to promote a fair order regarding agricultural policies. They are attempting to promote the liberalization of the international economic order to diminish agricultural subsidies in the United States and the European Union, which would make developing countries’ agricultural products more competitive.
  • The BRICS group will also play an increasingly important role in assisting developing countries in gaining an advantage in trade and climate change negotiations, as well as on issues related to the export of manufacturing products.

Features

  • The BRICS is an association formed by countries in four continents: Brazil in the Americas, Russia in Europe, India, and China in Asia and South Africa in Africa. Its member states cover an area of over 39,000,000 square kilometers, which is approximately 27% of the world's land surface. 
  • In 2015, the five BRICS countries represent over 3.1 billion people or about 41% of the world population; four out of five members (excluding South Africa at #24) are in the top 10 of the world by population. As of 2018, these five nations have a combined nominal GDP of US$18.6 trillion, about 23.2% of the gross world product, combined GDP (PPP) of around US$40.55 trillion (32% of World's GDP PPP) and an estimated US$4.46 trillion in combined foreign reserves. Overall the BRICS are forecasted to expand 4.6% in 2016, from an estimated growth of 3.9% in 2015.

Challenges

  • The market dominance of big three Russia-China-India is a challenge for the BRICS as it moves ahead. To become a true representative of large emerging markets across the world, BRICS must become pan-continental. Its membership must include more countries from other regions and continents.
  • As BRICS moves forward foundational principles of BRICS i.e. respect for sovereign equality and pluralism in global governance are liable to be tested as the five-member countries pursue their own national agenda.
  • China’s efforts to co-opt nation-states, which are integral to its Belt and Road Initiative, into a broader political arrangement have the potential to cause conflict among BRICS members especially China and India.



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