Building BRICS: An Alternative Global Order?
Building BRICS: An Alternative Global Order?
At the recent BRICS summit in Kazan, Russia, this October, the BRICS+ — a group by Brazil, Russia, India, China, South Africa, and other countries in the Global South — announced the addition of thirteen new partner countries, expanding its alliance to 22 members.
This expansion will potentially bolster the group’s economic, and numerical strength and overall influence in the global economy with speculations that it could be a threat to the existing blocs like G20 and G7 which are dominated mostly by the West.
Another report suggests that the group’s expansion signals a rising global discontent and a resolve to challenge the entrenched structural advantages that developed market democracies continue to hold within a global order shaped by and for the West.
These concerns then stir a critical question: can a truly balanced world order emerge, or is it only a matter of time before BRICS+ mirrors the very systems it aims to challenge?
Well, let’s give it time.
BRICS was first created as “BRIC” in 2006 by Brazil, Russia, India and China. South Africa joined in 2010, making it "BRICS". The group has since welcomed four new members—Egypt, Ethiopia, Iran, and the United Arab Emirates on January 1, 2024, and is now informally referred to as BRICS+. Saudi Arabia was invited to join but has not yet officially joined, and Argentina’s new President, Javier Milei, withdrew the country from its anticipated entry into the group.
The G20 group was established in 1999 as a platform for Finance Ministers and Central Bank Governors to discuss international economic and financial issues. However, the BRICS+ group also includes many of the countries that are in the G20 including Brazil, China, India, Russia, Indonesia, and South Africa.
Concerns that developing countries were unable to have their interests effectively represented within the G20 and G7 leaders’ network, largely influenced by Western powers, contributed to the formation of BRICS+.
A line in this report noted: “BRICS was founded on the premise that international institutions were overly dominated by Western powers and had ceased to serve developing countries.”
Dataphyte analysis shows that the recent expansion of BRICS+ will increase the group's numerical strength by 16.53 percentage points. With the addition of Indonesia and Nigeria, BRICS+ will be home to six out of the ten most populous countries in the world and collectively account for 56.87% of the global population.
The new membership will also raise the group’s combined share of global GDP Purchasing Power Parity (PPP) to 44.63%, up from 33.06%, based on 2023 GDP(PPP) figures excluding Cuba.
With the inclusion of BRICS+ countries, the group’s share of global exports saw a significant rise, increasing by 9.40 percentage points as of Q2, 2024.
This expansion will further validate BRICS+ as a critical player in global trade, reshaping economic dynamics and potentially supporting its goal of reducing the reliance on Western-dominated trade routes.
BRICS+: Threat to the G Networks?
While the G20 continues to hold the largest share of the world GDP, the BRICS+ share of the world GDP increased after a membership expansion.
The G20 presently contributes 87.29% of global GDP Purchasing Power Parity, with the G7 holding 29.02% of that share. The BRICS group accounts for 33.06% of total GDP, a figure that increases to 44.63% when the GDP of new full members and partners are included.
Similarly, the group’s share of the global trade in terms of exports increased to 23.87% from 14.47% when the exports of new members(both full and partner members) were added. Same as in the global GDP, the G20 retains its dominance in global exports, accounting for 88.16% of global exports in Q2 2024.
Analysts contend that adding new countries to BRICS+ could create a platform for the Global South to assert its interests and challenge the longstanding dominance of Western powers in global affairs. They highlight the combined economic strength of BRICS nations, which exceeds that of the G7, suggesting that this collective economic influence could act as a counterbalance to what they see as Western hegemony.
Additionally, they emphasise the vast size of the BRICS+ bloc, both in terms of population and GDP, underscoring its growing importance on the global stage. As the group's economic influence expands, it may wield greater power in shaping global agendas and policies, especially concerning development issues that impact the Global South.
In contrast, a report by the European Parliament noted that while the expansion could increase the group's influence, making decisions by consensus in BRICS+ might prove challenging given the increased diversity of interests within the group.
Analysts also noted that there are no permanent friends or enemies in international relations, there are only permanent interests and that the BRICS+ alliance will most likely cohere as a global south cooperative, with an innovative self-help agenda, but be reluctant to overturn the current global order from which it desires to benefit more equitably.
Could a BRICS Currency Displace the Dollar?
As BRICS+ extends its influence and presence on the global stage, it is also establishing structures to reinforce its impact. One such initiative under discussion is the BRICS Cross-Border Payments Initiative (BCBPI), aimed at facilitating international trade in local currencies and gradually reducing dependence on the US dollar’s dominance.
Other structures aimed at improving financial cooperation among members are the creation of the New Development Bank (NDB), the Contingent Reserve Arrangement (CRA), and other financial coordination initiatives.
In a report, Can BRICS De-Dollarise The Global Financial System? Zongyuan Zoe Liu and Mihaela Papa noted that the displacement of the British pound sterling signals that the hegemonic status of the US dollar can be replaced.
They stated two major constraints that may prevent BRICS from forming a unitary de-dollarisation coalition.
First, some BRICS members have closer relationships with the United States than with fellow BRICS members. This is evident in the case of India and its relationships with the United States and with China. Same as Nigeria’s trade relationship with the US.
While this prevents BRICS members from adopting a formal, cohesive de-dollarisation strategy in the near term, they may still informally pursue de-dollarisation initiatives. Second, some BRICS members, such as Brazil and South Africa, have economies that are more integrated into the dollar system than others. Thus, the BRICS members have no group-level consensus on de-dollarisation, nor do they share the same sense of urgency to prioritise de-dollarisation.
Most BRICS members still hold large amounts of US dollar assets in their reserves, so the weakening of the US dollar may impose losses on them.
So, will the BRICS+ expansion shift the world order? Maybe—or maybe not.
Could the US dollar lose its crown? Analysts say it is possible, just as it once overtook the British pound sterling.
How quickly could that happen? That is the question. One that has no clear answer.
Thank you for reading this edition of Data Dives. We hope that the bricks that shape the BRICS pave the way for a fresh perspective in the week ahead!