Background and policy
BRICS refers to a collective economic acronym that describes the alliance between Brazil, Russia, India, China and recently, South Africa. Goldman Sachs and Jim O’Neil first devised the term in 2001: Population size, rate of economic growth potential and contribution to overall global affairs were all measures considered in the formation of the bloc, symbolizing the transferral of global economic power from the customary established economies to the developing countries. The federation officially met in 2009 under the acronym “BRIC” and later in 2010 as BRIC (S) reflecting the inclusion of South Africa into the group.
Mutual aspects represented by the countries characterise the connection between the members. For instance, China and India are key players in the global supply of manufactured goods and services, while Brazil and Russia are comparably major contributors in the supply of raw materials. The four countries combined contribute to 40 % of the world’s population and cover over 25 % of global land amounting to a collective Gross Domestic Product (GDP) Purchase Power Parity (PPP) of over 18 trillion dollars.
The framework of the contemporary era has been structured by transformations in technology, society and more importantly shifts in global economic power.
During the fourth BRICS summit in New Delhi (29 March 2012), the federation declared that the overall intention of its formulation was to setup a framework that would accommodate shared growth amongst its members, further addressing concerns linked to sustainable development and environmental change. When considering their declaration, the federations’ policies appear to reflect that of the United Nations. Their intended contribution to global affairs is extended from resolving situations in Syria, Iran, Afghanistan and the Middle East. Further, the bloc claims to optimistically improve global health systems, rapid economic growth and energy based on fossil fuel making it seem like a new world order.
What are the underlining ramifications of the inclusion of an African nation in the group of the fastest growing economies in the world?
Except for their conjectured policies in their declaration, the BRICS share no other common goal. Considering all other respects, their interests and values, political systems, and objectives are substantially diverse.
To illustrate, Russia, has drifted away from democracy toward strongman rule under Vladimir V. Putin. China is the world’s largest authoritarian state and has by far the largest and most powerful economy in BRICS, which creates a complicated dynamic. China is the heavyweight, and thus the natural leader of the group, except that it is the political outlier. As such, distrust is high between India and China, whose border dispute, which goes back decades, is fuelling a quiet military build-up on both sides.
The group has also been criticised for basing their policies on estimated growth and the assumption that resources are limitless and will always be available.
BRIC(S) and South Africa
In the original concept of the BRIC federation O’Neil predicted that the economies with the most potential to become members would be South Korea and Mexico. However at China’s invitation, and their own insistence, South Africa was included in the coalition in December 24 2010 even though South Africa’s GDP and population size is less than a quarter in comparison to any of the original BRIC members. Considering the strengths that the four countries maintain, many have inquired as to what South Africa’s role and contribution is to the already formidable entity of the four BRIC members? For while the country is growing, their growth rate does not warrant being called one of the fastest developing emerging economies.
In the New Delhi declaration the bloc emphasized their position as that of not being a trading association or a political coalition but rather a peace seeking organization advocating global growth and stability yet South Africa emphasizes the economic gain of trading with the other BRICS members. That last number of years has seen the Chinese make major headway in their efforts to stake a claim of Africa as they take on major construction and infrastructure projects across the continent. As a result, concerns have been raised on whether the inclusion of South Africa was to further enable a pathway into Africa and its resources or was it to genuinely aid development.
The original members have a symbiotic relationship with each country offering more than South Africa could, especially considering the nations already depleting resources. With an impressive population of more than 162 million, compared to South Africa’s 50 million, it would seem oil rich Nigeria was a more suitable candidate to be considered for member status.
Despite its controversial inclusion in the coalition South Africa has to find ways in which to capitalise their much-coveted position. As a country it can benefit from joining BRICS, obvious factors such as economic trade gain and global exposure are offerings that the coalition presents. Much can be done to ensure reaping the benefits of being part of this economic power force which will, according to Abdullah Verachia, head of the India-Africa Business Network at GIBS (Gordon Institute of Business Science), make up 50 % of global market capitalisation by 2015.
India has pushed the launching of the BRICS Development Bank, an idea that has been adopted by all member countries and set for implementation in 2013. This initiative would be the vehicle used to fund infrastructure in the countries and looks to position itself as an alternate moneylender to age old institutions such the World Bank and other finance bodies. Should it be successful, the Development Bank will firm up the BRICS position as a global decision maker, placing South Africa in a very coveted position. AlbertKhamatshin from the Centre for Southern African Studies at the Russian Academy of Sciences believes South Africa will benefit most because the primary focus of the bank will be development projects within BRICS.
And it would seem South Africa is already benefitting from their status in BRICS as bilateral trade between India and South Africa increased by 43 % last year and improved the fiscal engagement between the two countries. Following negotiations with China, South Africa’s Department of Trade and Industry will be holding exhibitions in China where South African manufacturers will be showcasing their goods to the large Chinese contingent of buyers in a bid to improve the trade pattern that currently sees South Africa exporting raw material to China and importing manufactured goods.
These negotiations could see an increase in the export of manufactured goods, which will in turn increase employment opportunities in South Africa.
South Africa has also sent delegations to Brazil, hosts of the 2014 World Cup, with an aim to assist with stadium construction and a department has been established to explore business opportunities for South African firms in the country.
Shifts in global economic power are the highlights of the 21st century as developing nations present themselves as potential regulators of the contemporary age. While the concept of BRICS cannot be analysed at this stage considering that most of their policy is structured as prospects and not yet been implemented, it is imperative that South Africa ensures it receives maximum benefit as much as it will benefit its fellow partners. One can only assume and sincerely hope that theory will be capable of turning into practicality and the BRICS will deliver what they have declared for all involved.