BRICS Nations: Economic Growth and Development
BRICS: Understanding Their Rise and Impact
Why Were Brazil, Russia, India, and China Chosen?
These four countries, initially termed BRIC, were identified as potentially influential economies in the 21st century due to their:
- Large populations
- Younger demographic structure
- Increased productivity
- Rapid economic growth until 2015
Collectively, the BRIC nations:
- Comprise over 2.8 billion people (40% of the world’s population).
- Account for more than 25% of the global GDP.
- Cover over 25% of the world’s land area across three continents.
Why Was South Africa Invited to Join?
In 2010, the four BRIC countries invited South Africa to join the group. This was due to South Africa’s geopolitical location, economic growth, and influential international role on the African continent. The acronym then became BRICS.
Economic and Political Landscapes of Each Nation
Brazil: Experienced a commodity bubble until 2015, followed by an economic slowdown and lower purchasing power parity (PPP). Political and social crises occurred until the 2018 elections due to corruption. A lower financial rating led China to view the country as an opportunity. Brazil exports soybeans to China and has a joint investment fund.
Russia: Possesses a high-income mixed economy, with energy and defense being significant sectors. The country experienced an economic slowdown in 2015. It faces challenges like corruption and low foreign direct investment (FDI). Russia has a trade surplus and trades with China. Western sanctions have impacted its economy. It has protected state-owned companies, while the private sector struggles.
India: FDI flows into telecommunications, information technology, auto components, chemicals, apparel, pharmaceuticals, and jewelry. It is the second-largest agricultural producer globally, though agriculture’s contribution to GDP is not as significant as its role in employment. India imports heavily from China and has a large shadow economy.
China: Has a socialist market economy and is the fastest-growing major economy. Real estate investment is significant. Environmental deterioration has occurred, though some regulations have been implemented.
South Africa: Faces significant inequality, with poverty and crime being major concerns. It has experienced slow economic growth and public debt exceeding 40%. Racial disparities persist in land tenure and employment. Johannesburg boasts a strong financial sector. South Africa receives investment from China.
Key Highlights of the BRICS Nations
- Over 25% of the population in China and India work in the agricultural sector.
- Russia, Brazil, and South Africa heavily rely on the service sector.
- Russia’s primary economic driver is the energy sector.
- South Africa’s low Human Development Index (HDI) contributes to a high unemployment rate (25%-30%).
- Rapid economic growth in all BRICS nations is impacting the environment and public health.
The rapid economic growth and demographics of China and India are projected to lead to a large middle class. This new demand is expected to further enhance the economic growth of the BRICS nations.
The BRICS countries hold annual summits to discuss current events and projects.
The New Development Bank (NDB)
The New Development Bank (NDB) is a multilateral development bank established by the BRICS states in 2015. India proposed the idea in 2012.
Headquartered in Shanghai, China, the NDB started with an initial funding of $50 billion ($10 billion from each member). According to the agreement, “the bank shall support public or private projects through loans, guarantees, equity participation, and other financial instruments.” The bank’s primary focus is on lending for infrastructure and sustainable development projects, especially renewable energy, with authorized lending of up to $34 billion annually.