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BRICS: Acronym for Brazil, Russia, India, China, and South Africa

BRICS
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BRICS is an acronym for the economic bloc of countries consisting of Brazil, Russia, India, China, and South Africa. In 2010, South Africa joined the BRIC group. BRIC countries were originally projected to be the fastest-growing market economies by Jim O’Neill of Goldman Sachs in 2001.

The Goldman Sachs thesis does not argue that these countries are a political alliance, like the European Union (EU), or a formal trading association. Instead, it asserts they have power as an economic bloc.

Economists believe these nations will become dominant suppliers of manufactured goods, services, and raw materials by 2050 due to low labor and production costs.

Understanding BRICS

Brazil, Russia, India, China, and South Africa were some of the world’s fastest-growing emerging market economies. They grew quickly because labor was cheap, there were lots of young people, and they had many natural resources. This growth happened during a time when commodities, like metals and oil, were in high demand around the world.

These countries had common goals, such as:

  1. Working together to solve problems in their regions, like dealing with the Iranian nuclear program and conflicts in places like Libya, Syria, and Afghanistan.
  2. Dealing with financial and economic issues, such as making changes at organizations like the World Bank and International Monetary Fund (IMF).
  3. Creating the BRICS Interbank Cooperation Mechanism.

However, Goldman Sachs, a big investment banking company, didn’t think these countries would form a political group like the European Union or a formal trading group. Instead, Goldman Sachs thought these countries could become a strong economic group. But they also knew that their predictions were hopeful and relied on certain policies being put in place.

Even though they weren’t a formal alliance, leaders from these countries often met at summits and worked together on issues that affected all of them. It seemed like having economic power could also lead to having political power.

History of BRICS

BRICS is a group made up of countries like Brazil, Russia, India, China, and South Africa. They don’t always agree with the traditional way the Western countries run the world. Some members of BRICS think it’s a chance to have more say globally.

But, they don’t always see eye to eye on important things like being clear about what they’re doing and being fair to everyone. This might slow down the group’s progress.

How It Works

The BRICS group is like a club of countries that come together every year for a meeting. They talk about how they can work together on money and trade.

One country’s leader is in charge of the group each year, but they take turns. They started having unofficial meetings in 2006, but their first official one was in Russia on June 16, 2009.

BRICS is important because its countries are strong economically. Some countries want to join BRICS because they think it’s a good idea to be less connected to the West. Over 40 countries are interested in joining. In 2023, BRICS said it asked more countries to join. Argentina, Ethiopia, Iran, Saudi Arabia, Egypt, and the United Arab Emirates will become full members on Jan. 1, 2024.

Other Key Developments

  • The growth of the New Development Bank. The institution was established in 2015 to provide emerging markets and developing countries with funding for infrastructure and sustainable development projects.7
  • The establishment of the BRICS Parliamentary Forum, which is designed to “strengthen and promote contacts at the leadership level of chambers, committees and groups of parliamentarians.” This body is responsible for inter-parliamentary exchanges and consultations along with the development of new mechanisms for inter-parliamentary cooperation.

Goldman Sachs’ BRIC Thesis

In 2001, a person from Goldman Sachs named O’Neill noticed that while the world’s total money produced by countries, known as the global gross domestic product (GDP), was going to increase by 1.7% in 2002, the BRIC nations were expected to grow faster than the Group of Seven (G7). The G7 are the seven most advanced global economies: Canada, France, Germany, Italy, Japan, the United Kingdom, and the U.S.

In a paper titled “Building Better Economic BRICs,” O’Neill shared his thoughts about the potential of the BRIC nations.

In 2003, O’Neill’s colleagues at Goldman, Dominic Wilson and Roopa Purushothaman, wrote a report called “Dreaming with BRICs: The Path to 2050.” They said that by 2050, the BRIC group could become bigger than the G6 (the G7 minus Russia), and the world’s largest economies would look very different. This means the biggest economic powers might not be the richest in terms of income per person.

In 2007, Goldman published another report called “BRICs and Beyond.” It talked about the growth potential of BRIC countries, the impact they had on the environment as they grew, and whether their growth was sustainable. The report also talked about another group called the Next 11, which includes 11 emerging economies, along with the BRIC nations, and how new global markets were becoming important

Closure of Goldman’s BRICS Fund

The Growth of the BRICS economies slowed down after the big global financial problem of 2007-2008 and when the price of oil dropped in 2014.

By 2015, the term BRICS didn’t seem like a good place to invest money, and funds that focused on these economies either closed down or joined with other investment options.

Goldman Sachs combined its BRICS investment fund, which was focused on making money from these economies, with its bigger Emerging Markets Equity Fund. This fund lost 88% of its assets from its highest point in 2010.

Goldman Sachs told the Securities and Exchange Commission (SEC) that it didn’t expect the BRICS fund to grow much in the near future. According to Bloomberg, the fund lost 21% of its value in five years.

FAQs

What Countries Are in BRICS?

The BRICS nations are Brazil, Russia, India, China, and South Africa. In 2023, they asked Argentina, Ethiopia, Iran, Saudi Arabia, Egypt, and the United Arab Emirates to join them. They should officially become members on January 1, 2024.

Why Was BRICS Created?

Goldman Sachs made a group called BRICS to study some countries that were growing fast and could become really important in the world by 2050. Now, these countries work together to boost their economies.

What Is the Main Goal of BRICS?

BRICS has big goals: to cooperate, grow, and have a say in global matters. Specifically, they want to work together on economics, help each other develop, coordinate on politics, share cultures, improve technology, support sustainable development, and ensure peace and security.

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