Inside Story

BRICS: Challenging the global economic order

Is the vision that united Brazil, Russia, India, China and South Africa starting to crumble?

Leaders of the so-called BRICS group of emerging nations have been meeting in South Africa as they seek to exert greater influence on the world stage.

“South Africa’s position in the world economy is much less significant than that of the other four …. China by far is the most important of the BRICS. Take China away and the BRICS are really deeply insignificant …. There’s no doubt of the growing significance … but let’s not forget that the US economy alone constitutes about one-fifth of world GDP which is about the total of the five BRICS put together.”

– Michael Cox, a professor of International Relations at the London School of Economics

But the summit fell short of expectations.

Leaders from Brazil, Russia, India, China and host South Africa failed to launch a much-anticipated new development bank to rival western-backed institutions such as the World Bank and the International Monetary Fund.

Agreement was reached in principle to establish the joint lender to co-fund infrastructure projects in developing regions. And a raft of business and trade deals have been agreed between the BRICS members. But the meeting ended with little further progress beyond an agreement reached in New Delhi a year ago.

The original vision for the then BRIC bloc was borne out of the global financial crisis. Brazil, India, China and Russia seeking to distance themselves from the economic woes of the West, and to become less dependent on the volatility of the US dollar and the euro.

South Africa was invited to join the fold two years ago – in part as a gateway to the wider contintent.

“I think South Africa’s inclusion in the BRIC nomenclature is all around the geopolitical calculation, it speaks to the importance of Africa vis-à-vis BRIC. Let me just to give you some trade numbers: 10 years ago trade between the BRIC and Africa was about $20bn. Today it is  $250bn and I think it was a geopolitical calculation more than anything else to include South Africa in that name … It [South Africa] is coming in with a lot of noise but ultimately it’s not as powerful as it once was … they are no longer the gateway to Africa.” 

– Aly-Khan Satchu, a former investment banker specialising in emerging market financing

Together, BRICS nations now make up more than 40 percent of the world’s population – almost three billion people. The bloc generates one-fifth of the world’s gross domestic product, and the World Bank says it is driving half of the global economic growth.

The summit in South Africa was taking place as BRICS nations see their economic fortunes faltering.
It is raising questions about whether the original vision is still relevant and if it has simply become the China and India show.
Can South Africa stand shoulder to shoulder with its new partners, or does it, and Africa in general, risk being exploited? Is South Africa being used as a gateway to the rest of Africa?

To discuss this, Inside Story, with presenter Jane Dutton, is joined by guests: Duncan Clarke, the CEO of Global Pacific and Partners, and the author of Africa’s Future: Darkness to Destiny; Aly-Khan Satchu, a former investment banker specialising in emerging market financing; and Michael Cox, a professor of International Relations at the London School of Economics, and author of Power Shifts, Economic Change and the Decline of the West?.

“I think it [South Africa] has lobbied heavily to get into to this BRICS nomenclature, and it has a track record on economic growth that hasn’t altered. But it doesn’t look to be much change going forward at this present time, so it’s externalising a little bit to hope that it will get a lift through trade and possible investment through the association with the BRIC countries that it’s now joined into.” 

– Duncan Clark, the CEO of Global Pacific and Partners