The idea BRIC (Brazil, Russia, India and China) was first envisaged in 2001 by Goldman Sachs as part of an economic modelling exercise in order to anticipate the trends of global economy over the next half century. The acronym BRIC was first mentioned in 2001 by Goldman Sachs in the Global Economics Paper No. 66, ‘The World Needs Better Economic BRICs’. On 21st September 2010, BRIC Foreign Ministers at their meeting in New York conceded that South Africa may be invited to join one of the most prestigious world body BRIC. In accordance with this understanding, China, as the host of 3rd BRICS Summit, sent an invitation to South African President to attend the Summit in Sanya on 14 April 2011 along with other BRIC Leaders. The BRICS countries – originally Brazil, Russia, India, and China, and now South Africa – have proved to be a source of global economic progress and essential to upcoming generations. The centre of global economic activity is showing a noticeable change from industrialised nations in the west to developing economies in Asia, Africa, and Latin America. By the end of 2010, South Africa made an entry into the BRIC. Indonesia may also be given entry into the BRICS to give representation to the large developing countries that are quite central to global production and consumption.
In economics, BRICS is used to make a reference to the combination of Brazil, Russia, India, and China and South Africa making over 48% of the whole population of the world. These nations will have a lot to contribute to the future global economy. In the year 2000, the four countries in BRIC with Indonesia contributed to just 18 percent of global GDP, whereas industrialised countries contributing to about 65 percent. In the year 2010, BRIC countries contributed to more than a quarter of the world’s GDP, at 27 percent while the rich countries’ share got reduced to 56 percent. During 2000 to 2010, BRIC’s GDP rose by an incredible 92.7 percent, as against the global GDP growth of just 32 percent, with industrialised economies showing a very moderate GDP growth of 15.5 percent. The increasing significance of BRICS economies can be evident by the growth of imports. Their import and service demands, at about $2 trillion, contribute to 13.5 percent of global imports, a rise from just 6 percent 10 years ago. This underlines a 277 percent growth in imports. Growth of imports globally during this period was just 92 percent, while imports in industrialised economies increased only 72.3 percent.
The source of imports have been diversified by BRICS countries and are trading more with other great emerging economies and developing countries. They contribute significantly to the global economy, and their role in the future of global economics seems more visible.
From 2000 to 2010, in the area of new businesses, the market capitalisation of BRIC companies took an upswing from $1.2 trillion to $6.4 trillion, a significant increase of 641 percent. Their companies contribute about 18 percent of global market capitalisation, a hike from a very modest 3.8 percent in the year 2000. If the same trend continues, by 2025, BRICS companies will contribute to more than half of global market capitalisation. Demographic shifts are important events that are taking place and BRICS states, particularly India and China with much of the world’s youth population, could have been driving the growth of consumer spending and innovation.
Their large domestic markets are bound to create economies of scale that form BRICS’ geographies central to production and demand of the world. And they will be emerging as centres of innovation and development of new product. In the last two decades, India-China relations have seen a remarkable change: they are becoming broader and are with more substance. The most important component of that is the economy. The relations have seen a drastic change from China being an insignificant player to largest trade partner of India, with a trading of about $62 billion of goods in the year 2010. There are a number of Indian manufacturing and IT companies that are showing their great prospects in high-tech engineering, software development, banking and foreign exchange trading.
BRICS countries will have to work jointly with an aim to formulate strategies for the future. This could involve alliance on a wide variety of issues such as energy, food security, access to natural resources, climate change, governance along with international trade policies. The essential to maintain is the wide-ranging cooperation among BRIC countries so as to have a stake in each other’s economy and strengthening this trade and business relations among them is an important component of that.
On 29 March 2012, the Fourth BRICS summit was organised in New Delhi. The agenda of the summit was BRICS partnership with an aim for Global Stability, Security and Prosperity. India, Brazil, Russia, China and South Africa took part at the summit and by the end of the summit, Delhi Declaration was released. Two agreements wer signed by the Development banks of BRICS: i) Master agreement to offer credit facility in local currency. ii) BRICS Multilateral letter of credit confirmation facility agreement. The five banks that took part in it are Banco Nacional de Desenvolvimento Economico e Social-BNDES, Brazil; State Corporation Bank for Development and Foreign Economic Affairs-Vnesheconombank of Russia; Export-Import bank of India; China Development Bank Corporation, and Development Bank of Southern Africa. These two agreements are likely to further cooperation among development banks of the BRICS and are significantly going to enhance trade with the BRICS.
Key Points of Delhi Declaration
BRICS nations came to an agreement to work towards the reform of IMF and World Bank.
Brazil, India, China and South Africa congratulated the Russian Federation on its accession to the WTO.
BRICS countries expressed their commitment to play their role in the global fight against climate change and will put in all efforts in dealing with climate change issues at global level.
In the New Delhi summit, leaders of the BRICS group [Thursday, 29 March 2012] tried putting pressure on Western powers to cede more voting rights at the IMF this year and severely criticised the developed world’s reflationary monetary policies that hampered global economic stability. Promised changes to voting rights at the IMF have not yet been affirmed by the United States, leading to dissatisfaction over the G7 and the U.N. Security Council reform, for which India and Brazil have been trying hard for years for permanent seats. The BRICS leaders also put the blame on rich countries for destabilising the world economy even after five years of global financial crisis by the creation of enormous global liquidity. It also noted the right of Iran to make use of nuclear energy for peaceful purposes. The member countries believed that the crises over Iran’s nuclear programme should be resolved using diplomatic channels and the situation should not be allowed to intensify or worsen.
China expects the summit to exhibit the BRICS spirit of unity and win-win partnership, strengthen coordination and cooperation on global economy, finance, development along with other important issues of common interest, pushing forward practical cooperation in various fields, sending a collective message for the economic stability and recovery in the world, providing momentum for improving economic governance at global level and contribute to common development in the whole world. It can also be hoped that the summit will go a long way in strengthening institutional building of BRICS cooperation, mapping out future plans, and laying a solid footing for the growth of BRICS cooperation in the long run. Presently, a large number of emerging markets and developing countries have undergone speedy economic growth and become a vital force in the promotion of world peace and common development. With a firm commitment to peaceful development, cooperative development and harmonious development, these countries play an important role in common development of the world, which is essential for more balanced world economy, better international relations, more productive global governance and long-lasting world peace.
Since the beginning of the international financial crisis in 2008, these countries have led from front for ensuring global recovery by means of their own development. Their steady enhanced representation and their greater control over global economic governance have led the international order towards greater fairness and rationality. What has happened testifies once again that in the absence of emerging markets and developing countries, there will not be complete prosperity in the world; and that in the absence of stability in these countries, world peace and stability cannot exist. The development of these countries leads to have a constructive effect on the international landscape. The global community need to look at these countries keeping in mind a long-term and strategic perspective and actively provide all assistance for their development.
BRICS countries are playing an important role in defending and promoting the interests of developing countries. In their cooperation, BRICS countries have shown commitment for promoting South-South cooperation and North-South dialogue, aimed to execute the U.N. Millennium Development Goals, worked for the early achievement of the goals set out in the mandate for the Doha development round negotiations, worked harder to ensure a greater say for developing countries in global economic governance and strived hard against all forms of protectionism. Partnership among BRICS countries is made essential by the existing economic globalisation and democratisation in global relations. It is necessary keeping in mind the trend of the times identified by peace, development and cooperation, and fully conducive to establishing a harmonious world of long-lasting peace and common prosperity.
For BRICS to make practical cooperation in the near future, China desires to see efforts made in the two areas of high significance: First, laying a solid foundation. We should make all efforts to strengthen the existing cooperation programmes keeping in mind the practicality and efficiency and design a number of flagship projects. Second, being innovative. We should properly look for new spheres of cooperation keeping in mind the needs of economic and social development in BRICS countries, utilise the cooperation potential and infuse new vitality into the system of BRICS cooperation.