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BRICS – Influential Alliance of Leading Emerging Economies

October 27, 2023
Brics: Sao Paulo is the engine of Brazil's economy

The BRICS countries are an association of emerging economies. The abbreviation "BRICS" stands for the first letters of the five countries Brazil, Russia, India, China, and South Africa. The association is very similar to that of the O5 countries, which, however, include Mexico in place of Russia. BRICS is composed of the emerging countries that have recorded the highest growth rates in recent years, and is very important for the world economy and the greater integration of developing countries in the international scenario. If during your Brazil vacation you can observe a relationship of Brazil with one of the other BRICS countries, you can assume that the BRICS association has an impact on the country. More about this in the following.

History of BRICS

During the United Nations General Assembly in New York in 2006, representatives from Brazil, Russia, India, and China held a meeting that kicked off the joint work of the group that became known as BRIC. In subsequent years, foreign ministers from the BRIC countries attended the meetings, underscoring the importance of cooperation among them. The name BRIC was first mentioned in 2001 in an article by Jim O'Neill, former president of Goldman Sachs.

With the meeting of BRIC heads of state and the officialization of a new group operating in the international economic scenario, the configuration of BRIC countries began to change in 2009. These emerging economies had annual economic output growth rates of 5 to 10 percent over an extended period of time. Nevertheless, the BRIC group did not become a formal economic bloc, and it remains so today. On December 23, 2010, after consulting with the other BRIC countries, South Africa officially received an invitation from China and on April 14, 2011, participated for the first time in the annual meeting of this grouping, which has since been called BRICS.

Due to the growth potential of emerging markets, BRICS countries are gaining more and more attention from investors, which has led to increased trading in other financial products. The "New Development Bank", formerly known as the "BRICS Development Bank", was established on July 15, 2014 as a multilateral development bank by the BRICS countries as another alternative to the existing institutions "World Bank" and "International Monetary Fund". The "Contingent Reserve Arrangement" was established as a sister organization with an initial capital of 100 billion US dollars.

Goal of BRICS

The main goal of BRICS is active cooperation among countries so that they can work together to advance the socioeconomic development of their territories and ensure the growth of their economies. The BRICS countries also want greater independence from established financial institutions. To this end, they have established their own bank based in Shanghai.

The quality of this economic growth is also a concern for the BRICS, who want to combine the improvement of their industrial park and economic activities with sustainable development. In this sense, and in line with the objectives of the United Nations, the BRICS also seek social inclusion and the fight against poverty and unemployment in their countries. In this way, the countries aim to gain more geopolitical weight.

Important information about BRICS

The BRICS countries hold their annual summits in the presence of their respective heads of state to deepen dialogue between them and advance strategies for shared economic growth and development. The BRICS have expanded their sphere of action in recent years, becoming a major economic and geopolitical player on the international stage.

Another important aspect of the BRICS countries concerns their population. This group includes the only two countries whose population exceeds one billion people and which are the two most populous areas in the world. Both China and India have populations of about 1.4 billion. Together, the BRICS countries account for about 41 percent of the world's population.

Economic influence of BRICS

The BRICS countries are currently the world's leading emerging economies. Taking into account the latest data from the World Bank, the total gross domestic product of the BRICS countries accounts for 25.6 percent of global GDP, or 24.7 trillion US dollars. The largest economy in the bloc is currently China, whose GDP reaches 17.7 trillion US dollars. Therefore, it can be said that China is the most important economy of BRICS, accounting for 71 percent of GDP. Due to the higher economic growth of BRICS countries, the percentage of GDP is increasing compared to the other countries.

International trade conducted by the BRICS countries is equivalent to almost one-fifth of total global trade in goods. The emerging economies are major exporters of fuels and raw materials, as well as manufactured goods such as motor vehicles, electronic equipment, integrated circuits, and various services. In addition, all BRICS countries have leading positions in various sectors of the economy. While Brazil trades a lot in soybeans, oil, and iron ore, Russia is known for its vast oil reserves. Russia also has many trading opportunities in communications and information technology. India also scores high in these technologies and offers many transportation services. China generally has a high trade share in very many areas, but is very advanced in the trade of machinery accessories and transmission equipment. South Africa, on the other hand, favors trade in commodities such as gold, platinum, and iron ore.

About 20 percent of all global foreign direct investment goes to the BRICS countries. Importantly, there are also investment and capital flows between the bloc's economies. An example of this is the investment that China is making in Brazil, in areas such as infrastructure, particularly power transmission and generation, finance, and agribusiness.

Potential for the future

BRICS is a strong geopolitical and economic counterpart to G7 and NATO and is designed to help emerging economies successfully cooperate and grow. The years of cooperation also help to maintain or increase the high growth rate. In addition, the partially similar interests can be better enforced on a global level. BRICS will continue to play a major role, especially in the future, and will probably even gain in importance. Therefore, for your Brazil trip, the influence of BRICS will also have a lasting effect!

Sources: brasilescola.uol.com.br, www.bpb.de

Source: Aventura do Brasil