By Yaroslav Lissovolik
The upcoming BRICS summit in South Africa is set to reveal the criteria as well as possibly the composition of the next wave of BRICS members and/or members of the expanded BRICS+ alliance. In many respects this is set to be one of the most significant BRICS summits in the past decade as the BRICS+ outreach re-launched by China in 2022 has generated a massive reaction from the Global South that now sees BRICS+ as a key platform for realizing their potential on the international arena. Whatever form it takes, the coming BRICS expansion may generate further changes in the structure of international economic alliances, while also broadening the possibilities for emerging markets to mobilize financing for the attainment of their key development goals.
With respect to the composition of the new entrants into the core BRICS grouping there were a number of possible modalities proposed, including all of the non-BRICS G20 developing economies as well as a number of other key regional players from the Global South. Among the possible formations for this new stage of BRICS expansion I earlier advanced the BEAMS and PEAKS concepts[1], though recent developments have rendered these exact formats less likely in view of the preferences expressed by BRICS core members. In case the new wave of entrants were to consist of the five G20 members that are as of yet outside of BRICS – Argentina, Mexico, Indonesia, Turkey and Saudi Arabia – plus the two developing economies with the next largest nominal GDP in PPP terms – Egypt and Iran – the resulting new wave of BRICS can be termed as AMITIES, with all of these economies having participated in the BRICS+ format in the period between 2017 and 2022. Such a formation apart from bringing some of the largest emerging economies also has the benefit of additional representation accorded to Latin America and Africa, while raising the scope for greater policy coordination in major international organizations.
And while the exact composition of the expanded BRICS/BRICS+ formation will likely be the most sought-after theme at the upcoming summit, no less important will be the impact that this expansion will have on the existing patterns of alliances and economic policy options faced by emerging markets. With respect to the latter, several trends may be observed as BRICS expansion gains momentum and a more diverse and multipolar economic framework sets in:
An expansion in the array of sources of financing for emerging markets as more of them join NDB as well as possibly other regional and multilateral development institutions under the umbrella of BRICS+
Greater optionality in the use of payment systems, national currencies and reserves as BRICS develop financial market infrastructure to complement the existing system.
Lower scope for economic restrictions to be applied, including via protectionist measures.
A less burdensome conditionality framework that is likely to emerge on the back of rising optionality in sources of financing. In fact, in case BRICS do step up the financing of the Global South via BRICS development institutions, it will be interesting to see whether competing conditionalities emerge between the BRICS and the Bretton Woods camps
In effect, this is a different setting characterized by broader possibilities and options that become open to emerging market economies. This effect is further strengthened by the widening possibilities of building new patterns of economic alliances that may prioritize the creation of new sectoral platforms as well as regional and cross-regional blocks. One of the likely trends in the creation of such new alliances is their greater concentration within the Global South, though the developed world could well take the lead in some of the key areas of the global economy, including possibly in the formation of the so-called digital economic agreements (DEAs). Another area where the Western world could play a leading role in a new multipolar setting is in the sphere of “integration of integrations”, whereby the EU as the most advanced regional block could lead the formation of an inclusive global platform for regional trade blocks[2].
As for the next wave of BRICS entrants, their accession into the BRICS+ circle will widen the array of possible options, including continued development of economic relations with members of the G7. In fact, the possibilities for the expanded BRICS block that includes the likes of Turkey, Argentina, Mexico and Saudi Arabia, to explore the modalities of building communication lines with the advanced economies could be enhanced. In this respect, a BRICS++ framework of economic cooperation with the development institutions from advanced economies could become one of the themes on the agenda of an expanded BRICS formation. Modalities such as BRICS+AMITIES that bring together all developing economies that are G20 members may enhance the possibilities for building more structured and coordinated policies in key international fora such as G20 and the Bretton Woods institutions.
Yet another possibility is for the new BRICS entrants/BRICS+ economies to explore new formats and new priorities for economic alliances coming from the Global South. For example, rather than prioritizing high economic growth and higher market returns as did the original BRIC vision, there may be scope to place the emphasis on sustainability – not only in terms of environmental standards, or the growth vs balanced development, but also in terms of global economic governance and the role that middle-income economies play in a multipolar global economy setting.
According to the World Bank, more than half of the economies in the world economy are middle-income countries (MICs)[3], furthermore middle income economies account for “75% of the world’s population and 62% of the world’s poor… MICs also represent about one-third of global GDP and are major engines of global growth” [4]. With such credentials, the expanded BRICS (that is largely concentrated in the middle-income space) could position itself as a key center of gravity in the world economy that not only accounts for the majority of the population and the number of countries, but also for moderation in economic contradictions and frictions as well as greater sustainability in economic development – much as the middle-class performs such a stabilizing role in national economies.
Going forward, with the progression in the multipolarity of the world economy, the role of the middle-income economies is likely to grow in line with how the median voter theory operates in a democratic electoral setting. And this greater importance of BRICS+ together with catch-up growth vis-à-vis the developed world will call for further changes in the governance of the global economy. The Tocqueville paradox formulated nearly 200 years ago – namely that rising affluence raises the demand for greater equality and governance change – appears to hold not only at the country level, but also at the level of the global economy. The important point however is that while BRICS+ is becoming a platform for boosting developing countries’ growth as well as for transforming the governance system of the world economy, the pattern of change favoured by BRICS is very much in the evolutionary domain, with particular emphasis placed in the block’s summit declarations on supporting multilateralism and existing multilateral institutions. Expect these principles to be reiterated yet again in the 2023 BRICS summit declaration.
[1] http://infobrics.org/post/38738/
[3] MICs are those with a GNI per capita between $1,036 and $4,045; and upper middle-income economies – those with a GNI per capita between $4,046 and $12,535 (2021)