BRICS Global alliance overview.

BRICS is an acronym that stands for a group of five major emerging economies: Brazil, Russia, India, China, and South Africa. In 2001, Jim O’Neill, an economist at Goldman Sachs, coined the term to highlight the collective potential of these countries in the global economy.

BRICS is not a formal organization or alliance with a legally binding contract, but rather an informal alliance that aims to promote collaboration and communication among its member nations. Here is a brief overview of the history, objectives, and key aspects of the BRICS alliance:

History of BRICS

O’Neill published a research paper entitled “Building Better Global Economic BRICs,” which laid the foundation of BRICS. Due to their quick economic growth, massive populations, and vast resources, O’Neill saw Brazil, Russia, India, China, and South Africa as the economic powerhouses of the 21st century.

  • The first formal BRIC summit took place in 2009, leading to the establishment of a platform for regular dialogue.
  • South Africa joined the group in 2011, expanding it to the BRICS and adding diversity.
  • BRICS holds annual summits to discuss various issues, including trade, finance, development, energy, and technology.
  • BRICS has established mechanisms such as the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA) for economic development and financial stability.
  • BRICS represents a significant portion of the world’s population, landmass, and economic output.
  • It advocates for a more equitable international order and greater representation of emerging economies in global governance.
  • Challenges and differing priorities exist among member countries, but BRICS remains an important forum for cooperation and pursuing common interests.

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Objectives of BRICS

Cooperation, development, and influence in world affairs are at the core of the BRICS goals. The following are some of the main BRICS goals:

  • Economic cooperation: Encouraging trade, cooperation, and growth among members, as well as improving BRICS economies’ access to markets.
  • Development financing: Creating institutions such as the CRA and the NDB to finance infrastructure and development projects in member nations.
  • Political coordination: Strengthening political discourse and coordination on international issues, such as modifying institutions of global governance to take into account the shifting global economic landscape and to provide rising economies with a stronger voice and representation.
  • Social and cultural exchanges: Promoting interpersonal relationships and mutual respect for one another’s cultures while also boosting social and cultural exchanges between member nations.
  • Technology and innovation: Strengthening international collaboration in the fields of science, technology, and innovation to promote knowledge exchange, capacity building, and technological advancements among member nations.
  • Sustainable development: Promoting environmentally friendly and sustainable development methods while working together to achieve sustainable development goals.
  • Peace and security: Promoting peace, stability, and security locally and internationally while addressing shared security issues and risks, such as terrorism.
  • South–South cooperation: Strengthening cooperation and collaboration among developing countries, sharing best practices, and supporting initiatives that contribute to the overall development of the Global South.

Key Aspects of BRICS

The key aspects of BRICS encompass various dimensions that define the cooperation and influence of the group.

Economic Powerhouses

The BRICS countries account for a significant share of the global population, landmass, and gross domestic product. They are significant rising economies with enormous potential for economic expansion.

Cooperation and Dialogue

The BRICS group provides a forum for ongoing communication and collaboration among its members. It offers a platform for decision-makers to have conversations, share ideas, and collaborate on projects.

Economic Cooperation

The BRICS initiative seeks to increase trade and economic cooperation among its member nations. Initiatives, such as the BRICS Business Council, are used to attract investment, lower trade barriers, and develop economic ties.

Development Finance

The BRICS have formed financial institutions, including the CRA and the NDB. These organizations fund infrastructure projects, finance international development, and maintain the financial systems of their member nations.

Political Influence

The BRICS countries aim to have a political impact on the world arena. Member nations work together on global concerns, push for reform in institutions of global governance, and work to ensure that rising economies are more represented.

Global governance reform

The BRICS countries want to make global governance more inclusive and equal. They want to improve global financial institutions and create a world order that represents the goals and ambitions of developing nations better.

Closure of Goldman Sachs’ BRICS investment fund

In 2006, Goldman Sachs launched the BRICS Fund, which was an investment fund that invested in companies listed in the markets of Brazil, Russia, India, China, and South Africa. The fund aimed to give investors exposure to the economies of these countries and take advantage of their rapid economic growth. However, in 2015, Goldman Sachs decided to close the fund because it did not expect significant growth in the near future. The economic challenges faced by the BRICS countries after the global financial crisis led to a reassessment of the investment prospects in these markets. Despite this, Goldman Sachs remains committed to exploring opportunities in emerging markets.

Related: 5 basic principles of finance you should know

Unified digital currency initiative by BRICS nations

The upcoming BRICS Summit in 2023 is expected to be a significant event in international finance. There is anticipation that a gold-backed digital currency will be unveiled, which could have a profound impact on the global payments landscape. The BRICS nations want to introduce this alternative currency to enhance their financial independence and reduce reliance on existing monetary systems, particularly the US Dollar.

BRICS efforts in forming alternative payment systems and reserve currency trade, partnership for win-win cooperation, a gradual rise of a non-dollar system, moving away from reliance on the US dollar, common BRICS payment system and an increase in trade with domestic currencies.

— Dr Kish (@kishpatr1) June 15, 2023

If a unified digital currency is established among the BRICS nations, it could have significant consequences for the global economy. It could reduce the dominance of the US Dollar and euro in international trade and finance and provide emerging economies with an alternative avenue for conducting transactions. Furthermore, the introduction of this new currency could strengthen economic ties within the BRICS bloc, fostering investment and growth. This, in turn, could promote increased trade and cooperation, offering potential benefits for the global economy as a whole.

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