BRICS: Achievements and Challenges in Global Economy

This essay provides a comprehensive analysis of the BRICS nations – Brazil, Russia, India, China, and South Africa – examining their economic performance, internal and external challenges, and their impact on the global economy. It explores the successes of the bloc, such as the establishment of the New Development Bank and increased global influence, while also addressing the economic challenges faced by individual member states, including currency devaluation, recessive phases, political instability, and commodity price fluctuations. The essay highlights BRICS' contribution to global GDP and trade, its role in global governance, and its push for reforms in the international economic order. It emphasizes the importance of overcoming internal problems to maintain relevance and influence in the international arena. The essay also discusses the formation of the New Development Bank as an alternative for financial services and its potential to boost global development.

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International Political Economy.
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Abstract
Primarily, this essay focusses on the four emerging economies: Brazil, Russia, India,
China and South Africa (Brics).The Brics is considered a formidable group of economically fast
developing countries in the world. There are various notable achievements of the economic
partnership. However, there are various challenges or setbacks which have curtailed the success
and relevance of Brics. There are various individual country economic and political challenges
which have negatively painted the Brics. However, all in all, the relevance, changes and role
played by the Brics cannot be ignored in the event that the challenges mentioned are overcome.

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INTRODUCTION
Notably, BRICS is an economic bloc made up of five countries. Specifically, the countries,
Brazil, Russia, India, China, and South Africa are behind its formation .However, prior to 2011,
South Africa wasn’t part of Brics. According to Goldman Sachs, who formulated the term,
BRICS, these five economies are forecasted to be the dominating economies by the year
2050(Investopedia, 2018).BRICS is a combination of a possible powerful economies than a
political affiliation. According to O’Neill, these five countries are a formidable economic
powerhouse in the twenty first century. The strengths of these countries lies on the population,
abundance in natural resources, bigger supply chains and their ability to integrate their
economies with the globalization to their own advantages. Individually, these five countries form
part of the world’s largest economies and by forming a trading partnership, they are a formidable
force to reckon with. The successes of the countries under BRICS has not gone unnoticed by the
global economy and neither have the challenges. Among the notable successes of the bloc is the
setting up of the new development bank, equal governance (Presidency of the bloc) is rotational
in nature, economic and cultural cooperation among others. On the Challenge front, there is
member states economic growth decline, corruption, delayed decision making due to
disagreements, political instability in Brazil, recessive phases, drop in commodity prices (oil),
sanctions issued on Russia by Western countries, lack of unity in matters of international
importance, competition, corruption among other factors that need to be overcome for the Brics
reputation to keep standing.
Noteworthy, BRICS contribution to the global GDP between the year 1990 to the year
2014 is estimated to have risen from 11 % to 30%(Bremmer,2017).The economic strengths of
these countries stems from the abundance of natural resources for Brazil ,South Africa and
Russia. Primarily, South Africa is blessed with precious metals such as Gold, platinum and
diamond whose exportation has abundantly grown its economy following the Apartheid period in
the 1990’s.The abundance of energy resources such as natural gas, crude oil had propelled the
growth of the Russian economy after the Soviet Union regime. For Russia and South Africa, the
abundance of natural resources has greatly boosted their economic performance in the global
trade arena. These two countries are able to export part of their abundant natural resources into
the global economy leading to substantial revenue percentages .Exportation of their unique

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resources into the global economy has made them enjoy comparative advantages in the global
economy. For the countries, China, India, globalization has played a critical role in integrating
their supply chains. These two countries are taking advantage of the globalized economy to
expand their supply chains. Particularly, China is considered the 2nd largest economy based on its
GDP after the United States of America. India is considered a leading exporter of Information
Technology services in the world hence a huge revenue contributor to its country. India enjoy
comparative advantages in IT.
ECONOMIC PERFORMANCE AND CHALLENGES OF INDIVIDUAL COUNTRIES
Undoubtedly, individual member states of Brics have been facing unique internal and
external economic challenges and China is no exception. These challenges have slowed down the
economic growth rate of the individual countries and the economic partnership bloc as a whole.
The devaluation of the Chinese currency in the year 2015 slowed down its economic growth rate.
Usually, currency devaluation implies the depreciation in value of the currency of a given
country. Also, the Indian currency “denotisation “in the year 2016 adversely impacted its
economic performance (Kong, 2017). India sought to remove large currency notes from
circulation as a measure of dealing with corruption. During this period, the Indian currency
circulation stability was impossible to achieve thus the reduced economic activity in the country.
In addition, Russia experienced an extensive recessive face towards the end of the year 2015
which reduced the economic activity in the country. The recent recession period seems to be
longest since the 1990’s.The recessive phase is based on the seasonally adjusted estimates of the
year 2015. However, due to the rising oil prices, the Russian economy is back on a steady
recovery face which will in turn affect the trading volume of the Brics. Prior to the recent
Russian recessive phase, Russia had always recorded surplus trade and foreign exchange reserve.
These economic changes taking place in these countries are exposing Brics to dominance doubts
to the rest of the world.
In addition, the Russian economy has been battling its own challenges. The consecutive
contraction rate of the Brazilian economy for eight quarters hasn’t been good for the Brazilian
economy. There has been reduced economic activity in Russia due to the fall in commodity
prices. The fall of commodity prices has made it expensive for the Russian economy to maintain
a competitive edge over its competitors. Also, the recent political instabilities following the

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impeachment of its president has negatively affected the economic output of the country. This is
because in the case of political instability, investor confidence is adversely affected, the flow of
capital is affected by the change in government and without peace which is achieved through
political stability, and it is difficult to conduct any fruitful economic activity. This temporary
political crisis is curtailing the Russian economic growth rate and affecting the Russian duties to
the economic partnership of Brics hence a challenge for the Brics as an economic partner. (Kong,
2017).In addition, high inflationary pressure in Brazil is also responsible for the slow economic
activity in the country hence it is not contributing much to the global economy. For economic
growth to prevail, there is need for political stability and will otherwise the economic potential of
the affected country cannot be attained. Peace is very vital to the conduct of global and national
economic development. Without a stable political environment, economic activity does not
flourish.
Primarily, Brazil gross domestic product growth rate has gone down .Specifically, between
the months of January and March 2017, the Brazilian gross domestic growth rate was estimated
to have grown by 1% from the previous year. Also, prior to the year 2017, the Brazilian economy
growth rate had negative growth levels which is putting into doubt the relevance of Brazil (FP
Staff, 2017).In addition, the Russian recessive phases hasn’t made the relevance of the economic
partnership any memorable. Mainly, the Russian economic contraction phase is due to the fall in
global oil pricing. With the low prices in oil, the Russian revenue is reducing substantially due to
its huge dependence on its energy sector. Alongside the dwindling oil prices, Russian economy is
facing sanctions from western countries thereby limiting its economic activity and revenue from
partaking in global trade. The various individual challenges wrecking the Brics member states is
making the world challenge their emerging economy growth and relevance to the international
global economy. The South African economy faced dismal economic growth levels in the year
2017 which fact hasn’t done much to uphold the economic dominance concept of the
Brics.These challenge are casting a cloud on the economic supremacy of Brics according to an
article by the Business day. These macroeconomic and micro-economic changes in the Brics
nations is making the world doubt as to the whether these countries will be able to live up to the
hype that has been created among them .It is imperative that the five emerging countries address
their internal problems quickly and effectively to keep growing and developing in order to
maintain relevance.

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ACHIEVEMENT OF BRICS AS A BLOC
Undeniably ,Brics role in addressing global economy challenges cannot be sidelined
thus the assertion that the emerging economies are important to
globalization(O’Neill,2016).Noteworthy, Brics representatives are defending the economic
interest of growing market economies at the global level. Through the formation of the
development bank, the trading bloc is expanding its influence of global financial matters which
is an encouraging move for other emerging global economies. Brics has played a vital role in
boosting governance, cooperation at the global economic level (Lei, 2017).Collective voicing of
international and regional challenges to the economic and political challenges facing the world
goes to show how important the bloc is to the global governance and tacking global challenges.
Through Brics, the voice of emerging economies is heard at the global level owing to the fact
that some of Brics members have an important vote in the global financial framework. Following
the economic partnering of the five countries, the economic output has increased from 12% to
23% of the global GDP (Lei, 2017).Particularly, Brics export trade volume has risen from 11%
to 16 % of the global output by the year 2017.Additionally, the five countries enjoy a 13.24%
voting stake in the World Bank operations which goes to show the emerging economies
participation in global financial matters. Through the formation of Brics, cultural and educational
cooperation has improved through the implementation of collective athletic, film and cultural
events for its member states thus enhancing the relationship between the five countries. Cultural
events grow unity.
Notably, Brics is reputable for introducing a new international economic order (Ingram &
Poon, 2013). With the establishing of the development bank with the same status and features of
international financial institutions, the five countries have made its mark into the way
international finance institutions at the international framework work. Owing to this
development, the decisions of the Brics on the global economy carry as much weight as other
reputable international economic institutions and order .The Brics has made substantial changes
to the Bretton Woods systems which for a long time has been responsible for a given way of
economic international order.Brics economical decisions on global issues receives global
recognition due to their rising economic supremacy. Prior to the Brics, Western countries have
dominated the international economic order.However,the Brics is now a major player in the

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global economy due to its massive contribution to the global trade volume hence its direct policy
impact on international economic order of conducting business at the international level. In
addition, Brics has pushed for various reforms of the international economic order. The Brics
have succeeded in reforming the Bretton Woods system and the International Monetary fund.
The fact that the Brics is responsible for setting up the New Development as an alternative for its
member states to enjoy financial services similar to the World Bank and the International
Monetary Fund, is remarkable (Goodman, 2014).
Following the establishment this bank, the expansion of its member states will be
supported from the inside without the hustles and challenges of other international financial
institutions. The Development Bank has borrowed its features from the World Bank and the
International Monetary Fund (Godharn, 2013).The DB is likely to bring about the expansion of
global development in the case of proper management by the member states. The implementation
of the bank is meant to supplement the financial option for other emerging and developing
economies to access financial infrastructure thereby boosting international trade (South China
Morning Post, 2015).Owing to the dominance of International Monetary Fund by western
countries, some emerging and developing economies are having challenges accessing financial
facilities from these global institutions thereby derailing their respective economic development
and performance However with the development bank in place, emerging economies and
developing economies chances of accessing financial services are increased thereby boosting
global development in those emerging economies. The existence of alternative international
financial credit institutions, more developing countries are likely to acquire funding to boost their
economic development. The Development Bank is a substitute for the international monetary
fund and the World Bank thus giving Brics control over international economic order of doing
things thus its importance.
As an avenue for new global economic order, Brics provides a grievance and
coordination plat-form for non-members of the Organization for economic cooperation and
development to chart the way forward on their challenges and ambitions (Guriev, 2015).The
Brics has been successful in quelling the western countries dominance on economic
matters(Sidhu,2015). The fact that Brics meetings do not comprise of western economies which
are advanced, provides the perfect avenue for developing and emerging economies

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representatives to present and address global challenges that are specific to their countries
thereby boosting the economic performance of developing and emerging countries. Due to the
fact that most western countries are in charge of top leadership and management position of
international order institutions means that emerging economies challenges are not properly
addressed thus making the Brics meetings and summit the best avenue for such leaders to
address and advocate for specific changes and projects that will boost their economic
performance and development. There is need for more international forums to advocate and
implement the specific challenges facing developing countries so as to boost international trade
and in the process improve the economic livelihoods of the inhabitants of these developing and
emerging economies .Brics is an example of such a forum for emerging countries to address their
challenges and propose solutions. Brics meetings are a safe discussion net for them.
Further, there is some level of equal governance status in the matters of the Brics. For
most international governance institutions, the head management positions are held by certain
group of countries which denies other developing countries the chance for active leadership and
management of the operations that directly affect their economic performance and development.
With the rotational, presidential position (chairmanship of the Brics), all countries get to hold
that position which is a real example of equal governance participation. Not only is the system a
show of equality but also it gives its member states an equal chance to spearhead the objectives
of the economic bloc. This form of governance is very ideal for international economic and
political partnerships due to the opportunities it present to all its member states through their
representatives(Hui,2017).There is a rotational presidency of the member status which is a
remarkable example for global governance. In addition, the Brics framework enjoys inclusivity
(Wang, 2018).The inclusivity is based on the plus mechanism which advocates for member
countries to empower and expand economic development in their respective regions. The fact
that Brics has been quite successful in implementing the inclusivity concept in its dealings makes
it a much better international economic partnership bloc as compared to other. The inclusivity
concept is meant to boost equal representation and management in the group so all countries feel
equal.
Moreover, the economic partnership bloc is responsible for implementing the Contingent
Reserve Arrangement (CRA) (Peters, 2017).The arrangement was finalized using a treaty. The

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fund is expected to provide financial services to member states when they require it such as to
address shortage in balance of payments( The Economic Times,2016).The arrangement has been
operational since the year 2015.The CRA is a cushion against liquidation of the member
countries. The fact that Brics has this financial precautionary framework in place is admirable
because not many international institutions have successfully implemented this framework
(Stuenkel, 2017). .Particularly, Brics is responsible for being in control of 43% of foreign
exchange reserves (Agtmael, 2012).Due to the expanded global economic operations of the
economic partnerships, the consumption levels among the Brics countries has grown
tremendously (Agtmael, 2012).This means the consumers within Brics boundaries are increasing
their purchasing power which is an economically empowering tool in reducing poverty levels
and improving the living standards of the Brics inhabitants. For five years preceding 2007, there
was massive foreign and domestic investment in the Brics region which led to increased revenue
and improved economic livelihoods. Specifically, there was a 52% returns on the investment rate
among the first four countries of Brics (Agtmael, 2012).Through economic partnerships, FDI
grows.
Notably, the formation of Brics has brought the much anticipated change to the global
economic order. Alongside changing the global economic directions ,Brics is responsible for
boosting international trade due to the huge percentage it contributes in terms of trade volume to
the global development(Xing,2017).Not only has Brics promoted international trade but it has
contributed to the global politics and diplomatic relations among its member nations and the
outside world(Bazbauers,2016). Also, Brics framework are a challenge to the western economic
order. Under its own framework, Brics countries have adopted environmentally sustainable
practices through the ratification of various international instruments such as the Paris agreement
which advocates for the reduction of carbon emissions into the atmosphere as an environmental
friendly initiative. Brics participation in some matters of international significance has been
voiced though in not all circumstances .However, Brics countries are not completely out of the
grip of western politics and diplomacy. Particularly, Russia is under sanctions from the United
States of America owing to the part it allegedly played in the Crisis that took place in Ukraine.
As much as Brics is a formidable force on its own, it is slightly affected by the actions of western
advanced countries and institutions thus making it vulnerable in attempting to fulfill its

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objectives from the western countries and institutions influence. It is imperative that Brics breaks
free from the ambit of western countries (Russian Sanctions) in the future.
The successful implementation of the New development bank is a sure defiance and
alternative to the western countries financial frameworks(East Asia Forum,2014).The financial
framework of the Brics is aimed at empowering and accommodating the economic ambitions of
developing and emerging economies unlike the Western international financial framework which
is dominated by the ambitions and objections of already developed countries (Editorial Board,
2014).The involvement of Bric on global challenges carries weight in international affairs due to
the economic potential and achievement the group has established over the years. Two years
after the establishment of the development Bank, it can be said that the financial services are
being offered from the international financial institution for propelling the goals and ambitions of
the economic partnership (Maasdorp, 2017).The financial institution is based in Shanghai but it
is supported by the African Regional Center in Johannesburg. This is a great achievement for the
economic partnership bloc to have successfully established two international financial
frameworks .In addition ,the bank has made out a green bond worth 3bn(RMB) in China.
CHALLENGES FACING BRICS
Undoubtedly, every economic bloc has its own share of setbacks .For the BRICs, the
formation of the current development bank (DB).was not a smooth ride. The negotiations phase
brought out various grievances owing to China’s desire to have massive control of the bank. The
other countries were not prepared to grant China such control over the bank. After further
deliberations, India, Brazil managed to equalize the capital obligations of the five countries
(Reuters, 2017).However, there is still tension as to what extent the Chinese want to exercise
their dominance over the other countries. With the Chinese economy being dominant in the
economic and political scene at a global level, this might deny the other BRIC members an equal
participation ration in the matters of the bloc. Compromise and dominance among the countries
in the operation of the trading bloc is likely to stall down economic progress due to the delayed
decision making process and also the desire to exercise dominance over the other member states
by one country. There were challenges in deciding the location of the development bank between
India and China, to which Brazil withdrew. In the end, the Bank ‘s location was decided as China
hence the assertion that there are difficulties being encountered in the decision making process

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owing to longer negotiations periods and the desire to reach a compromise .It is difficult to
equalize participation among countries dominating the global economic environment from the
current international economic framework. However with Brics, the reality of equal governance
and participation of nations in international economic governance is becoming a reality rather
than a dream. The fact that the five countries each get a chance to be in the presidency is good.
The individual country economic challenges have directly impacted on the performance of
the Brics. The economic decline experienced in Russia, Brazil and China have changed the
economic prospects of the bloc. Russia alongside Brazil is battling recession effects whereas
China’s is experiencing economic contraction (Tisdall, 2016).These individual member state
challenges are going to indirectly reduce the global trade volume previously produced by the
collective member states(Peters,2017). In all these countries, corruption is a serious challenge as
it is globally. The corruption allegations facing South Africa and Brazil, are likely to slow down
the economic activities in these two powerful countries. Russia had to face low oil prices during
exportation thereby leading to a reduced exportation revenue for the country. Also, due to the
economic sanctions placed on Russia, its economic performance has not been up to its bests.
Such individual and global challenges have directed curtailed the economic potential of the
individual countries and Brics as an economic bloc. Also, various projects are yet to be
completed by the group due to challenges in reaching a consensus .For instance, the five
countries had meant to establish submarine cable system as a cushion against spyware from
European states and the United States of America .However, the same is yet to be attained due to
various challenges. In addition, the establishment of the New Development Bank was aimed at
reducing the countries reliance on the World Bank to which it is still to be fully realized (DW,
2018).It can be said that the is still slight reliance on other international institutions.
It is expected that with the operation of the bank for two years now, Brics and other
developing economies should rely less on other international financial facilities such as the
World Bank. This fact goes to show that the financial freedom form international financial
institutions is yet to be fully realized .Further, the individual countries need to maintain its
national supremacy has led to friction in the operations of the Brics .India’s supremacy was
threatened with the a certain project initiated by the Brics .Apart from national interests being
threatened by Bric Objectives (Jianping,2017).The diverse cultural, ideological, religious and

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cultural practices of the Brics has created various factions within the operation of the economic
partnership(Huang,2017).The most notable governance structure in the Brics is autocracy and
democracy which present different ideologies that might be considered conflicting to one nation
over the other. Such differences have the potential to derail the implementation of Brics projects
due to delayed decision making, tension and misunderstandings. These differences have led to
indecisiveness as to the Brics stance on various issues of international importance (Tsaurai,
2017). Particularly, the Brics stance on Maritime, nuclear and security in current global
predicaments is unknown due to the incoherence taking place within the economic partnership
bloc (PTI, 2016). It is very imperative that the Brics work through their differences and
incoherence so as they can speak in one voice on international matters of importance. The lack of
one voice is likely to spark disunity and mistrust rumors.
In addition to speaking on matters of importance, coherence is important in assuring the
global economy of their steady contribution to global economic and political environment.
Particularly, in the year 2016, the economic performance of Russia and Brazil hasn’t been
encouraging .China is struggling with deflationary risks(downside) and high debt rates thereby
leading to less than optimal economic activity. Overall, Brics are facing other global challenges
such as education, AMR, fewer representation slots in governance institutions at the global level
and other cyclical challenges (O’Neill, 2016).According to Professor Beeson, the Brics
operations are marred wit allegations of corruption and inequality. Also, tension is alleged to
mar the trading bloc negotiations (Beeson, 2017).Arguably, China being the biggest economy
among the Brics is considered problematic due to the fact that most of the funding for the new
development bank stems from it. This raises the likelihood of unequal power in decision making
of the bloc and undue influence. Also the political and economic significance of the Chinese to
global economics and politics cannot be compared to the rest of the bloc members thereby
raising the likelihood of greater influence over the operations of the economic partnership. Also,
it is argued that the different national priorities of countries can overshadow the economic
priorities of the bloc thereby curtailing the cooperation among the member states.
Moreover, the management and operations of the economic partnerships is alleged to
suffer from corruption just like any other governance and trading partnership thereby
undermining the economic cooperation and output of the economic bloc to the global economy