The future of the world economy that is transformed by BRICS rests not solely on the dynamics within this hierarchy of the largest economies, but also on the qualitative changes brought about by BRICS initiatives and policy coordination
In their vision of the world economy in 2050 (“Dreaming with BRICs: the path to 2050”, Goldman Sachs, October 1, 2003) Goldman Sachs economists reflected on the future position of BRICs on the international stage, most notably from the point of view of the hierarchy of the largest economies of the world by the size of their economies. The general thrust of their assessment appears to be coming to pass – the list of the largest economies of the world is increasingly dominated by the countries from the Global South.
But the future of the world economy that is transformed by BRICS rests not solely on the dynamics within this hierarchy of the largest economies, but also on the qualitative changes brought about by BRICS initiatives and policy coordination. In particular, the BRICS of the future will be shaped to a significant degree by the key decisions of member economies on critical issues such as expansion and the prioritization of economic cooperation, most notably in the trade and investment spheres. Prioritizing pragmatic economic development will allow BRICS to become “all it can be” in the coming decades and to serve as a platform for not only boosting South-South economic cooperation, but also for launching a new, revitalized globalization effort that is more sustainable and inclusive compared to earlier episodes.
In terms of BRICS expansion, by 2050 most of the economies of the Global South will become partners of the bloc. Moreover, there is also likely to be a framework (currently I refer to it as BRICS++) that provides scope for advanced economies and their development institutions to become partners of the BRICS grouping. The inclusiveness of the BRICS+ alliances could also be notably expanded in the coming decades via the creation of a platform for regional integration blocs of Global South economies – this would allow small developing countries to participate in BRICS+ initiatives.
The emergence of a platform for regional integration blocs within the BRICS+ circle will also lay the foundation for launching new rounds of trade liberalization across the developing world – something that will enable the Global South to increase its share in international trade. The coordination of trade liberalization across the regional blocs of BRICS economies will lead to the creation of a new, regional layer of global governance that will also be supported by regional development institutions such as regional financing arrangements and regional development banks. The BRICS+ economies will also form a common platform within the WTO that will become the main driver of new WTO trade rounds. In the financial sphere, the BRICS will develop new payment systems that will significantly improve the optionality and the effectiveness of trans-border settlements. The common BRICS currency is likely to become not only a unit of account, but also a means of payment/settlement for investments and international trade. The creation of the BRICS currency and the greater scope to use national currencies of developing economies will contribute to higher financial inclusiveness and will create the macroeconomic policy conditions conducive to higher economic growth and poverty reduction.
The creation of new and advanced BRICS financial infrastructure will enable BRICS economies to create an anti-crisis platform that will provide support to economies experiencing macroeconomic difficulties and crises. This will be attained through closer cooperation between a revamped BRICS CRA, the BRICS New Development Bank (NDB) and regional development institutions. BRICS will increasingly coordinate their macroeconomic policy, including their anti-crisis stimuli that may become an important stabilizing factor for the world economy. Finally and most importantly, BRICS could become a platform that delivers new development success stories that may include the likes of India, Ethiopia and Egypt. The advances of the Global South attained through the BRICS+ framework will be a key source of economic growth for the world economy and an inspiration for new waves of breakout developing economies in their quest for economic modernization. The key to the emergence of such success stories will lie in boosting South-South economic cooperation and using its enormous potential for the benefit of poverty reduction and economic modernization.
The above may appear to be the “best-case scenario” for BRICS long term development. But this may be precisely what the BRICS as a group has lacked thus far – the ambition to aim for the “first-best”. The higher the goal, the greater the achievement.
Yaroslav Lissovolik – Founder of BRICS+ Analytics.
