With an aggregate growth from eight percent in 2001 to about 22.4 percent of global GDP in 2017, the big emerging markets of Brazil, Russia, India and China have done better than Goldman Sachs economist Jim O'Neill expected when he first wrote (PDF) about them as a unit nearly two decades ago.
The BRIC has come a long way since its first summit in 2009 and the induction of South Africa the following year (which added an 'S' to the abbreviation). The five countries have united around the common goal of offering credible alternatives to the Bretton Woods system (dominated by the US, the EU and Japan) and have taken concrete steps in this direction through the creation of the New Development Bank and the Contingent Reserve Arrangement.
On the eve of its 10th summit, there are three important issues concerning the future of the BRICS that have to be addressed if it is to continue influencing and shaping global governance. These are: proposing a development paradigm, creating effective and sustainable financial mechanisms, and resolving political differences.
Crafting a BRICS development paradigm
The 10th BRICS Summit will take place amid economic acrimony between China and the US, with tensions boiling down to tit-for-tat announcements of tariffs on key imports. Amid the trade challenges between US-China and economic slowdown in EU and Japan, there is an opportunity for intra-BRICS trade to expand and power the global growth motor.
In the case of a lukewarm US market, China will have to look for alternative markets for its exports to the US worth approximately $462bn, as well as alternative sources for the $115bn-worth of goods it is importing from the US. The signs of a Chinese trade "detour" are already becoming visible in Sino-Indian ties as China attempts to improve relations with its biggest importer in South Asia. Brazilian producers are also reaping benefits from the duties China imposed on a range of US products from soybeans to frozen pork.
Beyond the US-China quid pro quo, the BRICS will also have to develop an engagement strategy for other developing countries and emerging markets. This includes greater involvement with different African regional economic communities and alignment with the African Union Agenda 2063 on trade, investment, and economic growth.
The fact that India-Japan's Asia-Africa Growth Corridor and China's Belt and Road initiatives are led by BRICS countries could further help strengthen the practical links between the grouping and the rest of the developing world.
Under South Africa's leadership, the 10th BRICS summit will also propose avenues for the creation of inclusive societies. For the first time, the grouping will directly address gender disparities through the creation of the BRICS Gender and Women's Forum dedicated to gender equality and empowerment of women and girls. The proposal to establish a physical Vaccine Research Center focused on research, development and innovation is also a very positive step.
All five countries have decades-old experience with fighting socioeconomic inequality within their borders. Therefore, an emphasis on social welfare and people-to-people exchange could become the core of a BRICS paradigm which takes development beyond trade and investment considerations.
Unravelling the 'new' in the New Development Bank
The New Development Bank (NDB) is a concrete example of how the BRICS development paradigm is taking shape. The third tranche of NDB-funded projects approved last May further broadens the scope of the bank's activities to areas ranging from urban development to water supply and sanitation while keeping sustainable infrastructure development at the heart of its mandate. The NDB will now have to ensure that these projects are rooted in sound social and environmental practices.
Along with a working definition of sustainable infrastructure and a framework for assessing the sustainability of NDB's projects, the bank could create financial and non-financial incentives to encourage governments to think about sustainable practices not as bureaucratic formalities or risks, but as actions ultimately linked to better development outcomes. This would be a major shift in the way environmental and social standards are currently conceived in the international financial architecture.
The NDB is also set to support economic cooperation and integration projects, giving it an unprecedented opportunity to engage with Africa as the region puts in place an ambitious Continent Free Trade Agreement (FTA) to facilitate a single market for goods and services. Successful implementation of the FTA will require constructing infrastructure that can link the continent both internally and with other parts of the world.
The BRICS could position itself for a critical role in the funding of these infrastructure projects through the NDB. However, the bank's board of governors can only approve a specific project in a non-member emerging economy or developing country on an exceptional basis, thus limiting the catalytic role the organisation can play in development financing.
A more equitable world order starts from within
The BRICS can become the premier platform of South-South cooperation by reaffirming its commitment to a multipolar world, respect for sovereignty, and democratic and transparent decision-making. In order to deepen this process, the five countries will first have to learn how to solve the thorny issues that affect them individually and collectively, such as domestic economic and political instability, the geopolitical tension around the South China Sea, or the India-China border friction in Doklam.
The BRICS emerged not as a group whose strength lay in the individual capacity of each country, but as a pragmatic relationship that pools the influence of its members to achieve common objectives. Each country also has its own reason to sustain the grouping. As such, for more contentious topics, platforms like the IBSA (India, Brazil and South Africa) and the Shanghai Cooperation Organization may offer an alternative starting point for dialogue until interests align in the realm of the BRICS.
The vision that Brazil, Russia, India, China and South Africa lay out for the next 10 years should be informed by the principles, purposes, and ambitions that guided them through their first decade. Shaping a strong identity for the grouping is probably the most pragmatic form of cooperation and what ultimately will keep the five countries together in the long run.