The BRICS bloc, when formed, created the hope to serve the common interests of Global South – the developing countries and the emerging market economies. The world economy has witnessed an unprecedented growth of emerging market economies and developing countries, with their share in global GDP rising from less than 40 percent in 1990 to almost 60 percent in 2022. Also, between 1990 and 2022, the combined share of developing countries in global export trade reached close to 40 percent from just about 20 percent. Trade between developing countries increased by an average annual rate of 10 percent since 2000, hitting $5.3 trillion in 2021. During the same period, world trade grew at a slower 5.5 percent. Although impressive growth performance has characterised many developing countries, the rise of BRICS economies has widely been recognised as the defining features of the advanced south, paving the way for a world economy with an increasingly multi-polar character.
The era following the 2008 global economic crisis marks the relative decline of the West, the end of the post-Cold War unipolar moment, and the rise of China and other major economies, all of which are challenging the current world order. The world is now fragmented due to escalated protectionism, explicit and implicit trade wars, and the emergence of regional mega blocs like RCEP, CPTPP, TTIP, etc. While the current centres of gravity for global politics and economics are Asia and the Western Pacific, geopolitics is now taking new turns due to the growing gap between the distribution of economic and military powers, which is driving further division. These trends are likely to shape the future of the world order.
Despite the much-created hype, there are doubts whether BRICS, as a bloc, is capable of creating a new world order. In my view, BRICS can’t become a powerful economic and trade bloc in the near future for a variety of reasons.
First, BRICS is an investment cooperation, not a trade forum. One notable achievement of the BRICS bloc is that in 2014, at the 6th BRICS Summit, the BRICS states signed the agreement on the New Development Bank (NDB). The NDB is a multilateral development bank aiming to support public or private projects through loans, guarantees, equity participation and other financial instruments. However, without comprehensive agreements in the areas of trade in goods and services, trade facilitation, intellectual property rights, and non-tariff measures, mere investment cooperation would not be meaningful. The prospect of such comprehensive trade agreements among BRICS countries seems bleak.
Also, there are allegations that BRICS countries impose various restrictions on investment from each other. In July 2023, India rejected Chinese automaker BYD’s $1 billion investment proposal to build electric cars and batteries in India in partnership with a local company. Allegedly, security concerns with respect to Chinese investments in India have been flagged by the Indian authorities. Certainly, such concerns are not helpful for BRICS to emerge as a powerful platform for investment cooperation.
Second, the bilateral political relations among some of the BRICS countries are not smooth and favourable. Also, the bilateral political animosity between the US and China and between the US and Russia affect the internal political relations within the BRICS countries. On top of these, the bilateral political relation between China and India, the two largest economies in BRICS, is tense and, in recent years, has been dwindling. In contrast, currently, India and the US maintain close relations, common interests, and collaboration on issues such as counterterrorism and countering Chinese influence in the Indo-Pacific region. India is a member of the QUAD, which was allegedly formed to contain the rising influence of China in the Indo-Pacific region. While India was part of the initial Regional Comprehensive Economic Partnership (RCEP) negotiations; allegedly, due to the growing political tension between India and China and strong domestic resistance in India for not opening up its market to China, India pulled itself out of the RCEP negotiations in 2019. India is also highly concerned about the growing Chinese presence in its neighbouring countries in South Asia. Therefore, if the two most powerful economies in BRICS don’t cooperate effectively with each other, the prospect of BRICS emerging as a powerful entity will remain bleak.
Third, the much-hyped BRICS currency is not feasible. As long as the economic differences between the member countries remain considerable, and an inherently strong mood of non-cooperation continues between India and China, the common currency is unrealistic. However, bilateral currency swaps (as it is happening on some scales between China and Russia, and between India and Russia) may continue to reduce dependency on the US Dollar.
Fourth, the recent inclusion of the six new members – Argentina, Ethiopia, Saudi Arabia, Iran, UAE and Egypt – in BRICS doesn’t provide a clear and solid roadmap for the BRICS to consolidate power and redefine global governance into a “multipolar” world order that prioritises the voice of Global South. The inclusion of Saudi Arabia, Iran, UAE and Egypt seems very Middle East-centric, which has more oil-centric, geoeconomic, geostrategic and geopolitical implications, rather than representing the interests of the Global South. To emerge as the voice of Global South, BRICS needs to work out its expansion plan carefully.
What are Bangladesh’s stakes in BRICS?
Bangladesh has strong economic aspirations to become part of a forum like BRICS. Both China and India are Bangladesh’s major trading partners, growing sources of external funding and prospective investments. However, a few non-economic factors are becoming increasingly important for Bangladesh to get the rightful entry into such forums, such as the evolving nature and challenges in domestic politics, and challenges in maintaining the balance of bilateral relations with China, India, and the US. While Bangladesh needs effective and enlarged trade and investment cooperation with all three, it is becoming increasingly difficult to maintain a reasonable balance due to the pressure coming from these countries out of their geostrategy and geopolitical interests, and for Bangladesh to handle this pressure in the contexts of conflicting domestic politics, weak institutions and governance.
Finally, graduation from the LDC status by 2026 will bring new challenges for Bangladesh. Among the BRICS nations, China and India are Bangladesh’s two largest import sources. Bangladesh, as an LDC, gets duty-free facilities for the export of all products to India, except for 25 liquor and tobacco goods. In China, Bangladesh’s exports receive duty-free treatment in 98 percent of tariff lines. In the post-LDC era, unless Bangladesh signs free trade agreements (FTAs) with India and China, it will lose its preference in these markets. Our country hasn’t signed any bilateral FTA so far – the only success is a preferential trade agreement with Bhutan for some products. With this very limited experience, no doubt, Bangladesh needs to do proper homework while negotiating FTAs with India and China in the coming days. Even if the country is able to join BRICS in the future, how effectively it manages its trade, investment, and strategic relationships with India and China will also be critical factors for realising its own benefits out of BRICS.
Dr Selim Raihan is professor at the Department of Economics of the University of Dhaka, and executive director at the South Asian Network on Economic Modeling (Sanem). He can be reached at email@example.com.
Views expressed in this article are the author’s own.
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