When I grew up, the world was locked in a battle of titans, with NATO contending with the Warsaw Pact for world dominance. NATO won the Cold War because its political and economic systems were better able to withstand the weight of its military preparations. In 1992, Francis Fukuyama speculated in The End of History and the Last Man that we were on the threshold of “the end point of mankind’s ideological evolution and the universalization of Western liberal democracy as the final form of human government.”
The last decade and a half, though, has seen considerable evolution on the world stage. The rise of fundamentalist terrorism has made Western democracies more militaristic and less open to immigrants. The Great Recession of 2007-2008 combined housing bubbles, liquidity crises, and the potential failure of the Western financial system, with lingering spillover effects to essentially every economy in the world. In several countries outside the Western world, however, significant growth was taking place, giving this group newfound roles in world leadership.
Jim O’Neill of Goldman Sachs drew attention to the emergence of these powerful economies in a whitepaper that gave them the label “BRICs.” He had noticed that the combined economies of Brazil, Russia, India, and China accounted in the year 2000 for 23.3% of world GDP on a Purchasing Power Parity basis (in terms of GDP, they were still under 8%). The feature that united these nations was the emergence of a large middle-class with substantial spending power. This growth was not expected to stop at this point; instead they were projected to be among the five most dominant economics in the world by 2050. Jim O’Neill recommended that the G7 (finance ministers and bank governors for Canada, France, Germany, Italy, Japan, the U.K., and the U.S.A.) be expanded to include members from some of these nations; the G20 (a more expansive economic summit) grew in stature after 2008, in effect replacing the G8 (Russia had been admitted to the G7 by that time). One might argue, then, that the BRICs had joined the Western world.
In fact, the BRICs have begun exerting leadership of their own. In 2009, the heads of government from each of the BRIC nations attended a summit in Yekaterinburg, Russia. The meeting was intended to introduce reforms to temper the effects of the Great Recession, and the group also called for India and Brazil to play a greater role in the United Nations (Russia and China already held permanent membership in the Security Council). The second meeting, in 2010, invited leaders of South Africa and the Palestinian Authority to attend. The years between 2001 and 2010 had seen remarkable growth for member nations, accounting for 65% of the expansion of global GDP during that interval. BRIC membership had also been significant, with trade among members increasing rapidly (for example, Brazil trade with other BRIC countries grew by 382% between 2003 and 2008). In 2011, the group invited South Africa to join, and its name correspondingly changed to the “BRICS.” Many commentators noted that South Africa’s economy at the time was considerably smaller than those of the first four nations.
Something new has emerged in the BRICS partnership. In July of 2014, the sixth BRICS summit in Brazil announced the creation of a $100USD billion “New Development Bank.” This bank was posed, in some respects, as an alternative to the International Monetary Fund. Russian President Vladmir Putin expanded on his frustrations with the IMF: “it is unjust to the BRICS countries and to new economies in general.” Other BRICS members have expressed frustration with the IMF “for imposing harsh loan conditions on vulnerable countries and for being insufficiently representative of the changing global power balance.” We have also seen the BRICS begin to throw its collective weight behind foreign policy issues beyond those of economics. They have argued against military intervention in Syria and in Iran, for example.
The future for the BRICS is an uncertain one. These nations face tremendous challenges. Government corruption, high unemployment, and infrastructure woes have plagued each of them in many ways. If they are able to translate population growth into economic growth, though, the balance of the world economy will surely shift. If that economic growth can be coupled with international influence, the NATO powers will once again be in dialog with another substantial power. The world waits to see how that conversation unfolds.