The BRICS have come a long way since 2001 when the acronym was first coined. What do these emerging giants need today in order to succeed in a new era of globalization?
"Today, BRICS stands for an increasingly important tool, which is helping to enhance global governance and, consequently, to further consolidate a multipolar world," says Marcos Troyjo of Columbia University. Photo: Host Photo Agency
Following this year’s BRICS summit in the Russian city of Ufa, the question of the future development of the BRICS as an institutionalized organization attracted a lot of attention among international experts. While some of them expressed a degree of pessimism about the BRICS, pointing to a lack of unity within the group, the majority saw the huge potential of the BRICS, especially after the creation of new financial institutions, such as the New Development Bank (NDB).
The new Russia Direct Brief “BRICS 2.0 and the Metamorphosis of Globalization” takes this issue further, by looking at the bloc of emerging powers in the wider context of globalization. Authored by Professor Marcos Troyjo of Columbia University, the Brief examines the way the global economy has changed over the past two decades. Today, says Troyjo, we are entering into a new stage of globalization that represents not just the free movement of goods, capital and people, but also trade, investment and the strengthening of global production networks.
Professor Troyjo gives an overview of what globalization could look like within the next 20 years and what will it mean for the BRICS if they want to successfully adapt to changing economic conditions and emerge even more powerful and prosperous on the global stage. The expert also talks about the trend of ‘local-contentism,’ which is evident not only in Asia (China), but also in the West (the U.S. and EU) and how this trend relates to the traditional and well-known concept of economic protectionism.
Stating that there are clear differences between these terms, Troyjo says that today the practice of local-contentism is becoming the “most recurrent tool in bulking up a nation’s capacity to compete in world trade and attract investment.” Moving on to the BRICS, he argues that if the five nations want to succeed in this new environment they should realize their full potential and use their comparative advantages in areas like commodities, information technology and manufacturing. They should be diverting the resources they have to tech-intensive sectors, where, as he says, the future of the global economy should be.
Troyjo then touches upon the importance of reforms that should be made to meet the requirements of the new process of reglobalization that will inevitably concern labor markets, tax and social security systems. In this regard, the new financial mechanisms that the BRICS nations are creating will prove to be effective as one of the available policy tools.
Analyzing potential implications and risks related to the work of the NDB, Troyjo comes to the conclusion that, if managed efficiently, the Bank would “definitely be a major instrument in building a brighter future for the BRICS.” Tracing the achievements of the bloc to date, the author also notes that one should not treat the BRICS institutions as mechanisms created to oppose the existing global economic bodies, namely the IMF and World Bank. These agencies, according to him, can no longer act as managers of global capitalism. Today, they would be more correctly described as thinks tanks offering useful information and analysis. Hence, the BRICS should resist concentrating too much on “denouncing the inadequate power structure of those multilateral financial agencies.”
Offering a list of recommendations for BRICS policy makers, the author remains positive about the future of the BRICS as an organization. To erase any possible doubts, Troyjo suggests the example of the EU that, notwithstanding the numerous disagreements between its member states, still managed to work together as one integrated economic mechanism.
What are the risks of deglobalization? How have the BRICS performed in different stages of globalization? What might the worst-case scenario for the BRICS entail? Download the report and find out.