BRICS and Mortar

The BRICS group represents about 43 percent of the world's population and about one-fifth of global GDP. Last year its members accounted for $465 billion of global foreign direct investment flows, or about 11 percent, and about 17 percent of world trade.

Li Jinzhang, Chinese ambassador to Brazil, says he is optimistic about the BRICS nations and their leading role in the global economy. "All are influential developing countries with large populations and territory and rich in resources. Most importantly, they have been politically stable for years. I reckon the BRICS nations are well placed to develop at top speed for the next 10 to 20 years."

The vitality that BRICS economies have shown during the financial crisis has contributed to recovery, he says.

However, Lu Feng, a professor at the China Center for Economic Research affiliated with Peking University, says the influence of the BRICS on the global economy does not hinge solely on their efforts to achieve economic growth.

"As the global economy has had to be restructured as emerging markets strive to get ahead, BRICS has encouraged those markets to assert their rights. Working as a bloc they have been able to force Western developed economies to accept that the world economy is undergoing radical change and that they have to adjust their approach accordingly."

The Delhi Declaration of the fourth BRICS summit last year called for a more representative international financial framework that gives greater voice to developing countries, and a fair international monetary system that serves the interests of all countries and supports the development of emerging and developing economies.

"The power that has been given to emerging economies has not matched their economic growth," Lu says. "The main reason is that the developed economies are not willing to let go of power. In this regard it is time for the BRICS countries to assert their legitimate rights."

Davies also believes that as BRICS summits become more institutionalized, the group could well become a counterweight to established Western interests.

"We have heard of the need for a restructuring of the global economic architecture, one that gives greater cognizance to the needs of the developing world."

Challenges

While some see huge opportunities for BRICS, the optimism is far from universal, one of the doubts being that it may lack the cohesion to stick together.

Yevgeny Yasin, one of Russia's top economists, said in 2009 that he saw little future in the BRIC grouping. "I believe it will remain an informal club in form and essence," the Financial Times quoted him as saying.

Three years and an extra letter later, BRICS is a widely recognized player in global economics, but Yasin seems no less pessimistic about its future, saying that without a constitutional structure it cannot last long. "Apart from economic potential and scale, the five countries have nothing in common at all."

However, the more optimistic Lu says the biggest challenge lies within BRICS members' ability and will to lead the global economy together.

In addition, each country has its wares to sell and its demands to meet. Russia exports energy and metals, South Africa exports raw materials, too, and Brazil is a leader in global agriculture. Meanwhile, China and India gobble up commodities.

"It seems that each of the five countries has different economic structures and pillar industries, and they can complement each other," Lu says.

"However, on the way to becoming big emerging markets, manufacturing is what every country will try to develop. An overlap of interests will hamper BRICS from maturing."

Brazil is one of China's largest iron ore sources, but China's negotiations with Brazilian companies have not always been smooth.

Brazil and South Africa both export mostly raw materials to China while importing large amounts of value-added manufactured goods, and the rivalry between them for Chinese business is palpable.

Davies says it is ironic that South Africa's strategic political partners in the BRICS grouping are its greatest commercial competitors, especially in the African market.