Five members of the BRICS association had invited six other countries, Argentina, Ethiopia, Egypt, Iran, Saudi Arabia and the UAE to join the group from 1 January 2024; four of these accepted the invitation. The paper discusses the critical questions as to whether this expansion will enable the BRICS+ to become a greater contributor to the world GDP and trade, and if the intra-BRICS trade will be more significant than it is now. We expect the share of expanded BRICS in the global GDP to increase by 3%, reaching 28% and the share in the world trade to increase by 5%; the intra-BRICS trade should also rise by 5%. The intra-BRICS trade of the old members has grown considerably over the years. The share of exports by the new members is not large; it increases for some of them and decreases for others, with exports to the older members being much greater than those to the newer members.

Пять членов объединения БРИКС пригласили шесть других стран — Аргентину, Эфиопию, Египет, Иран, Саудовскую Аравию и ОАЭ — присоединиться к группе с 1 января 2024 года; четыре из них приняли приглашение. В статье рассматриваются важнейшие вопросы о том, позволит ли это расширение группы БРИКС+, состоящей из девяти членов, внести больший вклад в мировой ВВП и торговлю и будет ли торговля внутри БРИКС более значительной, чем сейчас. Мы ожидаем, что доля расширенного БРИКС в мировом ВВП увеличится на 3 % и достигнет 28 %, доля в мировой торговле вырастет на 5 %, а торговля внутри БРИКС также вырастет на 5 %. Торговля внутри БРИКС до присоединения новых членов значительно выросла за прошедшие годы. Доля экспорта новых членов невелика; она увеличивается для некоторых из них и уменьшается для других, причем экспорт в страны прежнего состава БРИКС намного больше, чем в новые.

BRICS, GDP, Intra-Trade, Multilateral Organizations, Global South, Exports

БРИКС, ВВП, внутренняя торговля, многосторонние организации, Глобальный Юг, экспорт

The end of World War II was marked by the establishment of multilateral institutions meant to boost economic growth and ensure stability of the international economy. During the BOP crisis faced by the capitalist world in the 1930s, many countries had to reduce their imports; there was an overall drop in exports, incomes and employment with disastrous consequences. In 1944, at the Bretton Woods Conference the victorious allies established the IMF and the World Bank; its major functions were to provide short-term credit to countries experiencing a balance of payments (BOP) deficit and finance the post-war economic reconstruction and subsequent development. The General Agreement for Tariffs and Trade (GATT) established in 1947 became a venue for countries to negotiate tariffs on manufactured products and settle trade disputes.

Developing countries have been in conflict with the IMF over lending conditions which have overburdened these economies and hampered their growth. This was against Keynes’s view that both the deficit and surplus countries should share adjustment responsibilities. Complaints about the GATT’s impact on developing economies resulted in the Haberler Committee report in 1958, which supported their case but failed to bring change. The establishment of the WTO in the 1980s broadened the scope of issues to include agriculture, services, textiles, intellectual property, and foreign investment. However, the developing nations felt disadvantaged by the new arrangements, especially in services and IPRs, and gained only limited benefits in agriculture and textiles. Although the IMF has offered them new lending programs, the voting power and attached conditions continue to favour the advanced countries. This scenario gave the developing countries an incentive to create more effective, credible and accountable institutions where would be better represented.

BRIC, a term first used by Jim O’Neiil (a Goldman Sachs Economist) in 2001 in his report “Building Better Global Economic BRICs” (O’Neill, 2001) brings together some rapidly growing emerging economies with the potential to play an important role in the world economy. The grouping was formed in 2009, when Brazil, Russia, India, and China came together; South Africa joined in 2011 and BRIC became BRICS. In 2023, at the annual summit held in Johannesburg, South Africa, on August 22–24, the Argentine Republic, Arab Republic of Egypt, Federal Democratic Republic of Ethiopia, Islamic Republic of Iran, the Kingdom of Saudi Arabia, and the United Arab Emirates, were invited to join the group. Later, in December 2023, Argentina withdrew its agreement and Saudi Arabia has not yet responded to the invitation to join BRICS. The expansion showed an appetite for cooperation among non-Western economies and for strengthening the voice of the South. The New Development Bank established in 2015 provides the member states with development finance independent of the Western-dominated international financial institutions. However, no other strong steps towards financial independence have been taken.

The BRICS after the addition of the 5 new member countries, i.e., Egypt, Ethiopia, Iran, Saudi Arabia and UAE, hereafter called BRICS+, represents 45 % of the world’s population, more than 28 % of global GDP, and around 21 % of global exports. The paper seeks to answer the following questions:

1) Will the expanded BRICS increase their share in the world trade and global GDP?

2) What are the differences and similarities between the old and new BRICS members?

3) What impact will the expansion have on intra-BRICS trade?

To answer these questions, the paper needs to analyse the impact of the BRICS expansion on the intra-BRICS trade dynamics and the global economy as a whole.

A new path in global governance became visible after the global financial crisis hit the world’s economy in 2008, acting as a catalyst for rethinking global governance structures and regional power alliances (Chakraborty, 2018). The BRICS alliance emerged as a significant player on the global stage, gaining relevance due to its role in changing the global order discourse. These nations are part of what is commonly referred to as ‘emerging economies’; they have been attempting to establish a new framework for international relations known as inter-regionalism, within which they can pursue their bilateral, regional, and global interactions and objectives (Kipgen & Chakrabarti, 2022).

The significance of the BRICS countries in the global economy can be gauged by their substantial contributions across multiple dimensions. In 2022, the BRICS countries accounted for over 32% of the global economy’s GDP, 18% of global trade, and attracted 25% of global foreign direct investment; their residents make up close to 40% of the world’s population (Gouvea & Gutierrez, 2023). BRICS established two important financial institutions during the 11th summit held in Brazil in 2014 to foster financial cooperation and stability among the member countries, i.e. the New Development Bank (NDB) and the Contingent Reserve Arrangement (CRA). Between 2018 and 2022, the NDB played a crucial role by approving 70 infrastructure and sustainable development projects totalling US$ 25.07 billion, which included loans granted through the NDB Emergency Assistance Facility. Notably, India received funding for 18 projects valued at US$ 6.9 billion during this period (Iqbal, 2022). Recently, the BRICS discussions have been focusing on the ways to reduce the impact of global economic shocks, such as using local currencies in trade among members and thus minimizing the dependence on the US dollar for transactions. Moreover, at the April 2023 Brazil–China summit, it was proposed to launch a new BRICS currency. Coquidé, Lages & Shepelyansky (2023) use Monte Carlo simulations to show that there are favourable prospects for the dominance of the BRICS currency in international trade, provided that only trade relations are taken into account, ignoring political and other aspects. One of the ways to reduce dependence on Western institutions is to move away from the US dollar. The share of the Chinese renminbi in the BRICS transactions is about 47% and in the long-term it may exceed 80%; so it is probably the strongest candidate for the substitute currency (Gnidchenko, 2023).

The primary goal of the BRICS is to promote cooperation, policy coordination, and political dialogue to discuss international economic and financial issues. The intra-BRICS relations are on the rise; the south-south cooperation is growing; the association members, especially China, India and Russia, are building up contacts with many less developed countries. (Iqbal & Rahman, 2023). The uneven global power relations between rich and poor nations of the world have led to a continuation of an asymmetrical combination of policies, backed by trade theories (Sen, 2010). Several geoeconomic and geopolitical crises and frictions such as the Russia-Ukraine conflict, subsequent sanctions on Russia, global energy and food security crisis, recent U. S. semiconductor trade sanctions on China and other adverse circustances, have enhanced the need for regional cooperation in the Global South. Gouvea & Gutierrez, (2023) argue that the global economic slowdown provides an impetus for the development of new economic arrangements and partnerships.

Following 13 years without expansion, the 15th summit of BRICS took place in Johannesburg in August 2023, marking a notable development as the alliance admitted four new members: Egypt, Ethiopia, Iran and the United Arab Emirates; two countries have not joined the association despite receiving an invitation. Despite receiving an invitation, Saudi Arabia has not yet officially joined the group. Additionally, Argentina’s President, Javier Milei, opted to withdraw his country from its previously planned entry into BRICS (Jütten & Falkenberg, 2024). The expansion led to a change in the informal designation of the alliance, which is now called BRICS+. It is expected that the addition of the new members will strengthen the economic presence and expansion of the BRICS nations into multiple untapped markets, adding to their global significance (Singh, 2022). The group is united by its shared objectives that emphasize economic growth, cooperation and reform of international financial institutions. The expanded BRICS + have been working to enhance their collaboration through initiatives aimed at facilitating intra-group trade and addressing common economic and geopolitical challenges (Cochrane & Zaidan, 2024).

The understanding of the relationship between trade and development has varied over the years, which resulted in a wide range of recommendations regarding trade policy. In the immediate post-war period, economists such as Nurkse (1959), Prebisch (1950), and Myrdal (1956) argued in favour of a restrictive trade policy to promote industrialisation. Having analysed the situation in the 1930s, Nurkse (1959) concluded that high tariffs in developed countries would militate against exports of manufactures from developing countries. Prebisch (1950) believed that development could not be based on agricultural exports because of the deteriorating terms of trade. Myrdal (1956) asserted that liberal policies would favour the developed economies with their advanced institutional framework and prove detrimental to the developing countries. At the same time, it appeared that more open economies grew faster than the closed ones, and they did so the during liberalisation phase (Little et al., 1970; Bhagwati, 1977). Since the 1970s, many countries had increasingly adopted more liberal trade policies.

Although BRICS+ is not a trade agreement, there is a potential to enhance trade cooperation by forming an economic partnership of a mega-RTA kind, such as CPTPP, (T-TIP) or RCEP. Trade should open up new avenues for economic growth as it facilitates the movement of goods, capital and technology across borders enabling countries to access resources and markets they may not have domestically. This, in turn, will bring about higher productivity, increased investment, and ultimately, economic growth. Regional economic integration allows economies to progress without immediate exposure to competition from more advanced global exporters (Foxley, 2010).

A study conducted by Rahman et al. (2020) examines the intra-BRICS trade flows and trade potentials for the development of strong economic cooperation using a modified gravity model; it shows that the trade among the BRICS countries has good prospects. Intra-BRICS trade flows will be driven by the countries’ economic size, their market potential and effective policies, including the proper management of the trade costs. Yet, realising this potential will require considerable effort. Iqbal et al. (2023) who have analysed the bilateral trade relations between India and other BRICS members conclude that even though an increasing trend in traded amounts has been observed over the years, the gap between intentions and outcomes is still wide. Several studies have analysed the existing relationship between trade and other economic indicators in the BRICS countries. Rahman et al. (2022) attempted to identify the causality between poverty and trade in the BRICS countries using applied econometrics but found no causal relationship between the two variables. Rahman et al. (2021) detected a significant relationship between trade openness and carbon emissions of the BRICS economies. Zafar et al. (2023) investigated linkages between ICT (Information and communication technologies), tourism, trade, economic growth, and environmental sustainability in BRICS economies. Their findings suggest that there is an adverse effect of tourism, trade, and growth factors on environmental sustainability, whereas ICT helps promote a sustainable environment among the economies under analysis. The researchers believe that converting both trade and economic growth into green practices should be a panacea for the natural environment of the BRICS countries.

Since the available literature does not cover the implications of the BRICS expansion, a comprehensive analysis is imperative to assess its influence on the global trade and GDP growth.

The BRICS countries seek to build economic cooperation on strong intra-regional trade links, and this will continue to be the case with BRICS+. It is essential to analyse the exports of the old and new BRICS members to the world as well as intra-BRICS trade. BRICS nations’ exports to the world rose from USD 493.9 billion in 2001 to about USD 4651.6 billion in 2021 (Table A7 in Appendix), an increase of more than nine times in two decades, or more than 11 % a year. Also, its share in the world trade increased from 8.6% in 2001 to more than 20% in 2021 (data unavailable for 2022). Exports including those of the new members increased from 11.3% in 2001 to about 26% in 2021 (Table A7). The value of intra-regional exports in BRICS averaged USD 55.30 billion between 2001 and 2007. However, it averaged significantly higher, USD 246.51 billion, between 2001 and 2018. Furthermore, in 2019–2022, this averaged value reached a peak of USD 362.72 billion. There was a more than sixfold rise between 2001 and 2022. The intra-regional trade (exports) of BRICS+ experienced significant growth from an average of USD 143.87 billion during 2001–2007 to an average of USD 744 billion in 2019–2022, multiplying by more than five. The current value of trade among the BRICS+ nations is around USD 5 trillion, which accounts for approximately 22% of global exports and may increase further after the expansion.

Participation of individual countries in intra-BRICS and Intra-BRICS+ trade is varied, primarily reflecting the sizes of their economies (Kumar, 2018). Between 2001–07 (average) and 2019–22 (average), intra-BRICS trade increased nearly sevenfold, supported by the expansion of intra-regional trade by all member nations (Table A8 and Figure 4); China played a major role, accounting for around 47 % of the exports, followed by Brazil, Russia, India, and South Africa. Over the past two decades, there have been varying patterns in the export interdependence of the BRICS nations. In 2001–2007, China dominated the intra-BRICS exports with a 42.6% share, followed by Russia (23.5% of intra-BRICS exports in 2001–2007), Brazil, India, and South Africa. By 2019–22 (average) China remained the largest supplier to the other BRICS nations with an increased share of around 47 % of the intra-BRICS exports, Brazil became the second largest intra-BRICS exporter, with a share of 23.2 %, followed by Russia (18.2 %), India (7.4 %), and South Africa (4.3per cent).

Figure 4. 

Intra-BRICS and BRICS+Trade (exports) as a percentage of Total trade (exports). Source: Author’s calculation and data from WITS. Data is average for the period

In January 2024, four new countries, namely Egypt, Ethiopia, Iran and UAE, joined the BRICS, and today the group consists of 9 member countries, with Argentina having withdrawn her agreement to join and Saudi Arabia suspending the decision. These countries represent 45% of the world’s population, 28% of the global GDP (in 2015 prices), and around 24% of global trade (merchandise exports in 2022). We analyzed the importance of BRICS+ in the world trade and GDP and its impact on intra-BRICS+ trade. We do not expect a significant change in their share in world GDP: with the four new members, the share of BRICS+ is projected to increase by only 2.8%. Another crucial aspect of BRICS+ is their impact on global exports. The share of BRICS in total global exports had almost doubled, increasing from around 15.9% in 2001–07 to 29.7% in 2019–22. The new members account for only 4% of the world exports, and their share fell to a mere 2.6% in the last period, 2019–22. The average growth rates of per capita GDP in BRICS declined, whereas it has increased in the newer members since the 2008 financial crisis. The average share of gross fixed capital formation (GFCF) in GDP in BRICS and new members remained relatively constant.

The other important aspect we analyzed in this paper is the intra-BRICS and intra-BRICS+ trade. We found that the total amount of the BRICS+ world trade was USD 3.1 trillion (2001–2022 average), in which China accounted for a significant share of 55%, followed by Russia at 11.1%, UAE at 7.7%, India and Saudi Arabia at 7.2%. The BRICS+ total intra-regional trade in 2022 was USD 5 trillion. Brazil’s substantial 38.4% share in total BRICS+ points to its significance in the coalition. If there is further trade liberalization in BRICS+, then Brazil may gain trade from this bloc. China’s total world export in 2022 was USD 3.5 trillion, and its share in total intra-regional trade in BRICS+ was 11.5% in 2022 (USD 414.2 billion), which increased more than two times between 2001 and 2022. BRICS+ is a potential market for the Chinese goods and so their export will further increase as China’s GDP is growing by more than 6%. BRICS+ will be important for India’s trade, as a 20% share of its total exports was directed to BRICS+ in 2022. It should be noted that India imports more than 80% of its oil, and other BRICS+ countries are significant importers of her products. If there is further trade liberalization, India will be the net gainer within this BRICS+ association. Russia is currently facing a lot of economic challenges caused by the Western sanctions and so BRICS+ emerges as a vital trade bloc for Russia: 20% of the country’s exports are demanded in the BRICS+, which is very different from 8.6% in 2001. Similarly, BRICS+ holds substantial importance for Iran, accounting for 53% of its exports. Overall, the study highlights the significance of BRICS+ expansion in intra-regional trade, especially as developing countries contributed 80% to global GDP growth in 2022. BRICS+ acts as the voice of the global south in multilateral forums, it is a crucial factor given the current unfavourable geopolitical and economic conditions for global growth. The expansion of BRICS+ stands to become a boon for the global economy.