This paper seeks to determine whether the BRICS group has lived up to the expectations that their influence in international economic governance will increase. Stellar economic performance and the resulting well-being are important factors that may cause this influence to grow. However, there has been increasing recognition that welfare does not depend merely on income but on a broader set of indicators as exemplified by the Millennium Development Goals (MDGs) or the Sustainable Development Goals (SDGs). BRICS may increase their influence through their achievements on the social front and their soft power. Using simple statistical methods to examine their macroeconomic performance the paper found that only China and India had done well and lived up to the initial expectations. The social achievements of the BRICS have also been limited. The BRICS have sought to translate their dissatisfaction with the IMF and the World Bank into establishment of the New Development Bank (NDB) to provide loans for infrastructure projects and the Contingent Reserve Arrangement (CRA) to cover the needs for financing balance of payments deficits. The paper examines the working of these organizations to find out if they have been successful in meeting their objectives. The results of the analysis allows us to conclude that the NDB has been successful, unlike CRA, which proved to be ineffective.

BRICS, SDGs, New Development Bank, Economic Performance.

BRICS, a group of 5 developing countries, Brazil, China, India, Russia and South Africa, accounts for a significant proportion of the world’s population and GDP. It was expected that these countries would maintain a high rate of growth and play an increasingly important role in the world economy and also in international economic governance. This paper examines the extent to which BRICS has lived up to this expectations. Economic performance is usually measured in terms of macro variables such as growth, investment, exports and others. It has been increasingly recognised, however, that rises in per capita GDP are not an adequate measure of improvement in welfare. Welfare is a multi-dimensional concept; the MDGs and SDGs are important parameters to be considered when assessing a particular country socioeconomic performance. We supplement the examination of macro performance with an analysis of the results achieved on the social and sustainable development goals because success in achieving MDGs and SDGs is likely to enhance these countries’ soft power.

In Section 2, we first examine the importance of the BRICS countries’ contribution to the world GDP, and assess their share in the middle income (MY) countries’ GDP. In this Section we also give information on how the BRICS have fared in terms of per capita GDP. In Section 3 we analyse economic performance of the BRICS and discuss fixed capital formation in these economies and their export performance. In Section 4 we examine the behaviour of intra BRICS exports. Section 5, based on a time series analysis, outlines the prospects for economic performance of the BRICS. In Section 6 we shift attention to their success in social sectors and performance in achieving the millennium development goals, which may have crucial implications for their results in attaining the sustainable development goals. In Section 7 we explore the institutional innovations undertaken by the BRICS countries. We first examine the performance of the New Development Bank (NDB) showing that it has grown significantly and made a substantial contribution to promoting clean energy sources in the BRICS and to infrastructure development. We then discuss the contingent reserve arrangement (CRA) and note that while the NDB has been successful the CRA has been in almost deep-freeze. We end with some concluding observations in Section 8.

The share of BRICS in the world GDP rose from 11.9 percent in 2000 to 25.6 percent in 2021 (Table 1). This increase, however, is misleading as the share of two of the members, Brazil and S. Africa, decreased and the share of the third, Russia, was almost constant. Only China and India substantially increased their shares, the former spectacularly from 5.7 percent to 18.2 percent; India’s result was less dramatic: from 1.7 percent to 3.2.

However, this increased share in the world GDP seems to have been possible mostly because the high-income countries were growing slowly. The BRICS countries are all considered middle income countries by the World Bank’s income criterion; relative to other countries in this group, their share declined from about 83 percent to 67 percent (Table 2). Again, only China and India increased their shares: the former by a substantial 87 percent, and the latter by 11 percent; the shares of the other three countries decreased.

Comparing per capita GDP of the BRICS countries with those of the world and middle income countries we find that per capita GDP of BRICS has increased relative to that of the world, except for Brazil and S. Africa (Table 2). Per capita GDP in BRICS has also increased relative to that in middle income countries (Table 2). But this is mainly because of the spectacular performance of China that doubled its share of the per capita GDP of middle income countries. India’s per capita GDP relative to that of middle income countries increased by about 9 percent Again, per capita GDP in Brazil, Russia and South Africa decreased relative to that in the middle income countries; the decrease is considerable, about 50 percent, in the case of Brazil and S. Africa.

We now analyse in somewhat greater detail the performance of the BRICS countries. Growth of per capita GDP has been declining ever since the global financial crisis (GFC) of 2008. Growth first declined after the 2008 crisis and took a further hit during and after the Covid pandemic (Table 3). Two of the countries, Russia and South Africa, saw a fall in per capita income after the pandemic, and for the third, Brazil, the growth was close to zero. India also saw a severe fall in its growth rate, but only after the pandemic as its growth rate actually increased after the GFC. Only China managed to maintain a growth rate substantially higher than the average for middle income countries. In three of the BRICS, growth rates were lower than the average for middle income countries.

The BRICS countries had maintained their investment levels after the GFC; in Brazil, China, Russia, and S. Africa they were higher during 2011-18 than in 2000-07, and for India it was almost the same (Table 4).

However, investment levels fell in all the BRICS after the pandemic (Table 4). Lockdowns that accompanied the pandemic disrupted production, resulting in lower investment. The behaviour of the BRICS countries is generally in contrast to that of MY countries. In the MY countries investment increased as a percentage of GDP after the pandemic; earlier it had increased after the GFC.

While in growth and investment there is considerable uniformity in the behaviour of the BRICS there is no uniformity in their exports. Exports of goods and services made up a smaller share of GDP after the GFC in three of the BRICS, Brazil, China and Russia, but the share of exports was larger in the other two (Table 5). This varied response was also exhibited after the pandemic with the exports’ share increasing in three of the BRICS. Comparing the share of exports in 2019-21 to that in 2000-07, the two economies with the highest shares saw a decline in the share of exports in GDP, while the others experienced a rise.

The two crises adversely affected MY countries’ exports of goods and services, which declined after the GFC and fell again after the pandemic. However, this decline was less than that in China and Russia.

The external balance (EB) again showed a uniformity in behaviour: it had worsened after the GFC in the BRICS countries: in 2011-18 the EB was worse than in 2000-7 for all of them (Table 6). The expansionary monetary and fiscal policies adopted to compensate for the decline in foreign demand resulted in deterioration of the EB. In contrast to that, however, the EB improved after the pandemic. A possible explanation is that the restrictions on movements resulted in lower consumption and higher savings.

The MY countries showed a similar pattern: deterioration of the EB after the GFC but improvement after the pandemic. In brief, the growth rate of GDP declined for most BRICS countries in 2000-07 and 2011-18, and for all of them during 2019-2. GFCF was also down in all except China. In the MY countries, in contrast, investment increased as a percentage of GDP after both the GFC and the pandemic. The behaviour of exports of goods and services is more varied. As a share of GDP, it was up in Brazil and South Africa, but down in the other three countries. It went up in the two countries that grew most slowly between 2011-21. MY countries’ exports of goods and services were adversely affected by the crises. They declined after the GFC and fell again after the pandemic. The external balance worsened after the GFC for all the countries except India. In contrast, it improved after the pandemic in all the countries except China. The MY countries showed a similar pattern, i.e. deterioration of the EB after the GFC but improvement after the pandemic. The limited increase in their share of the global GDP and that of MY countries together with stagnation in investment and poor export performance mean that the expectations of the BRICS group’s increasing importance have not been fulfilled.

Participation of individual countries in intra-BRICS trade is varied, reflecting mostly the relative sizes of their economies. During 2000-07 (average) and 2019-21 (average), intra-BRICS trade increased nearly sevenfold, supported by expansion of intra-regional trade by all member nations; China played a major role, accounting for more than fifty per cent of its volume. Next came Brazil and then Russia, India, and South Africa. Over the past two decades, there were different patterns in export interdependence of the BRICS nations. In 2000-2007, China dominated the intra-BRICS exports with a 45.26 percent share, followed by Russia (22.58 per cent of intra-BRICS exports in 2000-2007), Brazil, India, and South Africa. By 2019-21 (average) China remained the largest supplier to the other BRICS nations with an increased share of 50.02 percent in intra-BRICS exports, Brazil became the second largest intra-BRICS exporter, with a share of 20.36 percent, followed by Russia (17.82 percent), India (8.19 percent), and South Africa (3.61per cent). The country most dependent on exports to BRICS is Brazil, with 33.4 per cent of its exports going to BRICS.

Intra-BRICS trade has expanded over the years and even the GFC or the pandemic did not adversely affect its dynamics. The share of intra-BRICS exports in the BRICS countries’ total exports grew from an average of 5.6 percent during 2000-07 to 8.6 percent during 2008-18 and further to 10.0 percent during 2019-21 (Table 7).

All the BRICS members contributed to this expansion. Brazil saw the largest increase, from an average of 9.3 percent during 2000-07 to 22.3 percent during 2008-18 to 33.4 percent during 2019-21. The country least dependent on the BRICS market was China whose share was only 4.2 percent during 2000-07 and increased slowly to 6.6 percent during 2008-18 and to 6.9 percent during 2019-21.

Time series analysis in an earlier paper (Agarwal, Azim and Kumar, 2022) found that China is a case of traditional growth dynamics, where investment leads to growth and neither domestic savings nor the external balance are constraints. This is to be expected as China has very high rates of savings and runs current account surpluses. Since the GFC its dependence on exports and hence the surplus have been coming down. But the share of GFCF in GDP has increased. It seems that its growth is investment driven.¹ Russia has an internal demand constraint so investment leads to more exports. South Africa shows a bi-direction relation between GFCF and growth of per capita income, a typical multiplier-accelerator relationship. In India, because of a dominant external constraint, increased imports lead to growth, substantiating the result of Maitra, 2020, Agarwal and Ghosh, 2017.² Brazil has basically performed poorly since the 1982 debt crisis despite different policy regimes and this is reflected in that there is no causality leading to growth.

But in the long run we find that GFCF has a positive effect on per capita GDP in Brazil, India and China. Also, exports have a positive effect on per capita GDP in these three countries, whereas imports have a negative, typical trade multiplier effect. This implies poorer growth prospects in the future as both exports and GFCF have declined as a share of GDP per capita. GDP in turn has a positive and significant effect on exports in Brazil. The external balance adversely affects GDP and positively affects the GFCF in Brazil, while its impact on GDP and GFCF in China and India is insignificant. Causal arrows go from imports to exports in Brazil and India whereas in China they go in the opposite direction: exports generate imports. GFCF has a negative effect on exports in Brazil and India owing to the existence of the supply constraint. Domestic output does not respond rapidly to the GFCF demand; it is diverted to meet the investment demand and GFCF crowds out exports.

There is divergence from the short run towards the long run position as the coefficient of the error correction term is negative in the time series analysis. Thus, a long run relationship exists between per capita GDP and other variables in these countries. However, for Russia and South Africa, there is no long run relationship.³ The summary of the long run results is shown in Table 8.⁴

In the long run, Brazil, China and India all show a classical relationship between GFCF and growth. Besides, in Brazil we find that the external balance adversely affects GDP but positively affects GFCF as the government seeks to re-ignite growth when the external balance is favourable. Exports also have a positive effect on per capita GDP as the external constraint is relaxed. In China, investment has a positive effect both on growth and the external balance reflecting its export-oriented development strategy. In India, investment has a positive effect on GDP. Exports have a positive effect on per capita GDP, but imports have a negative effect on per capita GDP; for almost the entire period the country ran an external deficit, and it has a long history of external crises, 1967, 1966-68, 1973, 1981 and 1991. Imports positively affect exports, which indicates the importance of imported content in exports.

One of the reasons for the establishment of BRICS was dissatisfaction with the international order after the Second World War (SWW), particularly with the working of the Bretton Woods twins, the International Monetary Fund (IMF) and the World Bank (WB). The BRICS established the Contingency Reserve Arrangement (CRA) and the New Development Bank (NDB).

The increase in the share of BRICS in the world GDP from 11.9 percent in 2000 to 25.6 percent in 2021 is misleading as the share of two of the members, Brazil and S. Africa, decreased and the share of a third, Russia, was almost constant. Only China and India increased their shares, the former spectacularly from 5.7 percent to 18.2 percent; India increased its share less substantially from 1.7 percent to 3.2.

Moreover, this increased share in the world GDP can be explained by slow growth in the high income countries, as the share of the BRICS countries’ in the GDP of MY countries declined from about 83 percent to 67 percent of the GDP of MY countries. Only the shares of China and India have grown; China’s by a substantial 87 percent, and India’s by 11 percent; the shares of the other three countries decreased.

Also, the increase in per capita GDP in BRICS relative to that in middle income countries mainly occurred because of China’s spectacular performance: the country doubled its share of per capita GDP in middle income countries. India’s per capita GDP relative to that of middle income countries increased by about 9 percent. Again, per capita GDP in Brazil, Russia and South Africa decreased relative to that in the middle income countries; for Brazil and S. Africa the decrease was considerable, about 50 percent.

The BRICS countries had maintained their investment levels after the GFC; after the pandemic, however, these have fallen in all the BRICS because of the disruptive effects of lockdowns that accompanied the pandemic. In this respect, the BRICS countries are in stark contrast with MY countries where investment amounts have risen.

Unlike comparatively uniform dynamics of the BRICS countries’ growth and investment, the behaviour of their exports differs across the group members. Export of goods and services made up a smaller share of GDP after the GFC in three of the BRICS, Brazil, China and Russia, but was greater in the other two. This varied response was also exhibited after the pandemic when the share of exports increased in three of the BRICS. Comparing the share in 2019-21 to that in 2000-07, the two economies with the highest shares saw a decline in the share of exports in GDP, while the others experienced a rise.

Except for China the share of XGS in GDP was higher in the other 4 countries. The behaviour of the BRICS contrasts with that of MY countries generally, where the share of XGS in GDP declined after the GFC and again after the pandemic.

In contrast to the behaviour of XGS, the EB showed a uniformity in behaviour: it had worsened after the GFC in the BRICS countries: the EB was worse in 2011-18 than in 2000-7 for all of them because of the expansionary monetary and fiscal policies adopted to compensate for the decline in foreign demand. In contrast, the EB improved after the pandemic possibly because the restrictions on movements led to a decline in consumption and rise in savings. The MY countries showed a similar pattern, a worsening of the EB after the GFC but improvement after the pandemic.

Intra-BRICS trade has expanded over the years and even the GFC or the pandemic did not adversely affect this growth. The share of intra-BRICS exports grew as a share of their exports to the world from an average of 5.6 percent during 2000-07 to 8.6 percent during 2008-18 and further to 10.0 percent during 2019-21. All the BRICS members participated in this increase. Brazil saw the largest increase, with the share of its exports to the BRICS countries expanding from an average of 9.3 percent during 2000-07 to 22.3 percent during 2008-18 and to 33.4 percent during 2019-21. The least dependent on the BRICS market was China whose share was only 4.2 percent during 2000-07 and then increased slowly to 6.6 percent during 2008-18 and to 6.9 percent during 2019-21.

Time series analysis reveals that China is a case of traditional growth dynamics, when investment leads to growth. Neither domestic savings nor the external balance are constraints, a result to be expected as China has very high rates of savings and runs current account surpluses. Since the GFC, its dependence on exports together with surplus amounts has been coming down, but investment has increased, which means that China’s growth is more investment driven than export driven. In Russia, there is an obvious internal demand constraint as investment leads to more exports rather than growth, despite its export surplus. South Africa depicts a bi-direction relation between GFCF and growth of per capita income, a typical multiplier accelerator relation. India’s economy has a dominant external constraint as increased imports lead to growth, substantiating the result of Maitra (2020).¹⁰ Brazil has basically performed poorly since the 1982 debt crisis despite different policy regimes; no causality leading to growth has been so far observed.

Nevertheless, in the long run, GFCF has a positive effect on per capita GDP in Brazil, India and China. Exports are also beneficial for the per capita GDP in these three countries although in Brazil domestic demand is still lacking. Imports cause exports in Brazil and India whereas in China, exports cause imports. GFCF has a negative effect on exports in Brazil and India due to a supply constraint. Domestic output does not respond rapidly to the GFCF demand and output is diverted to meet the investment demand. GFCF crowds out exports. The shrinking share of GDP of both GFCF and XGS implies that future growth prospects are poor for the BRICS countries.

The BRICS were broadly unsuccessful in achieving the MDGs. All the BRICS achieved the MDG goal of reducing poverty by half. But none of them reached the goal for maternal mortality and only Brazil and China reached the targets for child and infant mortality.

The target for poverty for 2030 is that it should be eliminated. Russia has already eliminated poverty and China is likely to maintain the growth rate required to eliminate poverty. However, the other three have not achieved the required growth rates for any extended period and so are unlikely to achieve the poverty elimination SD goal unless they attain a growth rate that has a greater impact on poverty.

The mortality goals for the SDGS are presented in absolute numbers instead of giving percentage reduction from their 2015 figures. Accordingly, Brazil, China and Russia have already achieved these goals. Although India has achieved the 2.7% growth of per capita income needed to reach the goal of child mortality its growth rates are insufficient for attaining the targets for maternal and infant mortality. S. Africa has not been growing at a pace necessary to meet any of the mortality goals.

BRICS have established two new institutions, the New Development Bank (NDB) and the contingent Reserve Arrangement (CRA). The NDB has been quite successful. Yet, in its first five years of its operation, 2016-2020, it financed projects only worth US$ 25.6 billion in the 5 BRICS countries while in 2019 alone the WB approved projects worth US$59.5. The projects have been mainly in the area of clean energy and infrastructure. 2020 saw a shift in its investment strategy towards projects to deal directly with the Covid epidemic and its macro effects. It has also raised both dollar loans and Chinese renminbi loans. Furthermore, 4 new members were admitted. So NDB seems set to become an important multilateral financial institution. The CRA has not been approached for financing, and, given its constitution, it is unlikely that any country will use its services.

The slowdown in growth in most of the BRICS countries and the limited success in achieving the SDGs places constraints on the influence of BRICS at the international level. It is also obvious that, while the NDB has been successful and might increase the influence of the BRICS, the CRA is ineffective.