Insignia Journal of International Relations

Vol. 10, No. 2, November 2023, 128-143

P-ISSN: 2089-1962; E-ISSN: 2597-9868

BRICS as New Alternatives in

Reforming International Financial Institutions and
Economic Partnerships

Casandra Aleksia
Graduate School of Diplomacy, Faculty of Philosophy and Civilization,
Paramadina University
E-mail: [email protected]

Arief Rizky Bakhtiar

Lee Kuan Yew School of Public Policy, National University of Singapore
E-mail: [email protected]

Abstract

The article aims to examine the role of the combined economies of Brazil, Russia, India, China and South
Africa (BRICS) in reforming the international financial institutions and economic partnerships. BRICS offers
new values and serves as alternatives for both its current and prospective members in having an equal
access to source international investments.. The arguments revolve around BRICS’ strategies to create an
effective development program that not only revolves around their own growth agendas. In addition, BRICS
have greater goals on establishing global trade relations and economic partnerships through the New
Development Bank (NDB) and Contingent Reserve Arrangement (CRA) among many others. The discussion
also focuses on other several key research areas related to BRICS’ efforts in promoting economic
partnerships and the overall impacts of the partnerships. By emphasizing the shared interests of developing
nations and emerging markets, giving high-quality economic and trade development priority, promoting
true multilateralism, and highlighting opportunities in emerging fields to contribute more to an open global
economy, this paper offers recommendations for BRICS’ future development. This study uses qualitative
method to achieve the objectives of this study. The most fundamental characteristic of qualitative research
is seeing the problems studied from the perspective of the subjects studied.

Keywords: BRICS, economic cooperation, financial institution, partnership

Abstrak

Artikel ini bertujuan untuk mengkaji peran gabungan perekonomian Brazil, Rusia, India, Tiongkok dan Afrika
Selatan (BRICS) dalam mereformasi lembaga keuangan internasional dan kemitraan ekonomi. BRICS
menawarkan nilai-nilai baru dan berfungsi sebagai alternatif bagi anggotanya saat ini dan calon anggotanya
dalam mendapatkan akses yang setara terhadap sumber investasi internasional. Argumennya berkisar pada
strategi BRICS untuk menciptakan program pembangunan yang efektif yang tidak hanya berkisar pada
agenda pertumbuhan mereka sendiri. Selain itu, BRICS memiliki tujuan yang lebih besar dalam membangun
hubungan perdagangan global dan kemitraan ekonomi melalui New Development Bank (NDB) dan
Contingent Reserve Arrangement (CRA) dan banyak lainnya. Diskusi ini juga berfokus pada beberapa bidang
penelitian utama lainnya terkait upaya BRICS dalam mendorong kemitraan ekonomi dan dampak
keseluruhan dari kemitraan tersebut. Dengan menekankan kepentingan bersama negara-negara berkembang
dan pasar negara berkembang, memberikan prioritas pembangunan ekonomi dan perdagangan berkualitas
tinggi, mempromosikan multilateralisme sejati, dan menyoroti peluang di bidang-bidang baru untuk

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berkontribusi lebih banyak terhadap perekonomian global yang terbuka, makalah ini menawarkan
rekomendasi untuk pengembangan BRICS di masa depan. Penelitian ini menggunakan metode kualitatif untuk
mencapai tujuan penelitian ini. Ciri yang paling mendasar dari penelitian kualitatif adalah melihat
permasalahan yang diteliti dari sudut pandang subjek yang diteliti.

Kata kunci: BRICS, kemitraan, kerja sama ekonomi, lembaga keuangan

INTRODUCTION the slowing of growth in most BRICS

Brazil, Russia, India, China, and countries, combined with limited success
South Africa are collectively referred to in achieving the Sustainable Develop-
as BRICS. The acronym BRIC (without ment Goals (SDGs) limits the BRICS'
South Africa) was first coined in 2001 by international influence.
Goldman Sachs economist Jim O'Neill, From the various studies above, it
who predicted that by 2050, the four appears that there are untouched issues
BRIC economies would take control of on the role of the combined economies of
the world economy. In 2010, South Brazil, Russia, India, China and South
Africa was added to the list (The Africa (BRICS) in reforming the
Economic Times, 2023). At the initial international financial institutions and
summit in Yekaterinburg in 2009, the economic partnerships and the
BRIC made a commitment to advancing effectiveness the NDB and CRA as the
reform of the global financial and tools to establish global trade relations
economic architecture (BRICS, 2022a). and economic partnerships.
Additionally, since 2011, BRICs Nevertheless, many drew attention
presidents have also met informally to the bloc’s low trade integration,
during the G20 leaders' conference. uneven growth, lack of assertiveness in
According to Varela & Delgado the face of the international order, lack of
(2019), despite its limitations in coordination regarding priority issues,
transnational affairs, it has been one of and missed opportunity to create
the most visible examples of strategic cooperation agreements that
multilateralism's success in the Global characterize the bloc (Cynthia, Armijo, &
South. The BRICS can promote an Katada, 2017; Daldegan and Carvalho,
alternative to the existing international 2021).
game rules and a more plural world. This paper will counter the
They have the ability to reform and arguments by presenting data and facts
construct international economic that BRICS have created an effective
institutions that allow for more equitable development program that not only
distribution of material resources. revolves around their own growth
Putri & Santoso (2023) emphasi- agendas but also on greater goals by
zed that BRICS must continue to promote establishing global trade relations and
closer economic cooperation, harness economic partnerships through the New
the power of innovation and technology, Development Bank (NDB) and
and actively participate in global issues Contingent Reserve Arrangement (CRA)
such as climate change, international among many others.
security, and poverty alleviation. This paper also provides recom-
Agarwal and Kumar (2023) argued that mendations for future development of

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BRICS by focusing on the common The BRICS cooperation has made
interests of emerging markets and uneven progress in its second decade.
developing countries, priority to high Although they have a very small catalytic
quality economic and trade develop- impact on global governance, the
ment, the practice of true multilateralism institutional innovations of the BRICS,
and the opportunities in emerging fields such as the New Development Bank and
to make greater contributions to an open Contingent Reserve Arrangement, have
world economy. contributed significantly to the creation
of global public goods.
Theories
The political need to unite a Research Method
number of rapidly developing nations This study uses qualitative
led to the creation of the BRICS methods for three reasons. First,
cooperation mechanism. The integration qualitative research allows the
process has demonstrated the viability of researcher to gain an in-depth
enhancing the capabilities of the BRICS understanding of the details of the case
platform (Li & Pogodin, 2020). The under study. Second, given the
current state of the world confirms that, limitations in collecting data, qualitative
when compared to geographical and research allows researchers to collect
physical similarities, trade relations have data from document sources and
an advantage in preserving amicable unstructured interviews that are
relationships. The volume of trade publicly published. Third, qualitative
reflects the degree of integration taking research is the right strategy to achieve
place within the BRICS. The idea of the objectives of this study. The most
economic regionalism emphasizes the fundamental characteristic of qualitative
development of peaceful international research is seeing the problems studied
relations between the BRICS nations from the perspective of the subjects
(Shameem & Jayaprasad, 2020). As a studied.
result of the countries' growing Further, critical analysis is applied
economic interdependence, tension in this research to comprehend and
between them is decreased. evaluate the arguments, theories, and
The BRICS leaders pledged to work proof in BRICS. Ultimately, a variety of
together and with other partners to analytical tools are employed, such as
strengthen financial supervision and descriptive statistics, and conjuncture
regulation, reform the mandates, scope, analysis, all of which are discussed in
and governance of the global financial relation to a theoretical framework that
institutions to reflect changes in the challenges basic concepts like growing
global economy, and ensure that power and regional power.
emerging and developing economies
have a greater voice and representation RESULT AND DISCUSSION
in international financial institutions and Overview of BRICS’ Financial
equal opportunities to develop economic Institutions and Mechanism: New
cooperation. One of many cases, the Development Bank
leaders supported the G20's central role Developing nations and emerging
in addressing the financial crisis (IFIs). markets are on the rise, and there is a

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trend for global economic governance to development, helping to advance shared
become more fragmented at the same commitments to achieving the objective
time (Biermann et al., 2009). The of strong, sustainable, and balanced
framework is becoming more and more growth. By accepting Bangladesh, Egypt,
divided into intergovernmental clusters the United Arab Emirates, and Uruguay
of cooperation, each with a set of as its first new members in 2021, the
behaviours and practices that contrast NDB made significant advancements
with the others in a variety of ways, such toward membership expansion, bringing
as cooperation versus competition and over 280 million people who could
integration versus disintegration. With benefit from the Bank's development
the rise of new (partially overlapping) solutions.
constellations of emerging powers and One million shares with a par value
initiatives to promote trans-regional of $100,000 each make up the bank's
cooperation and connectivity, the late initial $100 billion authorized capital.
2000s and early 2010s have Divided into paid-in shares ($10 billion)
demonstrated the complex and and callable shares ($40 billion), the
sophisticated nature of global NDB's initial subscribed capital is $50
governance. Along with the debate on billion (The Economic Times, 2015). The
the emerging of the trans- regional founding members (Brazil, Russia, India,
cooperation and its impacts, many People's Republic of China, and South
experts also raised questions on the legal Africa) each received an equal share of
framework for the cooperation. the bank's initial subscribed capital.
The BRICS countries established Every member will have one vote, and no
the multilateral New Development Bank one will have veto power, according to
(NDB), formerly known as the BRICS the NDB Agreement (Hofman and
Development Bank. The discussion on Srinivas, 2022).
the establishment of the NDB was first The establishment of the NDB itself
initiated at the fourth BRICS Summit in has provided more opportunities for its
New Delhi (2012). The Bank’s goal is to members to source international
raise funds for infrastructure and investments. The latest available data
sustainable development projects in the indicated that the NDB has approved
BRICS and other emerging economies, as financing of USD32.8 billion for 96
well as in developing nations (BRICS, projects in member countries (Porto &
2023). It was also decided that the Donnellon-May, 2023). In the NDB
Bank's initial funding should be 2021’s annual report, the Bank
significant and adequate for it to function highlighted that 2021 was a noteworthy
effectively in financing infrastructure. year for NDB in many ways, with a
The leaders of the BRICS nations signed number of noteworthy accomplish-
the agreement establishing the New ments. These include the Bank moving to
Development Bank at the sixth BRICS its permanent headquarters, welcoming
summit in Fortaleza, Brazil, in 2014 the first group of new member nations,
(BRICS, 2023). In this case, NDB further and enhancing positive effects through
aims to enhance BRICS cooperation and its investment operations. Bangladesh,
support multilateral and regional Egypt, the United Arab Emirates (UAE),
financial institutions' work for global and Uruguay were all admitted to NBD in

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2021. Over 280 million people from develop. The General Strategy for 2022–
these nations can take advantage of 2026 of the NDB (the Strategy) charts the
NDB's mission (NDB, 2021). The Bank's course toward becoming a
addition of their new members, who are preeminent supplier of infrastructure
from various parts of the world, and sustainable development solutions
strengthens NDB's function as a platform for EMDCs. The Strategy aims to improve
to foster collaboration in infrastructure the Bank's ability to mobilize resources
and sustainable development. at scale, finance a variety of project types,
In all the operations it supports, use sophisticated instruments, maximize
NDB seeks to maximize the impact on impact, and continue developing a strong
development. The projects approved in institutional profile in order to raise NDB
2021 are anticipated to produce a variety to a higher standard of operational
of development outcomes, including the excellence and development impact
construction of 35,000 homes, 660 km of (NDB, 2022a).
new or upgraded roads, 30 bridges, and NDB intends to increase its
30 km of metro lines, as well as the thematic bond issuance in response to
reduction of 7.5 million tonnes of carbon the growing interest among
dioxide (CO2) emissions annually and international investors in diversifying
49,000 m3 per day more of drinking their Environmental, Social and
water supply capacity (NDB, 2021). Governance (ESG) portfolios. As NDB
Following the SDG Impact Standards for intensifies its sustainability efforts, the
Bonds and the SDG Finance Taxonomy Bank will keep looking into
from the United Nations Development opportunities to issue cutting-edge
Programme (UNDP), NDB issued the sustainability debt instruments like
first-ever Sustainable Development Goal green bonds, climate bonds, and social
(SDG) bond in 2021 (China) (NDB, 2021). bonds.
As a pilot issuer, NDB collaborated The Bank will benefit from
closely with UNDP to help develop and thematic bonds in three ways: (1) An
test the standards and taxonomy. expanded investor base, as the bonds
Additionally, NDB released its first draw a variety of impact investors, such
floating-rate benchmark bond that was as institutional or corporate investors
correlated to the Secured Overnight with a mandate for sustainability; (2)
Financing Rate (SOFR) (NDB, 2022). Enhanced visibility, which will help the
NDB has quickly developed from a Bank develop its funding portfolio in
concept into a fully operational both primary and secondary markets;
multilateral development bank (MDB). and (3) Improved market positioning
The Bank's initial five-year general and brand image, as the Bank shows its
strategy, which was put into effect steadfast commitment to sustainable
between 2017 and 2021, laid the practices (NDB, 2022).
groundwork for NDB's early years of Another NDB innovation is the use
operations and set it up for a smooth of national systems. When conducting
transition into its subsequent five-year financial and policymaking activities in a
strategy phase (NDB, 2022a). recipient country, country systems
Additionally, it offered insightful lessons ensure that foreign actors use and abide
that will help the Bank as it continues to by the administrative systems of the

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home country (Hooijmaaijers, 2021). The concerned, the CRA closely resembles
NDB does not impose standards or the IMF's quota-based voting
conditions because it uses national distribution (Agarwal, 2014). Despite
systems for environmental, social, and this, because it does not give one party a
procurement issues. Instead, it abides by veto position, it offers a more balanced
the national labor, legal, and procurement voting system. Furthermore, the CRA
laws. It demonstrates the BRICS nations' lacks essential components like its own
steadfast commitment to upholding personnel and macroeconomic research
national sovereignty. Otherwise, nations facilities, as well as legal personality.
would require duplicate paperwork in In accordance with the current
both the local tongue and English. The system, countries' stocks of convertible
majority of BRICS countries lack the currencies, primarily United States (US)
administrative capacity to manage this dollars, and their IMF quotas make up
excessive bureaucracy. Although the international money. A country can only
standards in the BRICS nations are not increase its reserves if its balance of
low, they are frequently not followed.. payments (BOP) is in surplus if there is
no quota increase. The global supply of
BRICS’ Contingent Reserve dollars would rise if the US had a surplus.
Arrangement: New Alternatives to If there is a surplus in another nation, the
Address Balance of Payments current supply would merely be
In order to provide support in the redistributed. The other nations
event of actual or potential short-term collectively must run a current account
balance of payments pressure, the BRICS surplus, specifically the US must run a
Contingent Reserve Arrangement (CRA) current account deficit, for the supply of
was founded in 2015. The Treaty for the dollars to increase for the entire world.
Establishment of a BRICS Contingent IMF quotas are periodically reviewed
Reserve Arrangement, signed on July 15, and may be raised with the consent of the
2014 in Fortaleza, Brazil which serves as members. In this scenario, the BRICS
the legal foundation (Agarwal, 2014). does not produce any new international
Following announcement at the 7th currency. Loans to nations needing BOP
BRICS summit in July 2015, it became deficit financing are probably going to be
effective after being ratified by all BRICS made in convertible currencies,
states. It aims to make up for the BRICS' primarily the dollar, and will likely be
dissatisfaction with the International repaid in those same currencies. The
Monetary Fund (IMF) reforms that were BRICS nations will not be able to
long promised but delayed by the United influence the supply of global money
States until late 2015. The CRA serves as because no new global money is
the members' first line of defence rather produced. This implies that even though
than serving as a lender of last resort, there is now a second source of BOP
preventing them from needing to turn to financing, the burden of adjustment will
the IMF for conditional assistance. still fall on the deficit countries. No
Although all BRICS nations enjoy adjustment pressure will be applied to
equality for strategic decisions, a surplus nations.
contractual analysis of the CRA reveals Finally, having the CRA will provide
that where operational decisions are developing countries with alternatives,

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since it will take some time to develop predicted that after 2030, India's
such a capital market with all the Purchasing Power Parity (PPP) economy
required institutional features. It will will surpass that of the United States,
take several steps to achieve the goal of while Brazil and Russia will surpass
offering alternatives to developing Germany and Japan (PwC, 2017). In the
nations. All developing nations would next 30 to 35 years, the economy of
first need to be allowed to join. Their China will increase almost three times as
privileges and duties would need to be much as that of India, and many other
enshrined in law. developing nations will also experience
rapid growth. However, there is a lot of
BRICS’ Economic Partnership work that needs to be done in order for
Strategies Focusing on Development the BRICS nations to see these
Priorities predictions come true.
The BRICS countries have made In order to achieve sustainable
outstanding progress in cooperation economic growth, international
despite growing uncertainties, cooperation is now thought to be
supporting shared development and a essential. There is a need to identify and
global economic recovery. Since its develop strategies to strengthen the
establishment, the grouping has grown legal foundations of economic
in terms of scope and depth, having cooperation among the BRICS countries,
around 150 meetings annually with over as well as to prepare proposals for their
30 agreements and memoranda of implementation. Cooperation on a global
understanding provide a legal and regional scale is now viewed as a
foundation for cooperation in the diverse means of achieving economic growth.
areas from customs and tax to Each association member country's
agricultural research and energy economy benefits from effective
efficiency (South Africa’s BRICS resource allocation, complementarity in
Chairmanship, 2023). BRICS has also relevant areas of industrial and
transformed to a group of developing technological cooperation, expansion of
nations that together make up about production networks, and markets.
25% of the world's economy and However, putting policies in place to
represent about 40% of the world's promote economic cooperation and
population (European Commission, convergence in a variety of areas calls for
2018). Experts predict that the BRICS a well-balanced strategy and a careful
nations will have a greater influence on analysis of the anticipated advantages
the second half of the twenty-first and disadvantages for individual nations,
century. In the forecast published by such as analysing the development
PricewaterhouseCoopers (2017), it is priorities of the BRICS countries.

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 Table 1. Development Priorities of BRICS
Brazil Russia India China South Africa
• Budget • • Industrial and
Sustainable natural • Transportation • Eradication of
consolidation growth of innovative • Power engineering destitution and
• Sustainable population development • Digital economy poverty
economic growth• • Energy
Sustainable growth • Agriculture • Accounting for
• Foreign trade in real incomes • Infrastructure • Biotechnology the
facilitation development demographic
Source: Author, 2023.

The most extensive programs are work together to address recent global
those of Russia and China, according to challenges, such as financial volatility
the analysis of national policies and and macroeconomic shocks, and to
economic development priorities of the develop a positive, well-rounded, and
BRICS member states. The main goals of concise economic agenda, including for
the national development plans of South intra-BRICS cooperation. The BRICS
Africa, India, and Brazil, as well as the nations declared their desire to promote
socioeconomic development policy of rapid economic growth, deal with
Brazil, are to solve the problems that are macroeconomic shocks and financial
already present in each of these nations. volatility, support the multilateral
Agriculture, the digital economy, energy, trading system based on the principles of
the environment, health care, finances, the World Trade Organization (WTO),
labor, and employment, as well as and fend off the emergence of global
infrastructure and transportation, are uncertainty brought on by a variety of
among the main areas of interest for all factors, including the rise of unilateral
of the BRICS nations. The Moscow and protectionist measures that are at
Declaration of the 12th BRICS Summit odds with the spirit and principles of the
and the New Delhi Declaration of the WTO (BRICS Information Centre at the
13th BRICS Summit both included University of Toronto, 2020).
references to these areas of cooperation.
Some analysts claimed that the BRICS Expanding its Network
partnership has served as a new catalyst The confirmation that the five
for the world economy's recovery in BRICS member states are now seriously
addition to giving global development considering the introduction of a BRICS
cooperation a boost. reserve currency is the most important
The Strategy for BRICS Economic recent development from the group. The
Partnership 2025 establishes the new currency, which will be based on a
framework for member collaboration basket of each country's domestic
and specifies the development route for currencies—the Chinese yuan, the
BRICS in light of current economic Russian ruble, the Indian rupee, the
conditions and trends (University of Brazilian real, and the South African
Toronto, n.d.). By announcing their rand—will be developed to better serve
adoption of the BRICS Strategy, the the economic interests of the BRICS
nations show that they are committed to countries. Because of this development,

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recent reports that several nations have As a result, the node nations with
applied to join the BRICS countries pronounced national advantages and
should not be shocking. In addition to advantageous geographic locations, such
Algeria, Argentina, and Iran submitting as Argentina and Indonesia, will see that
formal applications, it is widely believed being able to benefit from the BRICS Plus
that Saudi Arabia, Turkey, Egypt, collaboration and ride the wave of the
Afghanistan, and Indonesia have also BRICS' rapid development is just a good
either already submitted applications or deal with big rewards. As a result, these
will do so soon. According to additional nations are likewise open to joining the
media reports, the BRICS union has also BRICS family. The growth of BRICS is also
received interest from Kazakhstan, essential for advancing a new, non-
Nicaragua, Nigeria, Senegal, Thailand, Western model of global development
and the United Arab Emirates (UAE). that is fair, environmentally sustainable,
The following three factors are and meets the socioeconomic
primarily responsible for BRICS' growth: requirements of the vast majority of
the first is the strong East- West conflict; people on earth, especially the poor.
the second is the development of "BRICS
Plus" collaboration; and the third is the Promoting Common Development
demand from "node" nations (Peng, The BRICS economic and trade
2022). The battle between the East and ministers agreed to increase cooperation
the West has gotten more attention in in areas like the digital economy, trade
the current setting of the ongoing investment, sustainable development,
Russian-Ukrainian conflict and the supply chain, and multilateral trade
escalating Sino-American rivalry. As a mechanisms. Further, the NDB had
result, both parties desire to strengthen approved more than 80 projects in
their alliances through growing their member countries by June 2022, with a
social networks. The BRICS countries total portfolio of about 30 billion US
have a strong incentive to accept other dollars, ranging from renewable energy
"node" nations with crucial strategic projects in Brazil to programs to upgrade
positions and flourishing economies to the Indian railway network and new toll
join the camp because they are emerging roads in Russia (NDB, 2022b).
economies and significant powers in the According to the bank, member
region. The drive for BRICS expansion is nations will receive 30 billion dollars in
stronger the more heated the East-West financial assistance from 2022 to 2026,
conflict is. The assistance of regional with 40% of the funds going toward
states, especially "node" nations with global warming mitigation. The BRICS
significant influence and crucial strategic Partnership on New Industrial
positions in the region, is essential to the Revolution (PartNIR) Innovation Center
ongoing expansion of BRICS Plus was established in Xiamen, east China's
cooperation which model will be further Fujian Province in December 2020 to
explained in the next section. Without give BRICS countries a foothold to utilize
these node nations' active involvement, technological innovation and digital
BRICS Plus cooperation will lack a transformation. It serves as a new and
sizable hinterland, making it challenging powerful impetus for development. The
to maintain or grow bigger and stronger. two parties agreed to prioritize

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cooperation in areas like artificial In 2017, China put forth the "BRICS
intelligence, the industrial Internet, Plus" cooperation model, which aims to
energy conservation, and environmental increase cohesion by fortifying the BRICS
protection through joint research, members' unity and coordination while
personnel training, and information also continuing to widen the "circle of
sharing on infrastructure and friends" of the BRICS in an effort to
sustainable programs in a memorandum pursue common development and
of understanding (MoU) they signed prosperity for all emerging markets and
earlier in June with the NDB to facilitate developing nations (BRICS, 2022b).
bilateral cooperation and promote the Foreign ministers who participated in
common development of BRICS the BRICS dialogues supported and
countries (XinhuaNet, 2020). agreed with the "BRICS Plus (+)"
According to Paul Krugman's New cooperation model after presiding over a
Economic Geography theory, most cross- video dialogue of foreign ministers
border trade occurs between nations between BRICS and emerging markets
that have comparable rates of and developing nations. The BRICS
production and returns to scale processes of interstate economic
(Robinson & Thierfelder, 2002). cooperation are related to the provision
Although the BRICS countries share the of favourable conditions for the
trait of being regional economic consistent creation of centres of
powerhouses, they differ greatly in other attraction for innovations, investments,
respects, including their systems of highly qualified personnel, and the
government, legal traditions, production of goods competitive on
commercial organization, and global markets in the common interstate
relationships between the state and economic space. The use of integration
society. Despite these contrasts, there tools and mechanisms will ensure the
are startling similarities in the way they system-wide implementation of
are developing their trade law capacities, economic development plans as well as
making internal institutional the intensification of cooperation not
adjustments, and engaging with the only in raw material sectors but also in
global trade regime. The demands and non-commodity sectors of the economy.
aspirations of many developing nations This creates the conditions for
have been satisfied by BRICS improving the quality of economic
cooperation in areas like poverty growth among member states over the
reduction, food security, green long term. The concept of BRICS+, which
development, industrialization, the aims to expand the organization's
digital economy, and connectivity. The membership, is extremely pertinent and
BRICS collaboration has not only given timely. A number of new emerging
global development cooperation a boost, market nations have emerged, including
but it has also served as a fresh catalyst Turkey, Iran, Indonesia, Bangladesh,
for economic growth on a worldwide Nigeria, and Mexico, to name a few. They
scale. simply cannot be disregarded given their
increasing economic and political
BRICS Plus Cooperation Models: relevance as well as their ability to
Expanding Collaboration advance regional and global peace. By

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including them, the BRICS+ mechanism
will become a more representative Challenges to BRICS
global and regional platform. Regarding their global ambitions,
These updated concepts are being such as, for example, in international
promoted to establish guarantees of financial governance, there are a number
trust and openness of the movement of of key challenges that BRICS may
capital in international financial law as anticipate moving forward. First, there
part of cooperation between the BRICS are significant differences between the
nations and other integration individual BRICS countries on the
associations. These include the mutual political, economic, military, and
recognition of non- discrimination in demographic levels. In this context, a
business, foreign exchange transactions, number of trends are crucial and
trade in systemic structural reforms, emphasize the growing disparities in the
preservation of the business economic development of the BRICS
environment for competition, nations, such as China's continued rise in
encouragement of novel investments, contrast to Brazil's decline. For China,
and financing of infrastructure capital this includes swift shift from production-
investment. The growth of ecosystems, led growth to consumption-led growth
the implementation of a system of direct as well as relatively fast rates of
financial settlements between the BRICS economic development (Arapova, 2018).
member countries and their partners in In contrast, Brazil experienced a severe
bilateral and, in the future, multilateral recession in 2015 following a decade of
formats, the development of digital uninterrupted economic growth, and the
currencies, and the gradual phasing out COVID-19 pandemic struck the nation as
of settlements in dollars and euros are all it was beginning to recover.
significant links. The BRICS interaction Disparities and asymmetries
format has repeatedly shown its within the BRICS are likely to worsen as
effectiveness in the modern world. The a result of the COVID-19 pandemic. China
association has attracted many players was the only BRICS country to register
in international politics over the course economic growth in 2020, and its GDP
of its existence. In the modern era, the increased in the first quarter of 2021,
BRICS association has successfully despite its modest growth compared to
assimilated into the framework of previous years (BBC, 2021). In addition,
international relations and strengthened BRICS countries have a very different
its position on the most important GDP structure. While Brazil is considered
interstate interaction platforms, like the as an agricultural country, Russia and
UN and the G20. The BRICS association South Africa are heavily reliant on their
may be needed in the modern era to trade in goods. In the meantime, the
strengthen the multilateral structure of Indian economy is dominated by
international relations. Through the services while China is dominated by
BRICS cooperation model, the BRICS manufacturing industries. There is also a
countries contribute to the balanced growing concern on India and South
development of emerging markets and Africa that are becoming increasingly
developing nations, making it a haven for protectionist in the past few years and as
many nations. the economic growth in BRICS countries

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are heavily dependent on low-cost labor on Chinese investment and cheaper
and significant mineral reserves without imports that would threaten their local
few innovations and investment in industries, while Russia has a security
human capital, such economic growth is concern on China’s growing dominance
unsustainable (Kralikova, 2014). in the Siberian and Far East region.
Second, there is still a lack of Similar to Russia, India also has major
institutional capabilities and governance conflicting interests with China on their
of BRICS. While BRICS has acted as a influence in South and Southeast Asia
collective actor as indicated by its 12 (Pandey, 2007; Renard, 2009; Narlikar,
summits and about 60 collective 2013; Luckhurst, 2013). Such conflicts
mechanisms, including the NDB and CRA, may escalate and further restrict
reforms are required to enhance BRICS’ cooperation among the BRICS member
greater role in global economic and affect future economic generation.
governance. Countries and other major
global actors still have to deal with each Policy Recommendations
of BRICS member individually on a Noting these challenges, policy
bilateral basis, rather than through one changes may be required to ensure
unified or collective platform. effective partnership of the grouping.
Even with the creation of the NDB, First, it is important for the BRICS
there are still substantive and members to address the economic
operational challenges to the institut- imbalances and discrepancies between
ional mechanism of BRICS. For example, its members, particularly to address
China has the majority of the share China’s dominance. China’s massive
capital of the Bank at $41 billion, much exports to the other members will pose
larger than Brazil, India, and Russia at trade deficit that may give negative effect
$18 billion each and South Africa at $5 on the existing BRICS cooperation.
billion (Iqbal & Rahman, 2017). It may be Second, structural reform must be
proven difficult to balance the diverging prioritized for BRICS members. For
interest of the BRICS members with instance, while collectively BRICS
China dominating the shares. countries are outperforming the
Nevertheless, the creation of the NDBs developed countries on several
remain important to accelerate reform economic indicators, there are ample
measures as well as providing room for BRICS countries to improve.
alternative source of funds apart from While BRICS members have
the World Bank and IMF – which will also demographic dividends of its 3 billion
equally strengthen the institutional people, the lack of opportunities given
mechanism of BRICS itself. the existing challenges might turn the
Third, with all the potentials, BRICS demographic bonus into serious
is considered less cohesive and less problems. In addition, reforms on
integrated as a bloc. While the economic democratic institutions, addressing
cooperation has improved, BRICS corruption, as well as lowering social
countries have the histories of conflict unrests are also crucial to ensure BRICS
such as on territorial disputes and countries in maintaining and improving
regional domination (Mostafa, 2015). their economic growth, with the aim to
Both Brazil and South Africa has concern

139
expand its markets and create more through the improvement in research
business and investment opportunities. and innovation and the upgrade of
Third, BRICS needs to strengthen domestic production.
its financial and monetary cooperation,
including by strengthening the CRA CONCLUSION
operational mechanism. In addition, Based on the existing BRICS’
BRICS capabilities to respond to possible financial institutions and mechanism as
financial crisis needs to be enhanced. well as its economic partnership
Some possible endeavors include the strategies, this essay examines that
establishment of the BRICS Local BRICS has the potentials to advance
Currency Bond Fund and strengthen multilateralism and rise as the new
coordination on macroeconomic policies world economic order, particularly as it
to ensure the effective and improved offers new alternatives on financing and
economic and financial system. reduce reliance to the current economic
Finally, the fourth, the initiation of order. However, BRICS countries also
NDB opens the possibilities for BRICS to face various challenges and
advance its collective weights as new uncertainties, particularly with regard to
emerging economies. Such condition the economic system imbalance, its lack
would be beneficial for the BRICS of institutional mechanism, and its lack
members to exert their political and of cohesion and integration. Such
economic influences through various challenges may affect the current
policy initiatives. The establishment of economic potentials and limit their
NDB should also pave way for BRICS advancement as the new rising power in
countries to deepen their global the current global order. To this end,
development partnership. Finally, as the further studies and research are
global order has leaned towards the required to draw a general conclusion as
growing interdependence, NDB may to whether BRICS has been successful in
provide alternative channel for promoting the reform on international
development assistance, shifting from financial institutions as well as in
the traditional methods of development promoting economic partnership among
assistance to a more equal partnership its members.
that is more inclusive and sustainable

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