The rise of the BRICS in the global economy
Author(s): Peter Lowe
Source: Teaching Geography , Summer 2016, Vol. 41, No. 2, Focus on making progress
(Summer 2016), pp. 50-53
Published by: Geographical Association
Stable URL: http://www.jstor.com/stable/26455170
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide
range of content in a trusted digital archive. We use information technology and tools to increase productivity and
facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected].
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at
https://about.jstor.org/terms
Geographical Association is collaborating with JSTOR to digitize, preserve and extend access to
Teaching Geography
This content downloaded from
111.68.96.41 on Sun, 25 May 2025 06:41:11 UTC
All use subject to https://about.jstor.org/terms
Peter Lowe
The rise of the BRICS in the
global economy
Teaching about the global economy entails
The BRICS have keeping up-to-date with an ever changing and Key features of the BRICS
emerged as a complex pattern of economic trends and political • The BRICS encompass more than 25% of
powerful force in relationships. Globalisation has brought about the world’s land area and 40% of the world’s
the global economy, a shift in economic and political power away population.
with the potential to from the advanced economies of the West, but
• All the BRICS are members of the Group of
significantly change where exactly is the new epicentre of the global
Twenty (G20) major economies.
economy likely to be? The BRICs acronym was
the current world • The economies of the BRICS have sustained
first introduced by Jim O’Neill, global economist
order. Peter assesses strong growth in recent decades. Four of them
at Goldman Sachs, in 2001. Brazil, Russia, India
how the BRICS still and China were identified as the countries with enjoy annual GDPs exceeding US$1 trillion.
have a long way to the greatest growth potential in the early 21st • The combined GDP of the BRICS reached
go to reach world century, but there was no expectation that they US$17 trillion in 2014, representing just under
dominance and would ever co-operate closely with each other. 22% of the global economy.
suggests that in Yet in 2009 the four BRICs held their first summit, • The BRICS hold significant foreign currency
order to take centre and two years later they were joined by South reserves, accounting for around 40% of the
stage in tomorrow’s Africa, creating the five-member BRICS group world’s total.
global economy they (Figure 1). Any new global grouping is intriguing,
but early adoption of a case study on the BRICS • The BRICS are carrying out increasing
need to overcome quantities of trade between themselves.
has proved risky for teachers and students! As
individual economic • The BRICS have changed their political
recently as 2011, exam boards still viewed the
challenges, as systems to embrace global capitalism.
BRICS as an assortment of countries with similar
well as remaining economic characteristics rather than a legitimate • Political co-operation between the BRICS is
committed to ‘grouping of nations’. Nevertheless, recent creating a new, potentially powerful, global
long-term political summits have provided increasing evidence that grouping.
co-operation. the BRICS have ambitions to organise themselves
into a ‘political club’, allowing them to convert
their economic power into greater geopolitical Figure 1: The key features of the BRICS countries.
influence (Figure 2).
Although the BRICS share certain advantages,
they possess different strengths. China Companies originating in the BRICS have
has become a dominant global supplier of inevitably become more international, with China
manufactured goods, while India has emerged in particular accounting for a significant share of
as a key global provider of services. Brazil and the world’s largest companies (Figure 3). Energy,
Russia have become major global exporters of banking, engineering and construction companies
raw materials, resources that China and India have been most successful in growing their
require for their industrialisation. The building of operations. The challenge for companies from
oil and gas pipelines between Russia and China is the BRICS countries is to diversify into new
a signal of their intent to co-operate on projects sectors, particularly technology-related, promote
that provide mutual benefits. South Africa has a more innovation and develop stronger global
diversified economy, and is a low-risk destination brands that have a greater presence in European
for investment in Africa. and North American markets.
Figure 2: BRICS Economic
Data. Source: World Bank
Brazil Russia India China S Africa
(data for 2014).
Population 200 142 1250 1368 53
(millions)
Total GDP 2.35 1.86 2.07 10.37 0.35
(US$ trillions)
Total GDP 7th 10th 9th 2nd 33rd
(Global Rank)
Per capita GDP 11385 12736 1596 7590 6478
(US$)
Exports 243 520 343 2340 98
(US$ billions)
Imports 242 324 508 1960 102
Summer 2016
© Teaching Geography (US$ billions)
50
This content downloaded from
111.68.96.41 on Sun, 25 May 2025 06:41:11 UTC
All use subject to https://about.jstor.org/terms
Figure 3: Companies
Country Revenue Profit
Global Rank Company Sector originating in the BRICS
of Origin (US$ billions) (US$ billions) countries ranking in the
top 100 globally. Source:
2 Sinopec Group Energy China 447 5.2
Fortune Global 500 (2015).
4 China National Energy China 429 16.4
Petroleum
7 State Grid Energy China 339 9.8
18 Industrial and Banking China 163 44.7
Commercial Bank of
China (ICBC)
26 Gazprom Energy Russia 144 4.1
28 Petrobras Energy Brazil 144 -7.4
29 China Construction Bank Banking China 140 36.9
36 Agricultural Bank of Banking China 130 29.1
China
37 China State Construction Engineering and China 130 2.1
Engineering (CSCEC) construction
43 Lukoil Energy Russia 123 4.8
45 Bank of China Banking China 121 27.5
51 Rosneft Oil Energy Russia 114 9.0
55 China Mobile Telecommunications China 108 10.5
Communications
60 SAIC Motor Automobiles China 102 4.5
71 China Railway Engineering and China 100 0.9
Engineering construction
72 China National Energy China 99 8.6
Offshore Oil
77 Noble Group Commodities Trading China 98 0.1
79 China Railway Engineering and China 96 1.2
Construction construction
87 China Development Bank Banking China 90 15.9
94 China Life Insurance Insurance China 87 1.7
96 Ping An Insurance Insurance China 86 6.4
Combining the attributes of each member will potential to become a significant challenger
make the BRICS a potentially formidable global to the World Bank, thereby increasing the
grouping. However, the BRICS economies still international power of the BRICS economies.
have a long way to go to reach world dominance,
and their combined GDP is not expected to The 2014 BRICS summit also included proposals
overtake the Group of Seven (G7) economies to set up a US$100 billion fund to steady the
until at least 2030. currency markets. This would provide a buffer for
any of the BRICS during times of capital volatility,
resulting from currency devaluation or sudden
Cementing the BRICS capital flight. Essentially, the fund would act as
Many observers see the BRICS alliance as an alternative to the IMF. Russia’s experience of
a counterweight to Western-dominated capital flight, since its annexation of Crimea and
organisations, such as the World Trade continuing role in the Ukraine crisis, illustrates the
Organisation, the World Bank and the value of such a fund.
International Monetary Fund. At their 2014
summit, the BRICS announced the creation The BRICS may have other reasons for wishing
of the New Development Bank (NDP). This to strengthen the new grouping. China could use
Shanghai-based bank will help to finance future the BRICS alliance as a safer way to extend its
infrastructure and sustainable development growing world economic influence, rather than
projects in each member country, as well as in being singled out for its unilateral actions. In
other emerging economies. The five nations particular, South Africa’s inclusion in the BRICS
agreed to put up an initial US$2 billion each may translate into greater support for China’s
in financing, with a further US$40 billion in trade and investment ambitions in Africa. India
guarantees, eventually rising to US$100 billion. has lacked political recognition globally, despite Summer 2016
© Teaching Geography
If the promises are fulfilled, the NDP has the its immense size, and could become much 51
This content downloaded from
111.68.96.41 on Sun, 25 May 2025 06:41:11 UTC
All use subject to https://about.jstor.org/terms
stronger under the BRICS umbrella. Russia has Future of the BRICS
struggled to maintain close links with former
Which BRICS are built to last, and will the BRICS
Soviet republics, and so needs alliances elsewhere. alliance hold? One problem with predicting the
Its hosting of both the 2014 Winter Olympics and future progress of the BRICS is the fact that each
the 2018 World Cup indicates a desire to raise country represents a very different kind of emerging
its status. Brazil has long been a major regional market. Equally difficult is the fact that China is in
power in Latin America, but is anxious to extend a league of its own compared to the others, since
its influence onto the world stage. Mirroring China is the real power in the BRICS group, and has
Russia, Brazil’s hosting of the 2014 World Cup effective veto power over any BRICS initiatives.
and the 2016 Summer Olympics are testament to Despite the balance of global economic power
its global ambitions. shifting towards the BRICS during the past decade,
there remain doubts over the sustainability of
their economic policies. Each BRICS country faces
Crumbling BRICS a different set of obstacles and challenges, which
Despite the positive developments of recent may thwart its individual global ambitions, and
years, the likelihood of the BRICS maintaining therefore the ability of the group to significantly
a strong, powerful grouping is not a foregone change the current world order.
conclusion. The strength of this alliance could
easily be diminished by their diverse individual Brazil
ambitions. They are potentially fierce competitors Brazil has been the land of the future for many
in global trade, and their investment ambitions decades, but only since the turn of the century has
in new markets, including the growing interest it looked like realising its enormous potential, and
in gaining an economic foothold in the African even now is experiencing a lower growth rate than
continent, risk creating renewed rivalry between the BRICS average. Democracy is relatively recent
them. A further source of conflict between the in Brazil, and concerns over corruption, income
BRICS revolves around the simmering tensions inequality and rising levels of debt need to be
created by strategic rivalry. Russia, China and addressed. Brazil’s strength is its diverse economy,
India, in particular, have overlapping spheres of including agricultural exports, biofuels, a hi-tech
sector linked to aerospace, and a significant degree
influence, all wanting to exert their dominance
of energy security. These attributes should provide
as regional powers in Asia.
it with the potential for faster future growth.
Furthermore, most of the BRICS have had to
battle negative economic news in the past 18 Russia
months. A Chinese-led global slowdown has Russia has re-emerged as a potential global
unsettled markets worldwide, with share prices economic superpower, but its success has been
plummeting on the Shanghai Composite index, almost totally reliant on periods of high global
China’s main benchmark. The reliance of Brazil, prices for its substantial reserves of oil and gas. The
Russia and South Africa on China’s demand for current price slump is hitting it hard, and commodity
raw materials has put their economies under price volatility will always be a threat to sustaining
its economic prosperity. Furthermore, its continuing
pressure. Among the BRICS countries only India
role in Ukraine is creating geopolitical tensions
is enjoying a rebound in GDP growth, with falling
with its neighbours. It also has to wrestle with the
commodity prices proving a boon to its economy.
challenges of a weak democracy, high levels of
corruption, and an uncompetitive manufacturing
sector. Nevertheless, Russia has the highest per
capita income among the BRICS, and enjoys
strengths in scientific research and technological
development to boost its future growth.
India
India can boast globally-recognised companies
in both manufacturing and services. Its main
strength lies in the offshoring and outsourcing
service sector, especially information technology
services and customer call centres. Furthermore,
it enjoys a very youthful population, with a
reputation for innovation and entrepreneurialism.
However, it has the challenge of a dual economy
to deal with. Poverty is acute in its rural areas
(Figure 4), whereas its cities have attracted jobs
and investment, largely due to their educated and
IT-literate workforce. Poor transport infrastructure,
energy shortages, corruption and bureaucracy
continue to pose problems. Nevertheless, India’s
youthful population will ensure the maintenance
Figure 4: India has the challenge of a dual economy. Poverty is
of an economically healthy demographic profile
Summer 2016 acute in its rural areas, whereas its cities have attracted jobs and for decades to come, giving India the potential for
© Teaching Geography
52 investment. Photo: Ruth Totterdell. fast economic growth.
This content downloaded from
111.68.96.41 on Sun, 25 May 2025 06:41:11 UTC
All use subject to https://about.jstor.org/terms
China
China has enjoyed a spectacular rise to become
one of the world’s economic giants. The ‘growth
gap’ between China and the other BRICS is largely
the result of China’s early focus on ambitious
infrastructure projects, which attracted inward
investment, and allowed home-grown companies
to thrive. It remains the world’s ‘manufacturing
workshop’, enabling it to acquire enormous
foreign exchange reserves. These reserves are
now being invested abroad, allowing Chinese
companies to develop into TNCs. Yet China still
has significant problems to contend with. The
country’s credit boom of recent years risks an
overheated economy, unmanageable debts,
and the possibility of a serious economic crash.
Furthermore, its possible disregard for human
rights and democracy could lead to protest and
unrest, destabilising the economy. Despite these
problems, China has been the biggest contributor
to global growth since the 2008 financial crisis.
If any country can be successful at engineering its
economy away from exports, and towards services
and domestic consumption, that country is China.
South Africa
South Africa has delivered progress to all its
citizens in the 20 years since black-majority rule
replaced the injustices of the apartheid system.
The country’s surprise entry into the BRICS
alliance appears to be for astute geopolitical
reasons, since it links the original BRIC countries
with the most advanced economy on a fast- India and Brazil have enough strengths to suggest Figure 5: The prosperous
growing continent, providing the BRICS with new that, within two decades, they could be major Central Business District of
trade and investment opportunities across Africa. Cape Town. South Africa has
players in what will have become a more multi- the advantages of abundant
South Africa has the advantages of abundant polar world. Russia faces the greatest challenges mineral resources, modern
mineral resources, modern infrastructure and to regain its global influence, but could still infrastructure and a strong
a strong financial sector (Figure 5). However, achieve its ambitions, particularly if commodity financial sector. Photo: Nick
educational attainment among the black demand picks up. South Africa is likely to remain Totterdell.
community is a concern, high unemployment in a league of its own, a major influence in Sub-
threatens stability, and wildcat strikes are Saharan Africa, but not a global player.
crippling the economy. The hope is that its
export-led economy should benefit as global The strength of the BRICS alliance will also be a
demand picks up. factor in each country’s individual fortunes. The
agreements that emerged from their 2014 summit
could mark a real commitment to establishing
Conclusion a powerful new global grouping, capable of
The long-term importance of the BRICS is difficult reshaping the global economic landscape. Yet, as
to predict, but they are certainly expected to Henry Ford once remarked, ‘Coming together is a
become much more powerful players in the beginning; keeping together is progress; working
geopolitical world landscape of the future. together is success.’ Only time will tell if the BRICS
China has the strongest claim to already be can work together long-term to create a more
regarded as a true force in the global economy. equitable and multipolar world order. | TG
References and further reading
Al-Atraqchi, F. (2015) ‘2015: The year of blaming China?’, The BRICS Post. Available online at www.thebricspost.com/2015-
the-year-of-blaming-china/#.VpLXBzY_k4M (last accessed 10 January 2016).
Bilbao-Osorio, B. et al. (2015) ‘The Global Competitiveness Report 2014–2015’, World Economic Forum. Available online at
www.reports.weforum.org/global-competitiveness-report-2014-2015 (last accessed 10 January 2016).
Elliott, L. and Inman, P. (2015) ‘China syndrome: How the slowdown could spread to the Brics and beyond’, The Guardian.
Peter Lowe is Head
Available online at www.theguardian.com/business/2015/aug/22/could-china-crisis-spread-to-emerging-markets (last
of Geography at
accessed 10 January 2016).
Wellingborough School.
Fortune Global 500 (2015). Available online at www.fortune.com/global500 (last accessed 10 January 2016).
Lowe, P. (2015) The Rise of the BRICS in the Global Economy. Available as an eBook on the iBooks & Kindle Stores. Email: petelowe@
O’Neill, J. (2001) ‘Building Better Global Economic BRICs’, Global Economics Paper No: 66. Goldman Sachs. geographyibooks.com
Summer 2016
© Teaching Geography
53
This content downloaded from
111.68.96.41 on Sun, 25 May 2025 06:41:11 UTC
All use subject to https://about.jstor.org/terms
