Political Economy Students' Journal

Introduction 

​

The BRICS bloc, formed by Brazil, Russia, India, China, and South Africa, is one of the most prominent groups of emerging economies. While its development has brought advantages for this group of countries, it is also true that this process has impacted other economies in the world. The objective of this essay is to discuss the affirmation that ‘the ascent of emerging economies, such as the BRICS, is purely beneficial for poorer developing countries’. With this aim, I will bring some pros and cons arguments from recent literature. 

​

Firstly, it is important to contextualize the BRICS. The idea of BRICS as an organized group of countries was formulated by Goldman Sachs’ chief economist Jim  O'Neil, in 2001, in a study entitled "Building Better Global Economic BRICs". In 2006,  the concept gave rise to a grouping itself, incorporated into the foreign policy of Brazil,  Russia, India, and China. In 2011, on the occasion of the III BRICs Summit, South Africa joined the group, and it adopted the acronym BRICS. The principle behind this alliance is to be a protagonist force in the international political arena, defending their interests and positioning themselves as a counterpoint to the supremacy of developed economies from the global North (Stuenkel, 2020). 

​

The emergence of this new growth pole had a relevant push after the economic crisis in 2008, when advanced economies had difficulties in overcoming the crisis and these new economies seemed to have a better recovery process. While the average GDP growth of developed economies in the period from 2008 and 2014 was 0.6, in developing countries this indicator reached 5.0 in the same period. For the BRICS, the numbers were: Brazil 2.7; Russia 1.6; India 6.3; China 8.8; South Africa 2.0 (UNCTAD,  2015). Between 2000 and 2011, the BRICS countries’ share in global output increased from 8% to 19%. In 2011, with the integration of South Africa as part of the group, they accounted for 20% of the total global GDP. More recent estimations show that the BRICS  group contains 43% of the world’s total population, almost 37% of global GDP (over US$16 trillion), and possesses a huge trove of global currency reserves of US$4 trillion.  Furthermore, China has surpassed Germany and become the world’s top exporter, being recognized as the largest economy on the planet in terms of purchase and power parity,  and a global manufacturing hub. 

​

Considering the stress of advanced country markets in Europe and North America,  the search for alternatives has turned to growing emerging markets and the possibility of creating more self-sustaining South-South value chains. As a result of this trend,  promoting South–South trade and investment as a means of maintaining growth momentum in developing countries has become a focus of the international development debate. The average annual growth rate of South-South trade increased from 14% in the period from 1990 to 1999 to 16% in the following decade (2000–2010), and its share in world trade increased from 7.4% in 1990 to 15.4% in 2010. The share of South-South exports in total merchandise exports of developing countries varied from 33.7% in the  90s to 57% in 2012 (UNCTAD, 2015). Manufactured goods dominate the product composition of the South-South trade. While the share of agricultural products in South-South exports was around 17% in 2011, its share in exports of manufactures was 59%.  These numbers were undoubtedly influenced by the growth of China, which is the biggest economy of the BRICS group and accounted alone for almost 50% of the Southern network trade. 

​

With the aim of addressing gaps in governance, infrastructure, and finance, the  BRICS group created the New Development Bank (NDB), which started operating in 2016  in Shanghai. The establishment of the NDB signifies the group's efforts to promote economic stability and financial cooperation, enhancing infrastructure development, trade facilitation, and investment opportunities among member countries. Further, this institution reinforces BRICS’ commitment to South-South cooperation, which is a form of contributing to the development of other countries from the global South. In this same path, it was created the Contingency Reserve Arrangement (CRA), founded as a safety net to help member states in financial crises, and viewed as a countermeasure to the  International Monetary Fund (Nuruzzaman, 2020). 

​

These efforts for influencing and changing the global financial system can also be seen as a means of seeking new ways of projecting the growing economic power of the  BRICS away from the Western-led international financial order represented by institutions such as the International Monetary Fund and the World Bank, creating institutions where they can have greater decision-making power and a higher possibility of gaining effective and practical access to funds. As the USA has remained the preponderant economy in the world since the end of World War II, the post-war world has been completely driven by US values and interests. This world order commanded by the  US has reinforced the dominance of the global North in relation to the global South. The rising of the BRICS, even with a questionable probability of shifting the global order, plays an important role in challenging and rebalancing these relations (Nuruzzaman,  2020). 

​

BRICS nations have achieved good progress in areas such as information technology, renewable energy, biotechnology, space exploration, healthcare, education, and poverty reduction, and this knowledge may serve not only for their benefit but also for helping and cooperating with their partners. Considering the historical and colonialist context, the ascent of the BRICS may represent a real voice of peripheral countries. The  BRICS nations are active participants in multilateral platforms such as the United  Nations, G20, World Trade Organization (WTO), and various regional organizations.  They can leverage these platforms to influence the global development agenda by advocating for the interests and priorities of developing countries. The BRICS can collaborate on common positions, propose policy reforms, and advocate for a fairer representation of developing countries in global decision-making processes, bringing a  variety of benefits to the global South.

 

Benefits for poorer countries

 

A recent report made by the OECD (2016) estimates that over 80% of external resources received by developing countries come from non-official development assistance, which has been traditionally made by developed economies from the global  North. Due to this phenomenon, which can be understood as an outcome of the ascent of emerging economies, many authors have been investigating the effects of development aid from BRICS on poor countries. Some of them demonstrated the benefits of this aid to the development of recipient countries, which can be illustrated by the relationship between  China, the biggest economy of the BRICS, and Africa, the continent that concentrates the poorest countries in the world. 

​

Xu & Zhang (2022), for example, showed that the infrastructure aided by China to African countries can increase the local GDP per capita growth rate by about 3.1  percentage points. Countries such as Kenya, Ethiopia, Tanzania, Gabon, and Ghana, which have received more Chinese aid projects, have experienced better economic performance than other African countries. GDP per capita in Ethiopia, for instance, has grown nearly  8% annually since 2004, and the proportion of the population out of poverty in Kenya or  Tanzania has also increased. The authors defend that one reason for these benefits could be that, differently from the traditional model of Western aid, Chinese aid is more centered on infrastructure projects, which can drive economic growth. In addition, these projects seemed to be in line with local needs and this also facilitates the acceptance by African people. Moreover, an increase in trade between China and Africa may offer new opportunities for some African countries to emerge out of the underdevelopment and poverty. Currently, China is the main trade partner of African countries and the largest foreign investor, with loan commitments estimated at US$153 over the period from 2000 to 2019. 

​

In contrast with other regions of the world, where the majority of people are employed in the secondary and tertiary sectors, a large share of Africa's labor force works in agriculture and related activities, where average productivity is lower.  Considering the poor performance of farming in Africa, an increase in Chinese investment may contribute to reviving agricultural production through technology transfer, the use of improved seed varieties, opportunities to access international markets, job creation,  greater tax income, and expertise. In this regard, Calabrese & Tang (2023) conducted a  comprehensive review to examine how Chinese firms contribute to economic transformation in Africa. While the partnership between African countries and China dates back to the years of 1950, the dramatic growth of the Chinese economy in the 2000s  encouraged Chinese firms to invest abroad, accelerating the engagement of these countries beyond aid. Trade relations with China enable African countries to diversify their production away from just commodities, and importing from China has been found to increase productivity among African firms through competition and skills upgrading. Furthermore, capital goods imported from China are cheaper and better suited to the needs of African firms, ensuring higher profits, wider availability of spare parts, and repair support when compared to those imported from the global North. The increased presence of Chinese firms in Africa might have positive outcomes since these firms are willing to incur short-term losses in order to reach domestic markets in Africa, which can be an opportunity for African countries to boost production capacity and consumer markets. The study also highlights the diversification of Chinese investments, that have been allocated for the manufacturing sector, services, construction, extractives,  telecommunications, e-commerce, etc. Taking into account that these sectors are more productive compared to the traditional agricultural sector, Chinese investment can contribute positively to structural changes and economic development. 

​

Benefits can also be seen in the arena of energy transition. African countries have been receiving foreign investments, especially from emerging economies such as the  BRICS, for the expansion of renewable energy projects. Again, China is the largest investor in this sector. Chinese finance for energy projects in Africa reached more than  USD 30 billion in the period from 2000 to 2016. Regarding renewable sources, 60% of hydropower projects in sub-Saharan Africa from 2009 and 2018 were financed by China,  and Chinese investments in solar power plants and wind energy are also relevant. Lema et al. (2021) investigated the co-benefits of renewable energy projects financed by China in Africa, beyond the benefits related to clean energy generation itself. When it comes to job creation, the construction phase of those projects seems to benefit local people, once  70-90% of total project employers are constituted by local workers. However, it is important to note that highly skilled activities are still mainly carried out by Chinese employees. In the operational phase, it is possible to see some knowledge transfer from  Chinese to local staff, which is also a co-benefit of those projects to the African people.  Nonetheless, there is evidence that the use of local manufacturing and services is limited since the main components are imported from China or other countries more economically advanced. Another interesting finding of this study is that, overall, the negotiating power of  African governments is very limited, so core decisions regarding the nature of projects,  technology selection, contracts, etc, are basically taken by China, with low influence of local interests. Moreover, despite the fact that some knowledge was transferred to local workers, there wasn’t a broader transfer of capabilities related to the preceding infrastructure delivery process, meaning that the capacity to create these kinds of projects by themselves is still very limited. With this, it is possible to conclude that  Chinese aid was important to develop renewable energy projects in Africa, however, co-benefits generated by this aid are insufficient to make African countries autonomous to continue developing this industry sector. 

​

China is currently the country that provides the most foreign aid to Africa independent of the OECD's Development Assistance Committee. Nevertheless, other  BRICS countries provide relevant financial aid to other developing countries as well.  Development assistance provided by India in the fiscal year 2015-16 reached nearly US$  2.5 billion, surpassing many traditional OECD donors in the same period, such as South  Korea or Spain (Zhang & Shivakumar, 2017). The economic growth of India made it possible for the country to disburse aid to more than 160 nations in 2016, especially its less developed neighbors like Bhutan, Nepal, Sri Lanka, Bangladesh, and Pacific Island  Countries (PICs). Indian aid to PICs, for instance, is focused on capacity building,  information technology, industrial development, renewable energy, and assistance for climate adaptation. Besides the benefits for recipient countries, this aid serves Indian  diplomatic and commercial interests, supporting the image of India as a nation that has the potential to play a relevant role in maintaining regional stability and promoting development. 

​

Brazil was internationally recognized as an aid donor in 2003 when aid activities remarkably increased in size and scope. The annual spending of the Brazilian  Cooperation Agency increased from US$ 0.24 million in 2004 to US$ 21.5 million in  2010, and this was the first year that incoming and outgoing aid were comparable. In  2013, this figure reached almost US$ 400 million. The focus of Brazilian aid is mainly  Latin America and Lusophone countries. Agriculture, health, and education are among the prioritized areas of cooperation. Countries with a lower GDP per capita have a higher probability of receiving Brazilian aid, demonstrating the needs-based approach adopted by Brazil (Asmus et al, 2017). 

​

Russian aid policy, adopted in 2007 and complemented in 2014, is focused on poverty reduction, disaster relief, development of trade and economic partnerships. In the period between 2010 and 2015, Russian aid has sharply increased from US$520.9  million to US$1.7 billion. Latin America, Eastern Europe, and Central Asia have been focal regions, and Africa is gaining importance over the years. Sectors such as agricultural machinery, humanitarian operations, health, and food aid are some examples of areas that usually receive Russian aid (Asmus et al, 2017). 

​

Besides financial aid, emerging economies development have the potential to influence other developing countries’ economies in many other ways. As regional important players, they can promote regional integration, enhance economic cooperation,  support development initiatives, and foster regional stability, economic growth, and social development. The Regional Economic Outlook: Western Hemisphere (2012), developed by the IMF, examined how economic fluctuations in Brazil could influence South American countries, in a process known as spillover. Considering Brazil is the biggest regional economy, this report found that the Brazilian economy has a strong influence on  Southern Cone countries (Argentina, Uruguay, Paraguay, Bolivia, and Chile). This fact is explained by trade linkages between Brazil and its neighbors, which facilitate the transmission of shocks originating in Brazil and the amplification through Brazil of global shocks to these countries. These findings demonstrate that growth and stability in  Brazilian economic activities can benefit its South American poorer neighbors.

​

The other side of the same coin 

​

As Chinese aid commitments to Africa have been increasing significantly, a lot of criticism has been raised regarding the motivations for donations. China is accused of providing assistance by self-interest and also of fostering authoritarian regimes, as the aid is offered without considering the recipients’ positions relative to democracy,  corruption, or human rights, for instance. Hoeffler & Sterck (2022) analyzed China’s aid allocation from 2000 to 2012 and demonstrated that indeed Chinese aid for African countries has sharply expanded in this period, from 0.4 billion USD in 2000 to 6.7 billion  USD in 2012, as well as the number of recipients. Another important finding of this study is that there is an automatic link between Taiwan's recognition and the absence of Chinese aid commitments. Furthermore, GDP per capita is negatively associated with Chinese aid, i.e. more aid is committed to poorer countries, regardless of the policy environment of the recipient. These findings may support the critics of self-interest, but the commitment to more aid to poor countries challenges this assumption, especially considering that,  according to the study, there is no evidence that commercial interests or access to natural resources are associated with Chinese aid allocation. With this, it is possible to observe that Chinese aid can benefit poorer countries, but these donations are not purely beneficial. Since political regimes, control of corruption and other democratic values adopted (or not) by recipient countries are not determinant factors for aid allocation, Chinese commitments to poor developing economies can be also detrimental. 

​

In this same path of qualifying Chinese aid, some scholars reveal that the intensification in China-Africa trade relations pushes African countries to remain commodity producers and exporters. Even with a rise in commodity prices, which can be seen as positive, it can prompt an inflow of foreign currency into African economies,  leading to currency appreciation and loss of competitiveness. By incentivizing African firms to import rather than produce, this process promotes systemic consequences. An increase in imports from China contributes to the deindustrialization of some African countries (Calabrese & Tang, 2023). 

​

Some studies also point out to violation of international labour standards in  Chinese firms in Africa. The application of the Chinese non-interference principle when granting financial aid is favorably received by many African leaders, who want to maximize self-determination and minimize non-tariff trade barriers, but this requires hiding a potential consequent decline in socio-environmental standards. A report made by the organization Human Rights Watch in 2011 examined the labor practices of Chinese state-owned companies in the copper mining industry in Zambia. Abusive employment conditions found were related to poor health and safety standards, including poor ventilation, hours of work in excess, the failure to replace workers’ personal protective equipment that is damaged while at work, and the threat of being fired should workers refuse to work in such unsafe places. One instrument that can protect workers from these practices is their organization in labor unions. However, the report also shows that several Chinese companies suppress workers’ right to join labor unions and retaliate against union representatives. Isaksson & Kotsadam (2018) reinforce this evidence. As China has little tradition of union and organized labor, it seems that this pattern is being transferred to countries that receive Chinese aid. According to this article, people living in areas close to Chinese project sites have a smaller probability of being a union member than individuals in the same country who do not live in the vicinity of those projects. This evidence contrasts with aid from other donors. Western donors, for instance, often tie their aid to economic and political reforms in recipient countries, and their vision of African development tends to focus on improvements in democracy, human rights, and governance. Furthermore, whereas many Western donors have shifted their focus toward social sectors, often with a clearly expressed ambition to promote democratization and civil society development in recipient countries, the Chinese instead tend to emphasize infrastructure projects and productive activities. The same study showed that there is no statistically significant difference in union involvement between people living close to ongoing World Bank projects and people living in other areas, supporting the evidence of this negative effect of Chinese aid when compared to Western aid.

 

Benefits for the rich countries 

​

In 2011, BRICS countries accounted for 26% of global landmass. In 2017, around 19% of global investment inflows were channeled into capital and land-intensive infrastructure projects, which influenced a substantial transformation in land-use patterns in this group of countries (Chatterjee & Naka, 2022).

​

In Brazil, for instance, it was expressed through a significant expansion of industrial large-scale farming. A relevant part of this agro-industrial production is exported to countries in the global North, that have scarce lands to produce the necessary amounts of agricultural products to supply their internal market. In 2022, Brazilian agribusiness exports reached US$ 10.5 billion, a 65.8% increase compared to the same month in 2021. Soy, beef, coffee, and chicken are the main commodities exported, and the European Union and the US are the second and third most important importers,  respectively (CNA, 2022).

​

To feed these global markets, huge hectares of Brazilian lands have been converted into soy plantations. Lands that sometimes were part of indigenous territories or important areas for ecosystem conservation have been transformed into monocultures,  which generates a variety of conflicts, manifested through long judicial battles with the state, violence, and death amongst the different social groups. The “Movimento dos  Trabalhadores Rurais Sem Terra” (MST) is the biggest social movement in Latin America and certainly the main opposition force against this monocropping domination of  Brazilian lands. With more than 500,000 families organized in 1,900 community-based associations, and a clear goal of promoting agrarian reform and land redistribution,  MST demonstrates the social value of land and other forms of production that are not only socially just but also environmentally friendly. While the dominant and conventional agrobusiness is the main driver of deforestation and, consequently, greenhouse gas emissions in Brazil, MST is currently the biggest Brazilian producer of organic food, like rice (MST, 2022). Despite these benefits produced by MST through its long 40-year history, the movement is frequently involved in land conflicts. According to the Rural  Conflicts Report (CPT, 2023), more than 180,000 families experienced land conflicts in  2022 (11% were MST families), an increase of 16,7%. Farmers are responsible for 23% of the conflicts, followed by the Government, companies, and land grabbers. This reality reveals that local dynamics and interests are an important part and must be considered to understand the political-economic context of the BRICS in the global economy (Chatterjee & Naka, 2022).

​

The variations of meanings and interests around land and its role beyond production in the current context of neoliberal economic growth, which happens not only in Brazil but in other BRICS countries as well, show that this kind of development adopted by Brazil has many disadvantages for the country itself. Further, while it is true that China is the most important buyer of Brazilian agri-commodities, it is also a fact that rich countries benefit more from this model of development that prioritizes the exportation of primary goods instead of manufactures. Environmental problems and social conflicts are some of the negative consequences assumed by emerging countries, while the global North does not need to internalize these impacts. It shows how rich countries also benefit from emerging economic development and can remain the dominant power. 

 

Conclusion 

​

Considering the arguments presented in this essay, it is possible to conclude that the relationship between emerging economies and developing countries is complex and has many dimensions. While some evidence shows that poor economies, such as African countries, may benefit from the ascent of emerging economies, such as the BRICS,  through increasing trade relations and investments, other studies presented the disadvantages of such interaction. At the same time that Chinese companies can contribute positively to  African development through investments in productive sectors, the benefits of this development are limited, since the knowledge transfer is restricted and does not enable further autonomy. Moreover, as the ascent of BRICS’ economies might also benefit rich countries, it is reasonable to conclude that this ascension is not purely beneficial to the poorer developing countries. 

​

References 

​

Asmus, G.; Fuchs, A.; Müller, A. 2017. BRICS and Foreign Aid. Working Paper  43. In: BRICS and the Global Economy.  

Calabrese, L.; Tang, X. 2023. Economic transformation in Africa: what is the role of Chinese firms? Journal of International Development, 35 (1), 43-64.  https://doi.org/10.1002/jid.3664 

CNA, 2022. Boletim do Comércio Exterior do Agronegócio. Confederação  Nacional da Agricultura. https://cnabrasil.org.br/noticias/exportacoes do-agro-alcancam-us-10-5-bilhoes-em-fevereiro-de-2022 

Comissão Pastoral da Terra. 2023. Conflitos no Campo – Brasil 2022. Centro de  Documentação Dom Tomás Balduíno da CPT. 

Chatterjee, M & Naka, I. 2022. Twenty years of BRICS: political and economic transformations through the lens of land. Oxford Development Studies.  50:1, 2-13, DOI: 10.1080/13600818.2022.2033191 

Hoeffler, A. & Sterck, O. 2022. Is Chinese aid different? World Development, 156,  105908. https://doi.org/10.1016/j.worlddev.2022.105908 

Human Rights Watch. 2011. Labor Abuses in Zambia’s Chinese State-owned  Copper Mines. https://www.hrw.org/report/2011/11/04/youll-be-fired if-you-refuse/labor-abuses-zambias-chinese-state-owned-copper 

International Monetary Fund. 2012. Regional Economic Outlook: Western  Hemisphere. Rebuilding Strength and Flexibility. IMF, Washington, DC. 

Isaksson, A. & Kotsadam, A. 2018. Racing to the bottom? Chinese development projects and trade union involvement in Africa. World Development, 108,  284-298. https://doi.org/10.1016/j.worlddev.2018.02.003 

Lema, R.; Bhamidipati, P.L.; Gregersen, C.; Hansen, U.E.; Kirchherr, J. 2021.  China’s investments in renewable energy in Africa: creating co-benefits or just cashing-in? World Development, 141, 105365.  https://doi.org/10.1016/j.worlddev.2020.105365  

Movimento dos Trabalhadores Sem Terra – MST. 2022. Nossa Produção.  https://mst.org.br/ 

Nuruzzaman, M. 2020. Why BRICS is no threat to the post-war liberal world order.  International Studies, 57(1), 51-66. DOI: 10.1177/0020881719884449 

Stuenkel, O. 2020. The BRICS and the future of global order. 2nd Edition.  Lexington Books. 

UNCTAD. 2015. Global Value Chains and South-South Trade, Economic  Cooperation and Integration among Developing Countries, United  Nations Conference on Trade and Development (UNCTAD)  

Xu, Z. & Zhang, Y. 2022. Lightening up Africa: the effects of Chinese aid on the economic development in Africa. China Economic Quarterly  International, 2, 178-189. https://doi.org/10.1016/j.ceqi.2022.08.004 

Zhang, D. & Shivakumar, H. 2017. Dragon versus Elephant: a comparative study of Chinese and Indian aid in the Pacific. Asia & the Pacific Policy  Studies, 4 (2), 260-271. https://doi.org/10.1002/app5.179