BRICS Countries’ Increasing Role in the world economy, Including Institutional Innovation

Abstract

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.