Who will benefit from BRICS expansion?

Starting from January 1, 2024 the ranks of the BRICS grouping will be expanded to include 5 regional powers from the Global South. This is arguably the most important development in BRICS history in the past decade and something that is bound to exert a notable impact on the evolution of the global economy. While the focus thus far has been on the geopolitical aspects of the BRICS expansion trends, there may be important implications pertaining also to the economic domain. If the trends of BRICS expansion are to continue with BRICS also actively working to boost mutual trade and settlements in national currencies what are the groups of countries that will derive economic benefits from these developments? 

Among the beneficiaries of BRICS expansion are the new members of the grouping’s core as well as the future “partnership belt” that is to be endorsed by the BRICS in 2024. The benefits to the new BRICS core nations such as Ethiopia as well as Egypt may reside in a greater regional role in Africa in intermediating the cooperation impulses from BRICS to the region as well as to its key projects such as the African Continental Free Trade Area (AfCFTA). There may also be benefits from measures targeted by the BRICS core to boost mutual trade and financial cooperation. The oil-exporting economies such as the UAE, Saudi Arabia and Iran may strengthen policy coordination with their OPEC+ partners from the BRICS core such as Russia and Brazil; there may also be the dividends from stronger international stature as regional powers and leading representatives of the developing world.  

Among the potential members of the “partnership belt” are some of the largest developing economies in their respective regions that are still outside of the BRICS core – Algeria and Democratic Republic of Congo in Africa; Pakistan and Bangladesh in South Asia; Bolivia and Venezuela in South America; Kazakhstan and Belarus from the CIS region; Thailand and Indonesia from South-East Asia. It is yet to be decided what the “partnership modalities” are going to be for the above economies, but these may include greater scope for economic cooperation with the BRICS core via NDB and BRICS CRA as well as involvement in the various economic initiatives targeting greater financial, trade and investment cooperation.

Another possible track in the process of BRICS expansion will be the link-up between the regional integration blocs led by BRICS economies. In this sphere, we expect Africa and the African Continental FTA (AfCFTA) to be the main beneficiary of the BRICS expansion and the creation of an “integration of integrations” platform for the Global South. This is due to the fact that there is significant scope for the BRICS core economies and their respective regional integration blocs to prioritize greater trade liberalization vis-à-vis Africa, particularly in the agricultural sector. Other beneficiaries may include BRICS members and partners that are launching free-trade accords with BRICS-led regional integration blocs. We note that BRICS regional blocs are in fact starting to forge closer ties with new BRICS core members – at the end of 2023 Iran signed a free trade agreement with the Eurasian Economic Union (EAEU).

One of the more pragmatic tracks of BRICS expansion is the widening in the ranks of the members of the New Development Bank (NDB). In recent years, a number of new members of NBD included developing economies such as Bangladesh and Uruguay, that have not yet gained the status of BRICS core members. The benefits obtained by the new members of NDB include access to financing as well as a greater role in their respective regions and regional integration arrangements. With the rise in the scope of NDB operations, some of the potential beneficiaries of its expansion are likely to include the BRICS regional neighbors and “in-between economies” that would benefit from connectivity projects and other positive spillovers from BRICS and NDB regional activities. Among the in-between economies that benefit from greater connectivity and trade turnover within the BRICS core may be such economies as Mongolia, Kazakhstan and Uzbekistan.   

Overall, the process of BRICS expansion is likely to continue in the coming years as the presidency goes to Russia in 2024 and Brazil in 2025. For at least several years the BRICS is likely to continue its extrovert development mode, with one of the priorities in 2024-2025 likely to be the creation and expansion of the BRICS “partnership belt”. There may be further steps directed at increasing the membership of the New Development Bank as well as possibly strengthening the role of the BRICS CRA in providing support to BRICS members and their regional allies. The most significant benefits from BRICS expansion will come from the lowering of trade and investment barriers across the Global South – something that will be predicated on the cooperation among the BRICS-led regional blocs. But for these dividends to materialize the BRICS need to prioritize economic cooperation and trade liberalization in the group’s development agenda.  

Image by sumanley via Pixabay


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