BRICS must set the agenda for the global economy’s future

By Anil Agarwal

South Africa is set to host the summit of BRICS leaders at a time when the global economy is going through a period of challenge and opportunity. The BRICS nations matter. Together, they account for almost one third of the world’s gross domestic product.

In 2023, their share of the global economy overtook the share of the Group of Seven (G7). Of course, the BRICS are a more diverse set of countries than the G7, which is essentially a grouping of democratic, free-market Western countries plus Japan.

However, what the BRICS nations have in common is a strong aspiration to become developed countries in the very near future. This must be leveraged.

Economic growth is the key to prosperity. The way forward may be different from what it was in the past 30 years. Every nation is now looking at building its own capabilities and some degree of self-reliance. But no nation can thrive in isolation. Finance, for example, is global. And it is looking for places where it can earn the best returns.

As someone who has raised billions of dollars of capital in global markets and invested it in India, South Africa and Brazil, I am hugely optimistic about the possibility of attracting more and more global capital to emerging economies. And the BRICS nations, with their aspirational populations, and huge potential for continued growth, are a natural destination for investment.

In this context, it is good to see the early success of the New Development Bank, an initiative of the BRICS countries. In time, such an institution will rival the World Bank.

Apart from finance, technology is another area in which cross-border cooperation may be vital.

While a lot of technology continues to be developed and owned by the G7 nations, the BRICS nations are gradually solidifying their own capacities. The future global economy will be defined by the technologies of the energy transition, advanced electronics like semiconductor chips, and innovations of the 4th industrial revolution, namely artificial intelligence, big data etc.

The countries which establish a leadership in these technologies will lead the world. Ultimately, the gap between rich countries and the not-so-rich countries will be determined by their level of technological capabilities.

As a group, the BRICS countries, which, between them, command a third of the world’s GDP, can cooperate in either developing technologies or at least in setting the global narrative/policy contours on technology sharing and partnerships.

On climate change and the energy transition, the BRICS economies already have a very big role.

Though their contribution to carbon emissions and climate change is minimal compared to the advanced countries, the impact of climate change is acutely felt by the vulnerable populations in these countries.

The energy transition is a process, and BRICS can be one forum which can emphasise and give details for how energy security can be best maintained for all emerging economies with a mix of renewable energy and existing sources of energy.

The energy transition will also be a high mineral intensive one. It will need increasing amounts of rare earths, lithium, cobalt, nickel, copper, aluminium and other such minerals. Much more needs to be done in terms of exploration and mining to ensure that supply keeps pace with demand.

Again, the BRICS countries are resource rich and can play a crucial role in helping each other and the world meet the demand for the minerals of the future. Also, they can showcase how mining can be green and not at all damaging to the environment if the latest technologies are adopted by all.

In the long run, the developed countries with ageing populations cannot compete with the dynamism of the young populations in emerging countries. It is wonderful that host South Africa has extended an invite to more than 40 other emerging nations to collaborate with BRICS.

It is imperative that the new global order be shaped by the voices of the billions of young, aspirational young women and men of the emerging economies who want their countries to become prosperous in the next two decades. BRICS must lay the bricks of that future.

Anil Agarwal is the executive chairman of Vedanta Resources.

BUSINESS REPORT