BRICS countries, advantages and challenges

BRICS countries: Of Advantages and Challenges

I recently wrote in an article here on my blog about how. Europe to lose importance in the future Today, we are taking the time to take a closer look at the BRICS countries. I would already perceive these as possible successors as an economic union compared to the European Union, which was actually also only intended as a common economic area.

Who are the BRICS countries? Well, they are a group of emerging economies consisting of Brazil, Russia, India, China and South Africa. They are known for their impressive growth rates and can be described as the "rock stars" of the global economy. But as with any rock star, there are lights and shadows. So let's dive into the world of the BRICS!

The Bright Side of the BRICS Countries

Let's start with the positive aspects. The BRICS countries are true giants when it comes to economic growth, the current Growth forecasts for the BRICS countries up to 2028 point in only one direction, and that is up. They have used globalization to strengthen their economies and lift millions of people out of poverty.

China, for example, within 40 years created Lift 800 million people out of poverty. Moreover, with their enormous populations, they offer immense market opportunities for companies. They are rich in natural resources, and countries like China and India have risen to become major centers of innovation and technology.

Politically, they have also gained influence, so Russia due to the war-conditioned EU sanctions, increased raw materials such as natural gas and oil, also financially it looks around Russia better off, so according to Trading Economics indicators that is Germany's inflation is more than 6%, while the Inflation in Russia is 2.5%.

At least as of May 2023. The BRICS countries are thus better equipped to deal with each other due to the more favorable terms of trade and benefit economically from the more favorable prices, according to China's oil imports from Russia rise, because they are cheaper, but according to the Reuters article this has a side effect, because since the state-owned big companies buy the cheap oil from Russia, smaller companies have to look elsewhere for cheap oil, and find it in Iran. The EU Sanctions lead to deindustrialization and higher commodity prices, BRICS countries benefit from this, indirectly, so does Iran.

These only and play an increasingly important role on the international stage. With the foundation of the New Development Bank they have shown that they are willing to invest in their own future and no longer depend on the International Monetary Fund.

And not to forget, the cultural diversity that these countries represent is simply amazing! Especially with regard to the social development of Western countries, because in the BRICS countries, cultural identity is protected and celebrated.

In summary:

  1. Economic growth: The BRICS countries are known for their rapid economic growth. China and India, for example, are two of the fastest growing economies in the world.
  2. Market potential: With a population of over 3 billion people, the BRICS countries offer enormous markets for products and services. This offers immense opportunities for both local and international companies.
  3. Resource wealth: The BRICS countries have rich natural resources. Brazil and Russia, for example, are rich in minerals and energy resources, while India and China have significant agricultural resources.
  4. Innovation and technology: Countries such as China and India have become major centers of innovation and technology. They have pioneered areas such as information technology, renewable energy and biotechnological research.
  5. Political influence: As emerging economic powers, the BRICS countries have also gained influence on the political stage. They play an increasingly important role in international institutions and champion the interests of developing countries.
  6. BRICS Bank: The creation of the New Development Bank (NDB) by the BRICS countries demonstrates their willingness to invest in infrastructure and sustainable development in their own countries and beyond.
  7. Cultural diversity: The BRICS countries represent a wide range of cultures, languages and traditions. This cultural diversity enriches the global community and promotes intercultural exchange.


Challenges of the BRICS countries

But wait before you invest all your money in the BRICS countries! As with any rock star, there are some scandals. Despite their economic growth, the BRICS countries suffer from significant social inequality. Environmental problems are also pervasive due to their rapid economic development.

Corruption is another sensitive issue, and human rights violations are unfortunately not uncommon. So there are also problems here that need to be solved by the states so that the population and the countries themselves become more stable and achieve healthy growth.

Economically, they are often heavily dependent on certain sectors, which makes them vulnerable to global price fluctuations, but at the same time makes them more independent again through the BRICS alliance. And although they have invested in their infrastructure, there are still significant shortcomings.

Education and skills shortages are also challenges they have to face. China is on a good, if morally questionable, path here, where students are even provided with Brainwave measurement in class be monitored to see if they are still alert.

So there are definitely challenges that countries will face and will have to face in the long term in order to stay growing.

  1. Social inequality: Despite their economic growth, the BRICS countries exhibit considerable social inequalities. This is reflected both in income disparities and in differences in access to education and health services.
  2. Environmental issues: The rapid economic development of these countries often has significant environmental impacts. This includes pollution of air and water as well as deforestation and loss of the biological diversity.
  3. Corruption: Corruption is a widespread problem in many of the BRICS countries. It not only affects the efficiency and fairness of public administration, but can also have a negative impact on the business climate.
  4. Political instability and human rights problems: Some of these states have problems with political instability and human rights violations. This creates uncertainty and can undermine confidence in governance.
  5. Economic dependence: Some BRICS countries are heavily dependent on certain sectors of the economy, which makes them vulnerable to global price fluctuations. Russia, for example, is heavily dependent on oil export revenues, while Brazil is heavily dependent on agriculture.
  6. Infrastructure problems: Although the BRICS countries have invested in infrastructure, there are still significant deficiencies, especially in rural areas. This can affect economic development and people's quality of life.
  7. Education and shortage of skilled workers: Despite progress in education, BRICS countries face challenges related to the quality of education and the lack of skilled labor in certain sectors.


My conclusion

In summary, the BRICS countries are an exciting mix of opportunities and challenges. They are undeniably important players in global economics and politics, but they also have their share of problems to solve. But who doesn't, right? Every country, including or perhaps especially Germany, has its own problems to contend with.

Each country has individual problems and different approaches to solving them. In any case, they are on their way to changing the global balance of power and shaping the 21st century. It is therefore worth keeping an eye on them and seeing how they develop.

Will I invest in the markets now? Let's see 😉

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Posted by Petr Kirpeit

All articles are my personal opinion and are written in German. In order to offer English-speaking readers access to the article, they are automatically translated via DeepL. Facts and sources will be added where possible. Unless there is clear evidence, the respective article is considered to be my personal opinion at the time of publication. This opinion may change over time. Friends, partners, companies and others do not have to share this position.

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