Brazil Russia India China and South Africa form the intergovernmental organization known as brics which is one of the most powerful economic groups in the world and one that a lot of people have never even heard of while not the most flattering name the brics controlled 26. 7 of the world's surface area 41. 5 of the global population and around a quarter of the world's total economic output with a combined GDP of 25 trillion dollars that makes this group larger by every metric than the USA or the EU and they're only becoming larger as time goes on the brics members have announced plans to trade between each other more intensely they've even spoken about introducing a common currency that could effectively shut out the West control over this major group of trading nations that could be a concerning Trend because obviously these countries don't have the best political relationship with the rest of the world Russia is currently fighting a war that has been universally criticized by the USA and its allies and China has made its intentions clear that it wants to invade Taiwan and bring it under Direct control of the Mainland continued economic cooperation has been one of the best deterrents for this kind of conflict over recent decades and failing that economic sanctions are a powerful tool that doesn't actively involve getting caught up in an armed conflict between major nuclear superpowers which most brics members are if these countries can form a trading block or a trading brick I guess then not only could countries like the USA lose out on a lot of the global trade which has been one of the key drivers of its economic growth over the past Century it could also mean that one of the economic trade-offs of military aggression will disappear and there would be less standing in the way of these countries doing what they want of course this is a worst case scenario but even if this group does only use its relationship to Foster trade agreements given its size and influence it could still radically reshape the global economy if nothing else it's a really interesting case study into the Dynamics of global economic cooperation because one thing to remember about this group is that a lot of them don't even like each other so what is the economic goal of the brics group does it pose a threat to the countries not including this group and finally is it likely to succeed after all of that to give us a sensor perspective on this group we can put the bricks on the economics explained National leaderboard to see how they stuck up against other economies as well as their own members individually the brics economies were originally grouped as a matter of convenience by economists that wanted to talk about the major developing nations in the world it wasn't an official organization like NATO or the European Union it was just an easy way to refer to Major developing economies there are similar groups that economists make all the time tiger economies were used to broadly describe the group of Asian economies undergoing rapid economic growth originally South Korea Taiwan Singapore and Hong Kong economists do this with other stuff as well they will refer to the US dollar as the global Reserve currency but there are no formal agreements or official rules to say that the US dollar is the world Reserve countries do use other currencies for trade all the time it's just that they use the US dollar the most because it's the easiest to work with and the most widely accepted the difference here is that the brics countries or originally just the bric countries because South Africa wasn't included yet saw this grouping and thought to themselves that hey yeah that's actually a good idea we should team up the first real mention of the brics group was in the early 2000s but it wasn't until 2000 9 that the countries involved had their first formal Summit in Russia where leaders from the four nations met to discuss the global economic situation reforming financial institutions remembering that this was taking place just after the 2008 Global financial crisis and they talked about how their countries could better cooperate in the future a month after the first summit The Brick Nations announced the need for a new Global Reserve currency that was stable and predictable their announcement never directly mentioned to the US dollar but each of the individual countries had been critical of its dominance in the past a year later South Africa a country that was also at the time developing quickly joined the group and the country started arranging annual Summits to discuss various economic objectives one of the biggest projects rolled out since the group's formation was the establishment of the new development Bank most commonly known as the brics bank this is an organization a lot like the international monetary fund which makes investments into developing economies to grow their economic output and hopefully long term make them value-adding participants in global trade which should all other things been equal make every country better off membership in the brics bank is a lot more limited than membership in the IMF which is basically made up of every country on Earth apart from Cuba North Korea Monaco Vatican City Lichtenstein and finally Taiwan because mainland China won't let that happen the brics Nations also discuss plans to build out their own undersea optical fiber cables to link all the member countries directly this isn't such a big deal for Russia China India and even South Africa since they are all relatively close geographically but it is a bit more of a challenge for Brazil which is on the other side of the world and cut off from direct ocean access without going around the tip of South America which is a big project the countries have even pushed for the brics games which are kind of like the Olympics or Commonwealth Games but only open to brics members the general trend of this organization is clear they want their own Olympics their own cable their own IMF and their own Reserve currency for the rest of the world this kind of looks like assembling the Avengers of terrible human rights records these countries wanting an alternative to existing Global operations is an understandably concerning trend the group is also open to more members as well the UAE Saudi Arabia Iran Egypt Bahrain Argentina and Algeria have all formally applied for membership a long list of other countries have also informally expressed their interest Iran Algeria and Argentina formally applied after the Russian invasion of Ukraine which sends a pretty strong message that two distinct economic teams have been formed around the globe but in the interest of fair analysis it's important to ask why they want to do this sometimes it's important to play Devil's Advocate on some of these global economic issues and that's exactly what we're going to do here all these developments in the broader context of moving away from dependency on the rest of the world and specifically the west and probably more specifically the USA raises an obvious question why why do these countries want to be outside of the influence of everybody else the obvious conclusion that people would jump to is that they want to be immune from sanctions and other economic tools that the West can use against them if they carry out their less popular geopolitical Ambitions it if these guys can trade amongst themselves they can get access to all of the shared resources and Manpower of a massive economic group so even if they are totally isolated from everyone else it won't matter because between these countries they have almost all of the economic factors they could ever need now it's certainly irresponsible to totally disregard that conclusion but it's also not entirely fair if the USA or Europe was totally dependent on using China's currency as a meeting of exchange or Reserve assets they would probably want their own alternative as well the demonstration of Russia being cut off from Global Payments networks showed a lot of countries that their reserves could be rendered useless if they did something that one country didn't like now of course invading a Sovereign Nation is not something that any country is going to do by accident but if it can happen to Russia there's nothing to guarantee that it won't happen to anybody else and any responsible government would want to make sure that they have some kind of redundancy in place as for things like undersea cables directly connecting all the brics countries that was primarily motivated by the Revelation that the U.
S national Security Agency was intercepting data that flowed through U. S territory again it's fair enough that these countries would want to invest in Communications channels that were private finally the brics bank or the new development bank is an alternative to the IMF controlled by the brics countries as well as Bangladesh Egypt the UAE and Uruguay people already don't like the IMF and there is some understandable animosity towards these member countries but the new development bank is nothing unique there are dozens of organizations like this around the world but do similar things to the IMF just targeted at a specific region or cultural group as an economic entity the brics countries also might look really scary and Powerful but it's basically all China China accounts for more output than all of the other countries in this group combined twice over so the bricks is a potentially hostile economic Force there's not that much more concerning than just China alone also while the group has only officially existed for 14 years it hasn't been very effective in getting much done the Chinese r b which would be the default choice for a reserve currency between the group is still only 2. 7 percent of global reserves similar to the reserves of Canadian and Australian dollars the other currencies of this group are just lumped in by the IMF into the 3.
4 percent of all other currencies kept in reserve the countries have announced plans to introduce an entirely new currency with rumors that could even be backed by gold but they've been talking about this since 2009 and so far not much has happened even if they did manage to introduce this new currency it would probably only add rigidities and complications to just trading in their existing currencies the ineffectiveness of this group to really drive any significant changes also indicative of just the general effectiveness of this group the brics economies are failing economies when the term brics was first popularized the countries that made up the group were all growing rapidly and developing Advanced Industries there was the genuine expectation from most economists that this group would control the balance of the global economy by now of course they are collectively still very powerful even without China not only from a purely economic point of view but also simply because of the resources Manpower and Technology as they possess nuclear weaponry being a big one but most of the countries have slowed down significantly Russia's growth has been stagnant for over a decade before this latest round of sanctions and after its invasion of Ukraine it's only going to fall further Brazil has lost close to half of its economic output in the last 10 years and its recovery from covert is proving to be slow due to ongoing political issues South Africa has been much the same having seen no real economic growth in the past decade and even China that once seemingly Unstoppable economic force is facing more and more problems as its economy matures the Outlook is not as optimistic as it once was for these countries days even while the world as a whole has grown significantly these countries are going to have trouble pulling the strings of the global economy if they can't even manage their own and the group dynamic isn't going to help them either all the brics countries and the potential members of this group are far from what you would call close allies China and India are the largest economies in this group have literally had military confrontations along disputed borders the group is really an alliance of convenience the smaller members wanted to be part of big economic initiatives and the largest member like the control that would give them over major economies around the world as newer initiatives have conflicted with the goals of the bricks it's pretty consistently been the brics initiatives that have not been prioritized now we don't want to entirely discount the potential impact that this group could have on the global economy but is really not much more than a loose grouping that meets up once a year to discuss economic objectives the only reason it gets any attention over the dozens of other similar organizations is because of who the members are but that doesn't mean that it's not a concerning Trend it's just for a different reason and that's the fracturing of global Corporation as groups like this form and the world becomes more insular only trading and sharing information and resources amongst small blocks with similar interests we will all struggle global trade and Global output are almost perfectly correlated and the reason that countries like the ones in the brics group were able to develop their economy so quickly is because they had access to the global economy building an economy from the ground up is very difficult when you have to do everything from scratch it's still very difficult now but it's a lot easier when foreign investors can come in and give countries access to modern technology and infrastructure and then be a customer for their outputs while they develop their domestic markets we have already covered this process in a lot of our recent videos so as always I don't want to repeat too much here but the trend of countries becoming more self-sufficient for whatever reason will make this all much more difficult and long term that will slow down global economic growth bricks are not the only group pushing this the global pandemic and escalating trade tensions means that most countries and companies are looking to onshore and simplify Supply chains where possible people but redundancy often comes at the expense of efficiency and opportunity India is one of the most promising economies in the world today because of its huge population of relatively well-educated and English-speaking people that can provide skilled offshore services in the international language of business getting grouped into an organization directly opposed to some of its biggest potential customers could hurt its future growth and the growth of the economies that would have benefited from those Services it's not realistic to think that all countries will get along all the time but economic cooperation has been one of the greatest tools for Global Peace in the last century anything that wants to reverse that Trend should be cause for concern even if the intentions of the group themselves are totally innocent okay now it's time to put bricks on the economics explained National leaderboard even though they are not a single nation or even a tightly bound economic Union like the EU ranking them against other economies should give us all a sense of how big of a threat the bricks really are starting as always with size the bricks have a combined GDP of 25 trillion US Dollars which makes them larger than the EU and even the USA by some margin the group without China has an output of 7. 5 trillion US dollars but collectively they get a clear 10 out of 10. that GDP though is spread out over nearly half of the world's population which means that despite their impressive Collective size the average resident of a brics country only produces 7 800 in output every year which is significantly behind the global average this average is brought down primarily by India which is the most populous and poorest country in the group but the group as a whole can only get a 4 out of 10.
stability and confidence is not great not within the group or outside of the group Russia has been widely sanctioned Brazil is in the midst of a political and economic crisis China is fighting trade Wars and India is fighting with China as a group they do have some advantages with having each other to rely on for resources and trade but they still can't get more than a 5 out of 10. growth has been very strong thanks again largely to China but also assisted by India that more than makes up for the turbulence in the other economies but because we are looking at this group as a whole they still get a 9 out of 10. industry is very strong for these countries China is the workshop of the world Russia and Brazil are rich in natural resources and India has the largest Workforce in the world South Africa is also there all jokes aside though it would be unfair to give the group anything other than a 10 out of 10.
altogether that gives the bricks an average score of 7.
