The recently completed annual BRICS (the collective name for Brazil, Russia, India, China and South Africa) summit generated three agreements which demonstrate the ongoing move towards self-reliance and strategic cooperation amongst emerging and developing economies.

The Agreement on the New Development Bank and the Treaty for the Establishment of a BRICS Contingent Reserve Arrangement have the potential to address some of the frustrations which emerging market countries have had with the World Bank Group and the International Monetary Fund (“IMF”), the primary sources of global development financing since World War II.  Despite being home to 46 percent of the world’s population and responsible for over one-fifth of the global GDP, the BRICS countries’ voting power averages around 10.5 percent across the World Bank Group and the IMF.⁽¹⁾  In establishing the New Development Bank — which will provide financing for “infrastructure and sustainable development [public and private] projects” through “loans, guarantees, equity participation and other financial instruments” — the BRICS countries will have total and equally distributed control over a lending institution with an initial subscribed capital of $50 billion (and an initial authorized capital of $100 billion).  The Bank’s initial authorized capital of $100 billion is comparable to the amount of subscribed capital presently held by the African Development Bank.

There also have been criticisms that, in imposing certain conditionalities on borrower countries, the World Bank Group and IMF have wielded their lending powers like a stick rather than a carrot.  The BRICS countries’ Contingent Reserve Arrangement makes available a $100 billion contingent reserve “to forestall short-term balance of payments pressures, provide mutual support and further strengthen financial stability” as well as “contribute to strengthening the global financial safety net.”

Strategic cooperation and mutual assistance will be central to the success of these demonstrable moves towards economic self-reliance.  Under the Cooperation Agreement on Innovation, the BRICS countries have agreed to enter into bilateral or multilateral agreements “aimed at coordinating cooperation, skills transfer and knowledge sharing.”  With an emphasis on infrastructure and sustainable energy but also with regard to agribusiness and other industries, the BRICS countries will exchange views, experience and expertise as well as promote knowledge sharing initiatives on “innovative financing, emerging technologies and financing of innovation projects.”

Fulfilling the promise and potential of these agreements will be a sizeable task for the BRICS countries and the coming years will reveal whether they are up to it.  In the meantime, the BRICS countries have made clear that their ambitions lay in leveraging the ongoing shift in the balance of global economic power.

_{(1) BRICS Countries’ Percent of Voting Power in Each Institution}

_{Figures are current as of July 2014}