Economy, International development
New Development: The BRICS Bank and the International System
Harvard International Review02.01.2015Read original
The BRICS have decided to pursue influence through the New Development Bank. This bank will provide both development grants and emergency reserves, combining the functions of both the World Bank and the IMF in one institution. It can help make the world of international development and stabilization multi-polar, providing an alternative when necessary and becoming a more attractive option for countries tired of Western dominance and the strict conditions that often come with IMF and World Bank assistance.
When Goldman Sachs traders coined the term BRIC—an acronym for the emerging Brazil, Russia, India, and China—in 2001, it was just handy shorthand for a flashy new investment opportunity. Now, the BRICS (which, since 2010, have included South Africa) are a real, functioning diplomatic network. On July 15, the BRICS countries signed a treaty providing for the establishment of the New Development Bank (NDB), a multilateral institution intended as an alternative to the IMF and the World Bank, two bodies in which the BRICS countries have long pushed for more influence. Its architects are hopeful that it can compete with its Western-dominated counterparts, changing the power balance of the international system. But can the NDB really disrupt the status quo?
At the turn of the millennium, the BRIC countries caught the attention of major financial institutions as promising locations for new investments. Most of these investments paid off. Between 2003 and 2008, the BRIC countries experienced monumental growth. Soon, “BRIC” became part of the wider lexicon, indicating four breakout nations that were changing the landscape of the world financial system. There was a sense that this was something historic—that Brazil, Russia, India, and China were rising from the poor and middle class of the world to join the elite, ending Western dominance over the global economy. However, influence in the world economy is based on more than GDP and sphere of commerce […]