Development Banks from the BRICS

Development Banks from the BRICS

The BRIC acronym was created at the beginning of the 2000s to represent a group of four fast-growing economies –Brazil, Russia, India and China – and was changed to BRICS in December 2010 with the inclusion of South Africa. At its fifth annual summit in Durban at the end of March 2013, the group announced the future establishment of a New Development Bank (NDB) to meet infrastructure investment needs in the developing world. The Bank will start lending in 2016.

What has so far made negotiations over certain points difficult is the fact that there are strong differences between the BRICS as well as unresolved historical issues, such as the contentious borders between China and India. Analysts have pointed out the BRICS’ dramatic economic differences in terms of:

  • size of economy: China’s economy, for example, is about 28 times that of South Africa
  • trade: Russia, Brazil and South Africa trade predominantly in commodities, while China trades in manufactured products and India in services
  • account balance: Brazil, India and South Africa record a deficit, while China and Russia record a surplus.
  • political regime: ranging from Brazil, India and South Africa, which are fully participatory democracies, to Russia, an authoritarian democracy, and finally to China, a single-party socialist state

The way the New Development Bank will operate largely depends on how the BRICS countries manage to reconcile their views on development cooperation and on the role financial institutions must play in that context. That is why there is increasing interest in understanding BRICS countries’ experiences with their own national development banks in order to derive commonalities and differences in the mandates, strategies, operational models, investment strategies and funding sources, etc., of each bank.

In this context, this report offers an overview of the BRICS' development cooperation initiatives. as well as the differing role played by the national development banks in each of those countries.

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