BRICS in the World Economy: An Analysis of their Growth, their Role and their Relations with G7

Abstract

In the last decades several economic and political earthquakes have taken place. Consequently, the balance of power in the world economy has partially shifted from a clear hegemony of Western countries to a more balanced scenario, characterised by the rise of some developing countries and the stagnation of some of the former world economic powerhouses. Within that context, this thesis develops an analysis of the evolution of BRICS countries role in world economy, and compares it with that of the G7 nations. The analysis covers their weight on world´s GDP, trade and financial flows, their weight on certain “Strategic Industries” and their inititiatives to create alternative International Instituitions to those currently governing over International Financial, Economic and Trade Relations. In that regard, the main findings are that BRICS countries relevance on the World economy has significantly increased, surpassing the G7 in terms their combined GDP (mainly fuelled by the growth of China and India). Nonetheless, G7 countries still dominate International trade and financial flows, despite the noticeable evolution of BRICS in those areas. Additionally, G7 nations have more developed financial systems, best trained labor forces and are able to produce more complex products, whereas the role of Russia and China in the supply chain of certain “Strategic Industries” confers them an essential role in World´s economy. Lastly, economic and political confrontation among both groups is on the rise, with the potential to negatively impact World´s economy and overall welfare.