BRICS in trade clusters: the prospects of convergent trade policies of large emerging economies

Abstract

This paper analyzes global trading clusters to understand the effects of the BRICS economic rise for the international trading system and the WTO. The BRICS dominate without doubt their regions in economic and trade figures, as well as compete with — and in the case of China even overtake — the G7-states on the global level. But do the BRICS share a common approach for international trade, which they could promote as an alternative order or challenge to the current international trading system? So far the consequences of the BRICS-rising for international trade structures, multilateral negotiations and the WTO remain uncertain.

This paper argues on the basis of cluster analysis, that — due to their respective trade patterns — the rise of the BRICS will not lead to major changes inside the WTO. By testing emerging economies on different trade variables, the paper shows the challenges for BRICS cooperation in international trade and reveals also false assumptions in the respective literature. The differences between emerging economies are sometimes much bigger than assumed, which makes cooperation rather complicated and complex. The paper concludes that the WTO remains in its current form the most important trade governance institution for emerging economies, because the divergence in their trade patterns hinders emerging economies to challenge the current system with an alternative approach.

Keywords:

BRICS, WTO, International Trade, Cluster Analysis, Emerging Economies