Leaders of BRICS (Brazil, Russia, India, China, and South Africa) announced at the end of their summit in March in Durban their intention to start a new Development Bank. This Development Bank will be used to mobilize resources within developing countries to build infrastructure and promote sustainable development projects.
Over the last four decades, the nations of BRICS have seen enormous success in economic development and are coming together to see that their futures are bright and full of opportunities. As developed nations struggle through their own economic difficulties, the Development Bank will serve to bridge a gap in funding. Infrastructure requirements in emerging-market economies point to the need for the availability of credit and sources of financing. With 1.4 billion people lacking reliable electricity, 900 million lacking access to clean water, and 2.6 billion without adequate sanitation, the Development Bank will be a key player in addressing the long-term sustainable solutions to those problems. In addition, the forecasted large migration to cities calls for policymakers to fund environmentally sustainable investments.
Predictions for infrastructure spending within the developing world top $2 trillion annually in the coming decades. This spending will allow nations to achieve long-term poverty reduction and economic growth. The private market will still be relied upon, but their dollars can only go so far. The Development Bank will fill the gap and become a catalyst for change in developing countries.
As the world economy is changing, the Development Bank provides BRICS a chance to reflect on those changes within an institution that utilizes modern financial instruments, strong governance, and broad-based mandates. The bank can capitalize on new development partnerships and collective action as well as innovative and cost-effective approaches. While developed countries still have a strong role to play in global development, the shortfall in assistance and need for quick decisions make the Development Bank a welcome institution in the marketplace of emerging countries.
– Amanda Kloeppel