Abstract: The development of technology does not necessarily lead to the prosperity of nations. One significant obstacle to achieving equitable economic growth is the presence of monopolies, which act as destructive forces against economic justice by creating disproportionate economic advantages for a select minority. This issue manifests not only within countries -- where social class disparities are exacerbated -- but also between nations, leading to the exploitation of less developed, or subordinate, countries by more dominant economies.
The dominance of Western countries in digital technology infrastructure and regulation acts as an invisible control that hampers the growth of startups and innovative companies in developing countries, restricting their ability to compete and thrive on a global scale.
Given the high potential and resources of its member nations, the BRICS alliance emerges as a potential balancing force against these monopolistic challenges.
This article examines the role BRICS can play in addressing these issues. It discusses the necessary soft and hard infrastructures that the alliance should establish to enhance development opportunities and promote prosperity among its member nations. By focusing on collaborative efforts in the digital economy, BRICS has the potential to mitigate the effects of monopolies and contribute to a more equitable global economic landscape.
Technological Progress and Well-being
Many people, including experts, often assume that technological progress inevitably leads to people's well-being and a fairer wealth distribution among countries and individuals. However, as Daron Acemoglu and Simon Johnson elucidate in their book "Power and Progress," centuries of experience have shown that this is not always the case. Technological advancements have often resulted in increased income inequality, widespread unemployment, and even poverty. Therefore, rather than optimistically waiting, it is our responsibility to guide technology -- an inevitable aspect of progress -- towards ensuring the well-being of nations.
Much has been discussed about how monopolies within a country can exacerbate class divisions and injustice among people, leading to the spread of poverty. A similar dynamic exists in the relationships between nations. Whether we are talking about the class gap within a country or the disparities between nations, dominant countries with their soft or hard monopolies can undermine and exploit subordinate nations.
When monopolies prevail, technology can be misused -- be it through machinery, capital, regulation, or the influence of one or a few countries. It's not an exaggeration to state that historical political conflicts cannot be imagined without the intervention of international economic powers. In the broad global political order, economically advanced countries are often the origin or influential variable in major political events. As Adam Hanieh explains in "Lineages of Revolt," these countries, by virtue of their economic advantages, become the reference point for defining concepts of development, citizenship benefits, and more. This logic grants some of them the explicit or implicit right to exploit, impose sanctions, wage direct wars, and enforce economic restrictions against less developed countries.
In such a radical logic, it's evident that some countries will find themselves on the subordinate side of the equation. This second group is often seen as a source of primary and raw resources -- including natural resources and human labor -- turning their countries into arenas for resource appropriation and perpetual conflicts. Technological monopolies strive to keep the subordinate perpetually in a subordinate position.
Steps Against Monopolies
In this context, political economists advocate for breaking free from the constraints of the global economic hierarchy and actively resisting forces that seek to maintain the status quo. They recognize that small economic unions offer a powerful alternative to the dominant global economic order. Emerging economies can harness cohesive financial strategies to form international coalitions that prioritize their transnational interests. This approach initiates a shift toward a "transnational political economy," empowering nations to redefine their roles in the global landscape and assert their agency in shaping economic relationships, rather than remaining confined to outdated national frameworks.
The BRICS+ nations are seen as a potential balancing force in the global economy, including technology. Although China and India, the most populous countries in the world, are members of BRICS, their inclusion is not paradoxical but rather an opportunity to strengthen the alliance, enabling smaller countries to take advantage of the emerging potential. It should also be noted that the positive impact depends on BRICS+'s long-term policies that avoid reproducing the same consequences or becoming another power bloc that acts against the interests of the people. Instead, it should aim to foster cooperation that benefits all member nations.
As BRICS+ positions itself as a counterbalance to entrenched technological monopolies, it has a crucial opportunity to invest in human capital development among its member nations. Iran's substantial proportion of STEM graduates highlights the potential that exists; however, the ongoing skills gap underscores the need for targeted investments in education and training. With all ten of the leading countries in STEM education being members of BRICS, there is a unique opportunity for knowledge exchange and collaborative educational initiatives that can enhance the overall competitiveness of the alliance in the global digital economy.
BRICS, originally formed as BRIC in 2001 with Brazil, Russia, India, and China, emerged as a collective aimed at attracting foreign investment. Over the years, this group has evolved significantly. South Africa's accession in 2010 transformed BRIC into BRICS, further expanding its influence. The recent 15th BRICS Summit in Johannesburg in 2023 marked another pivotal moment, announcing the inclusion of five new members -- Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates -- effective January 2024. This expansion positions BRICS as a formidable geopolitical and economic bloc with the potential to reshape global economic dynamics.
By 2024, BRICS countries will encompass over 40% of the global population and account for approximately 31.5% of the world's GDP based on purchasing power parity, surpassing the G7's share of 30.7%, according to data from the International Monetary Fund (IMF).
Image Source: European Parliament
BRICS+ must recognize the geopolitical tensions with both its members and global tech leaders like the US and EU, who might see BRICS+ as a rival, potentially using sanctions or regulations to curb its growth. This dynamic could particularly impact members like India and Brazil due to their strong connections with these powers. To counter this, BRICS+ should focus on economic diplomacy to bridge political divides and present a unified front in global talks. It's also vital to create a robust internal governance framework that reflects the varied economic landscapes of its members, enhancing stability and decision-making. By tackling these issues head-on, BRICS+ can emerge as a key player in promoting fair technological progress.
BRICS+ and the Digital Economy
The World Economic Forum projects that by 2025, the global digital economy will exceed €210.8 trillion, representing about 24.3% of global GDP. The OECD Digital Economy Outlook 2023 shows that the Information and Communication Technology (ICT) sector maintained strong performance during 2022 with an average growth rate of 7.6%, about three times faster than the total economy in OECD countries.
Given the projected growth in the digital sector and the pivotal role of artificial intelligence as a transformative driver, this article focuses on the digital economy opportunities presented by the BRICS+ alliance. This alliance not only positions itself to compete with other global coalitions but also fosters cooperation that can create unique growth opportunities for startups, medium-sized software firms, and large technology companies, particularly those from less-developed nations that have struggled to access mainstream global markets.
Establishing a Permanent Digital Economy Department
To effectively harness the potential of the digital economy, I propose the establishment of a permanent Digital Economy Department within BRICS+. Envisioned as a comprehensive technology innovation center and accelerator, this department would facilitate the infrastructure necessary to empower startups and tech companies across BRICS+ nations.
Three Tiers of Focus
The planning and objectives of this digital department should be categorized into three levels:
Tier One: Fundamental Regulation and Soft Infrastructures
One significant initiative already underway is BRICS Pay, a decentralized multi-currency digital international payment system designed to facilitate transactions among member countries and reduce reliance on traditional financial systems that may be subject to sanctions or restrictions. Additionally, the New Development Bank (NDB) plays a crucial role in financing infrastructure and sustainable development projects, offering accessible funding for startups and tech companies. By establishing these financial infrastructures, we can lay the foundation for a robust ecosystem, enabling numerous fintech companies to operate across the entire region, rather than being confined to one country or one currency.
To build a robust ecosystem across the region, there is an urgent need for "harmonized regulatory frameworks" that streamline governmental interactions and address challenges related to data sovereignty. While the General Data Protection Regulation (GDPR) is frequently referenced as a standard for regulatory practices, its comprehensive approach to privacy raises questions about balancing compliance with the operational realities faced by small and medium-sized enterprises (SMEs). In some cases, an intense focus on privacy considerations may introduce complexities that can challenge the agility and growth potential of these businesses, highlighting the need for frameworks that support both innovation and consumer protection.
Additionally, establishing a regional arbitration center would allow companies to handle international contracts more effectively.
Another key issue is the absence of double taxation treaties between some countries. Even where they do exist, U.S. banking sanctions against countries like Russia and Iran prevent private companies from fully benefiting from them.
Also, we must ensure that all BRICS+ countries adhere to common conventions in the field of intellectual property or commit to a new agreement. With the support of unified legal frameworks and financial infrastructures, a significant number of startups will emerge.
Tier Two: Technology Infrastructures
Investments in foundational technology infrastructures -- such as data centers, artificial intelligence frameworks, cloud services, and International Internet Exchange Points (IXPs) -- are crucial for enabling businesses and startups to scale effectively.
As artificial intelligence emerges as a powerful global force, cooperation among developing countries can help address historical inequalities stemming from earlier industrialization patterns. Joint investments in data centers and AI processing infrastructures, coupled with collaborative research centers, will be essential for bridging the technological divide.
The global AI market was valued at over €130 billion* in 2023 and is expected to grow substantially by 2030, up to nearly €1.9 trillion (Statista, 2023). Private investment now accounts for most of the investment in AI. The US is leading private investment in AI (€62.5 billion) in 2023, followed by China (€7.3 billion) (Figure 1). The EU and the United Kingdom (UK) together attracted €9 billion worth of private investment in 2023 (Stanford University, 2024). Public investment in AI is growing as well. The EU Digital Europe program will fund AI with a total of €2.1 billion in the 2021-2027 period. (+)
A significant portion of these investments is directed toward data center infrastructure and massive processing farms. The numbers and figures clearly show that less developed countries are unable -- or sometimes, due to sanctions or restrictions on the sale of hardware, not permitted -- to make such investments. This causes them to lag behind in development, further multiplying their developmental challenges.
This is where the necessity of joint investment in this sector becomes clear. These investments should be made both in the development and establishment of data centers and massive shared AI processing infrastructures, as well as in joint AI research centers.
Tier Three: Technology Products
The exponential growth of startups in recent years demonstrates the high potential and growth rates in the digital economy sector. According to CB Insights, as of 2023, about 88 percent of unicorns (startups valued at over €1 billion) home in 4 regions including the USA (50%), China (15%), India(10%), and EU-UK (12%). Startups in countries or regions with smaller populations and economies have a very limited chance of becoming unicorns. Although various economic and political factors contribute to this issue, a major obstacle is the limited opportunity to launch into global or multi-country markets. An alliance like BRICS can greatly help address this challenge.
The next generation of technology companies, especially those related to artificial intelligence, have greater potential to grow rapidly. On average, it took over seven years for today's unicorns to reach the billion-dollar mark from when they were founded. However, generative AI unicorns have averaged just 3.9 years -- and in some cases under a year -- to achieve unicorn status.
The infrastructures mentioned in the first and second tiers can help even the smallest startup in South Africa easily acquire customers from China. By fostering an integrated digital market, startups and tech companies can scale beyond their national borders, reaching a combined market of over 3 billion people. Removing last-mile delivery limitations across the BRICS+ region would pave the way for new companies in international logistics and, in the next step, exponentially increase the number of startups and companies in e-commerce and social commerce, free from local restrictions.
Conclusion: Technology's Double-sidedness -- Fear and Hope
In an age where technology has become a defining force of our time, it is essential to recognize its true potential: technology must serve as a tool for the welfare of all nations, not a weapon for the exploitation of the marginalized. The Global South stands at a critical crossroads, facing the legacies of colonialist practices of dominant powers. This is a moment that demands radical change and collective action through strategic alliances such as BRICS+.
In the field of the digital economy, the first step is legislation and agreements that create soft infrastructures, including financial and legal regulations. This crucial step significantly aids in building the second level, focusing on hard infrastructures such as cloud computing, data centers, and artificial intelligence infrastructures. This domino effect will, in the third step, reach tech services, SaaS products, and other offerings that will benefit billions of people worldwide. The BRICS Permanent Department of Digital Economy is responsible for this task. It is evident that transparent and coherent initiatives -- such as the BRICS Economy Index, social incentives, and prestigious awards -- are tools provided to this department that can promote and stabilize this trend.
This journey will not be easy; it will require a concerted effort to dismantle the power structures that uphold inequality and a commitment to solidarity among nations. As we forge these alliances, we must prioritize the needs of our people -- ensuring that the fruits of technological advancement are shared broadly rather than hoarded by the few.
Just as this article began by discussing the social impacts of technological progress on the well-being of nations and illustrating technology as a tool that should be guided to help nations, it concludes by emphasizing the same. Fear and hope are two sides of the same coin -- the coin of technological progress. The next generation is awaiting the outcome of this pivotal moment. But unlike a game of chance, the result is not random; it depends on our efforts and sense of responsibility. Our mission is to empower hope, to empower dreams.