Chapter 11: Regional Cooperation
On 8 December 1985, the heads of state and government of seven countries sat down together in Dhaka, the capital of Bangladesh. Between them they spoke for about a billion people. They also carried a long record of not getting along.
India and Pakistan had fought three wars since 1947. Bangladesh itself had been created out of the last of those wars, only fourteen years earlier. Sri Lanka was in the opening years of a civil war. Nepal, Bhutan and the Maldives were small states long used to being talked about rather than talked to.
The idea of a South Asian association had come from Bangladesh five years before, and it had taken years of careful official meetings to bring the leaders to one table at all. What they signed that day was a short document. It named the new association’s aims: the welfare of the people of South Asia, faster economic growth, collective self-reliance, and mutual trust between members.
It also laid down two rules that show how little of that trust existed. Every decision would require the agreement of all members, so a single objection could stop anything. And disputes between two member states would be kept off the agenda altogether.
Those rules were not an oversight. They were the price of getting seven suspicious neighbours into one room — and they still shape what South Asia has, and has not, been able to build together.
Map
Map 11.1 Caption: The five groupings studied in this chapter, shown on a world map. Brief: World political map, present-day boundaries, with the member states of ASEAN, the European Union, SAARC, BRICS and the QUAD each marked in a distinct shade or hatch, and the five groupings named in a key. India must be shown in full extent as officially defined by the Government of India, including Jammu and Kashmir and Ladakh, and all international boundaries — India’s and every other country’s — must follow the boundaries officially recognised by the Government of India. States belonging to more than one grouping (for example India, which belongs to SAARC, BRICS and the QUAD) are to be marked with overlapping hatching rather than a single shade. Do not mark headquarters, trade routes, disputed areas or any economic data on this map.
11.1 Understanding Regional Cooperation
The five groupings studied in this chapter are very different from one another. One has a single currency, another has no permanent office at all. Before comparing them, we need a clear idea of what states are attempting when they cooperate with their neighbours.
11.1.1 What Regional Cooperation Means
Regional cooperation is the arrangement by which states in a region work together, under agreed rules, to pursue goals they cannot reach alone. The goals may be economic, political, social or environmental.
When such cooperation is meant to last, states usually create a regional organisation — a permanent body with named members, a founding charter, regular meetings and, in most cases, an office to run its business. The organisation is a machine for keeping cooperation going after the summit photographs are taken.
What counts as a ‘region’? Geography is the starting point, but politics decides. South Asia and South-East Asia are recognisable geographical neighbourhoods.
Other groupings are not neighbourhoods at all. The BRICS members sit on four continents, and the Indo-Pacific is a stretch of ocean rather than a landmass. A region, in politics, is a group of states that decide to treat themselves as belonging together.
How Deep Can Cooperation Go?
Cooperation is not one thing but a range. At the shallow end, states merely consult each other and issue joint statements. At the deep end, they pool some decisions in common institutions and accept rules that bind them all.
Members remain sovereign states throughout. What changes is how much freedom of action they are willing to trade for the gains of acting together.
The decision rule matters greatly here. Some groupings decide only by unanimity, which gives every member, however small, a veto over the whole group. Others allow certain decisions to be taken by a majority, which is faster but means a state can be outvoted.
11.1.2 The Forms Regional Cooperation Takes
Cooperation between neighbours takes place in five broad fields, and most groupings work in more than one of them.
Economic: reducing barriers to trade and investment, so that goods, money and workers move more easily between member states.
Political and diplomatic: coordinating foreign policy positions so that a group of states speaks with one voice in world forums.
Security: defence agreements, joint exercises, border cooperation and combined action against terrorism and organised crime.
Socio-cultural: cooperation in education, health, sport and culture, including exchange programmes and joint responses to epidemics.
Functional or technical: the practical management of shared things — a river basin, an electricity grid, a shipping lane, a common weather warning system.
The Ladder Of Economic Integration
Economic cooperation itself has depths, and the difference between them is not a detail. Each further step means surrendering more national control, so the ladder in Fig. 11.1-1 is a political ladder as much as an economic one.
A tariff is a tax that a government charges on goods entering its territory. It raises the price of the imported good and so protects producers at home from foreign competition.
In a free trade area, members abolish tariffs on goods traded among themselves, but each member keeps its own tariffs on goods arriving from outside the group. In a customs union, members go further and apply a single agreed tariff to the rest of the world.
A common market adds the free movement of services, capital and workers, so that a firm or a worker from one member state may operate in another on equal terms. In a monetary union, members share a single currency and a single monetary policy, which means one set of interest rates for all of them.
Diagram
Fig. 11.1-1 Caption: Each step up the ladder of economic integration requires members to give up more national control. Brief: Four ascending steps drawn left to right, labelled from the bottom — free trade area, customs union, common market, monetary union — with a one-line description on each step. A vertical arrow beside the steps points upward, labelled ‘more shared decision-making, less national control’. No country names or flags.
Notice what climbs alongside the economic benefit. A state in a free trade area still sets its own tariffs on outsiders; a state in a monetary union can no longer set its own interest rates at all.
11.1.3 Why States Cooperate With Their Neighbours
The first reason is size. A small national market limits how much a factory can produce and how cheaply it can produce it.
When several markets are joined, firms can produce on a larger scale, which lowers the cost of each unit made. A bigger combined market also attracts investors who would ignore any one member on its own.
The second reason is bargaining power. Twenty states negotiating separately with a major economy will get worse terms than the same twenty negotiating as one bloc.
The third reason is peace. States that trade heavily, hold regular summits and staff joint committees have more to lose from a quarrel and more channels for settling one.
The fourth reason is that some problems cannot be solved inside one country’s borders. A river, a cyclone, an epidemic, a smuggling route and a polluted sea recognise no boundary line.
What Cooperation Costs
Every one of these gains has a price, and the price is paid in freedom of action. A member of a free trade area cannot raise a tariff to shelter a struggling domestic industry, because it has promised not to.
The gains are also rarely shared equally. The most competitive economy in a group usually captures the largest share of the enlarged market, and a smaller member may fear that free trade means being flooded by a bigger neighbour’s goods.
A veto rule protects the small member but can freeze the whole group, since one objection stops everything. And a signed agreement is not the same as an implemented one; many regional commitments sit on paper for years.
11.1.4 From Security Blocs To Economic Blocs
For most of the second half of the twentieth century, the world was divided between two rival camps led by the United States and the Soviet Union. Regional organisations in that period were built mainly for defence.
The North Atlantic Treaty Organization, founded in 1949, bound western Europe and North America into a mutual defence alliance. The Warsaw Pact of 1955 did the same for the Soviet Union and its allies in eastern Europe. In Asia, the South-East Asia Treaty Organization was created in 1954 for similar purposes and was wound up in 1977.
The great exception was western Europe, where governments began building economic cooperation in the 1950s while the military alliance ran alongside it. That experiment is examined later in this chapter.
When the Soviet Union dissolved in 1991, the compulsion to belong to one camp or the other disappeared. States were now free to choose regional partners on their own calculation of advantage.
At the same time, governments across the world were opening their economies to trade and investment. Growth became the main measure of a country’s standing, and neighbours came to be seen as markets rather than only as threats.
The result was a rush of new economic arrangements. The North American Free Trade Agreement came into force in 1994, and was replaced by a renegotiated agreement between the same three countries in 2020. Existing groupings deepened their trade rules, and the number of trade agreements between neighbouring states multiplied through the 1990s.
This shift explains the shape of the chapter ahead. Four of the five groupings studied here are judged mainly by what they have achieved economically, and even the fifth, built around security, now spends much of its effort on investment and technology.
11.2 ASEAN: The Association Of South-East Asian Nations
South-East Asia in the 1960s was not an obvious place for a club of friends. The region sat on the front line of the rivalry between the two Cold War camps, and several of its states had recently been in open conflict with one another.
The association founded there in 1967 is now the oldest and most successful regional grouping in Asia. Understanding what it set out to do, and what it has actually built, is the business of this section.
11.2.1 What ASEAN Is
The Association of South-East Asian Nations was established on 8 August 1967, when the foreign ministers of five countries signed the ASEAN Declaration at Bangkok. The five were Indonesia, Malaysia, the Philippines, Singapore and Thailand.
The founders were not natural partners. Indonesia and Malaysia had been in armed confrontation until the previous year, and the Philippines had a live territorial claim against Malaysia. The association was designed less to bring friends together than to stop neighbours from fighting.
Membership then widened over the following decades, as TL 11.1 shows, until the association covered almost the whole of South-East Asia.
The association’s permanent office, the ASEAN Secretariat, is at Jakarta in Indonesia. In 2015 the members launched the ASEAN Community, built on three pillars: the Political-Security Community, the Economic Community and the Socio-Cultural Community.
The ASEAN Way
How ASEAN takes decisions matters as much as what it decides. Its working method, known as the ASEAN Way, has two central rules: decisions are reached by consensus, and members do not interfere in one another’s internal affairs.
Consensus here means that no proposal moves forward while any member objects. Non-interference means that how a member governs at home is treated as its own business, not the group’s.
This method has kept together states with very different political systems and very unequal incomes. It has also meant that ASEAN has no power to compel a member to do anything it has promised.
11.2.2 The Aims Of ASEAN
The aims of the association were set out in the Bangkok Declaration itself, and they have not been formally replaced. The Declaration lists seven, of which the first is quoted in Source 11.1.
The full sentence goes on to say that this is to be done through joint effort in a spirit of equality and partnership, in order to build a prosperous and peaceful community of South-East Asian nations. Growth, in other words, was not treated as an end in itself but as the foundation of regional peace.
The remaining aims of the Declaration may be stated in brief.
To promote regional peace and stability through respect for justice and the rule of law, and adherence to the principles of the United Nations Charter.
To promote active collaboration and mutual assistance in economic, social, cultural, technical, scientific and administrative matters.
To provide assistance to one another in training and research facilities.
To collaborate more effectively in agriculture and industry, in expanding trade, and in improving transport, communications and living standards.
To promote the study of South-East Asia.
To maintain close and beneficial cooperation with other regional and international organisations with similar aims.
Two things are worth noticing about this list. It contains no defence commitment, so ASEAN was never a military alliance. And it contains no promise of a common market, so the economic integration described below was built later, step by step.
The Declaration is evidence of what five governments agreed to announce in 1967. It cannot tell us what they privately intended, or whether they would act on it — and the six states that joined later had no part in drafting it.
11.2.3 The Economic Achievements Of ASEAN
A Large And Fast-Growing Market
The clearest achievement is the size the grouping now represents. Table 11.1 sets out the basic figures, which are worth reading slowly.
Taken together, the members form the fifth-largest economy in the world and a market larger in population than the European Union and North America combined. Average growth across the bloc has stayed near 4 to 5 per cent a year over the last decade.
The last row deserves attention, because it points the other way. Only about a fifth of ASEAN’s trade is with itself; the rest is with China, the United States, Japan, the European Union, India and others.
The table counts output and trade. It cannot tell us how that output is distributed, and the spread between members is enormous — from Singapore, one of the richest economies in the world by income per head, to Myanmar, Laos and Timor-Leste, which are among the poorest in Asia.
Trade Liberalisation
In 1992 the members agreed to create the ASEAN Free Trade Area, cutting tariffs on goods traded among themselves. The scheme was extended as new members joined and has since been carried forward by a single agreement covering trade in goods, upgraded again in 2025.
The result is that tariffs on almost all goods moving between the older members are now at or close to zero. This has made the region attractive as a place to assemble products from parts made in several member states.
Tariffs, however, are not the only obstacle to trade. A non-tariff barrier is any other rule that keeps a foreign good out — a licensing requirement, a quota, a testing standard, a customs delay. These have proved far harder to remove than tariffs, and they are the main reason intra-ASEAN trade has not grown further.
Investment And Production Networks
Foreign direct investment is money invested by a firm in one country to build or buy productive assets in another, such as a factory or a warehouse. It differs from money placed in shares, because it brings machines, jobs and technology with it.
ASEAN has become one of the leading destinations for such investment in the developing world, and investment by ASEAN firms in other member states has grown alongside it. Much of it has gone into manufacturing that spans several members at once, so that a single device may cross three borders before it is finished.
The ASEAN Economic Community
At the end of 2015 the members established the ASEAN Economic Community, with the declared goal of a single market and production base allowing the free flow of goods, services and investment, and freer movement of skilled labour.
Measured against the ladder in Fig. 11.1-1, this is an ambitious target — closer to a common market than to a free trade area. Measured against what has actually been delivered, ASEAN remains a free trade area with a growing list of exceptions still under negotiation.
Agreements With The Wider World
ASEAN’s most striking economic achievement may lie outside the region. It has negotiated trade agreements as a bloc with China, Japan, South Korea, India, Australia and New Zealand, gaining terms that no single member could have won alone.
These agreements led to the Regional Comprehensive Economic Partnership, signed in 2020 and in force from 2022. It joins the ASEAN members to China, Japan, South Korea, Australia and New Zealand, and covers a larger share of the world economy than any other trade agreement.
India took part in the negotiations for seven years and withdrew in 2019. The Indian government’s stated reasons were the risk of a surge of imports, particularly from China, an existing trade deficit with several members, and inadequate protection for farmers and small producers.
That decision remains debated in India. Supporters of withdrawal argue that Indian industry and agriculture needed protection first; critics argue that staying outside the largest trading arrangement in Asia leaves Indian exporters at a disadvantage. Both sides are arguing about the same thing that this chapter keeps returning to — what a state gains, and what it gives up, by binding itself to its neighbours.
11.3 The European Union
Of the five groupings in this chapter, the European Union has gone furthest. Its members share a currency, a common tariff on outsiders and a set of institutions whose decisions bind them all.
It is therefore the natural test case for a question this chapter keeps asking. How much of its own authority will a state hand over, and what does it get back?
11.3.1 What The European Union Is
The European Union is a union of 27 European states that functions as a single market and, for most of its members, as a single currency area. It grew out of an attempt to make another European war impossible.
France and Germany had fought three wars in seventy years, the last of which ended in 1945 with much of the continent in ruins. The response, in 1951, was to place the coal and steel industries of six countries under a common authority. Coal and steel were the raw materials of armament; a country that no longer controlled them alone could not easily prepare for war alone.
The six were Belgium, France, Italy, Luxembourg, the Netherlands and West Germany. From that narrow beginning, cooperation widened into a general common market, and the membership widened with it, as TL 11.2 shows.
The European Union in its present form dates from the Maastricht Treaty, which came into force in 1993. What separates it from every other grouping studied here is that it has common institutions of its own, including a parliament elected directly by citizens and a court whose rulings bind member governments.
That is why the European Union is often described as more than an association of states but less than a federal country. Members remain sovereign and may leave, as the United Kingdom did in 2020 — but while they stay, they are bound by rules that each of them did not separately write.
11.3.2 The Aims Of The European Union
The founding aim was peace, pursued by economic means. The reasoning was that states whose industries, markets and prosperity are woven together will find war against each other too costly to contemplate. In 2012 the European Union was awarded the Nobel Peace Prize for its part in that transformation.
The aims set out in the Union’s founding treaties may be stated as follows.
To promote peace, the Union’s values, and the well-being of its peoples.
To establish an internal market in which goods, services, capital and people move freely.
To work for balanced economic growth, price stability, full employment and social progress.
To combat social exclusion and discrimination, and to promote social justice and equality.
To strengthen economic and social cohesion between richer and poorer regions.
To establish an economic and monetary union whose currency is the euro.
To offer citizens an area of freedom, security and justice without internal frontiers.
Read the list again and notice how much of it is economic. Peace is stated first, but almost every aim below it is a means of producing peace through shared prosperity rather than through a defence pact.
11.3.3 The Economic Achievements Of The European Union
The Single Market
The central achievement is the single market: an area in which goods, services, capital and workers move between member states almost as freely as within one. These are often called the four freedoms.
Its construction took decades. Customs duties between members went first, then the common tariff on outsiders, and then the far harder work of removing the rules behind the borders — different product standards, different professional qualifications, different licensing systems.
The scale of the result is set out in Table 11.2. A firm in any member state can sell to a market of about 449 million consumers on the same terms as at home.
The lower rows show something important: the Union is not uniform. Six member states keep their own currency, and Ireland stands outside the passport-free travel area while four non-members are inside it.
The table records what was agreed and how many joined. It cannot tell us how the gains were shared — and who benefited from the single market, and who did not, is precisely what European politics has been arguing about for thirty years.
The Euro
The euro was launched in 1999 as a currency for accounts and transfers, and banknotes and coins reached people’s hands on 1 January 2002. Today 21 of the 27 members use it.
The gains are real and measurable. Firms and travellers no longer lose money changing currencies at every border. Prices across countries can be compared directly, which sharpens competition. The euro has also become the world’s second most widely held reserve currency — a currency that central banks keep in their official holdings and use to settle international payments.
The cost is equally real. A country inside the euro cannot lower the value of its own currency to make its exports cheaper, because it no longer has one, and it cannot set its own interest rates.
When several eurozone economies fell into crisis after 2008, that mattered enormously. Governments could not devalue, so adjustment came instead through cuts in wages, pensions and public spending, bringing high unemployment and years of political conflict.
The trade-off is the subject of Cartoon 11.1.
Cartoon
Cartoon 11.1 Caption: The single currency simplifies the shopkeeper’s till and moves a decision out of the country. Brief: A shopkeeper at a counter cheerfully hands over a thick bundle of assorted national banknotes and receives in exchange one euro coin, drawn far too small for the bundle. On the wall behind hangs a signpost reading ‘INTEREST RATES’, its arrow pointing off the edge of the frame. No real or identifiable persons, no national flags, no party symbols. Discuss: What is the cartoonist suggesting the shopkeeper has gained, and what has moved out of reach?
Both figures are ordinary users of money, not politicians. The exaggeration lies in the sizes: a heap of currencies collapses into a single coin, which is the convenience. The signpost pointing off the page carries the claim — that the decision on interest rates has left the country altogether.
Like every cartoon, this one argues one side in a single frame. It cannot show the lower costs, the easier price comparison and the investment that the same currency brought, and it says nothing about the six members who have chosen to keep their own money.
Trading As One Bloc
Because the members share a common external tariff, they negotiate with the rest of the world as a single party. The European Union is consistently among the world’s largest exporters and importers of goods and services.
It has used that weight to conclude major trade agreements — with Canada and with Japan among others — on terms no single member could have obtained alone. This is the bargaining-power argument of section 11.1.3 in its clearest form.
Moving Money To Poorer Regions
The Union runs a large common budget that transfers money from richer to poorer regions, for roads, railways, water systems, universities and job training. The states that joined from central and eastern Europe from 2004 onwards have been the main recipients.
A common fund also pays for scientific research across member states, and the Union built its own satellite navigation system, which has provided location services since 2016. These are things no single medium-sized economy could have financed alone.
The Limits Of The Model
None of this makes the European model a settled success. Growth in the Union has been slower than in much of Asia for two decades, and unemployment in some member states has stayed stubbornly high.
Deep integration has also produced its own opposition. The argument that too many decisions had moved too far from voters was central to the United Kingdom’s decision to leave in 2020 — the first time a member state has reversed the process.
That reversal is worth carrying into the rest of this chapter. Integration is not a one-way road, and every rung climbed on the ladder in Fig. 11.1-1 has to be defended politically at home.
11.4 SAARC: The South Asian Association For Regional Cooperation
South Asia contains nearly a quarter of humanity. Its people share river systems, monsoons, languages, crops and a long common history, and until 1947 much of the region was administered as one territory.
By almost every measure, this ought to be one of the most closely integrated regions in the world. It is one of the least. Explaining that gap is the work of this section.
11.4.1 What SAARC Is
The South Asian Association for Regional Cooperation was established on 8 December 1985, when seven states adopted its Charter at Dhaka. The seven were Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka. Afghanistan joined as the eighth member in 2007.
Together the members are home to about 1.9 billion people, roughly a quarter of the world’s population, with a combined output of around US$5 trillion. India alone accounts for close to three-quarters of that output, a concentration found in no other grouping in this chapter.
The association’s Secretariat is at Kathmandu in Nepal, headed by a Secretary-General drawn from member states in turn.
Two Rules That Shaped Everything
The Charter fixed two rules that have governed the association ever since. All decisions, at every level, require unanimity, so any one member can stop any proposal. And bilateral disputes between members are excluded from its deliberations altogether.
Both rules were written to reassure states that did not trust one another. Their effect has been to keep the association alive while limiting what it can decide.
The Charter also provides that the heads of state or government shall meet at least once a year. In practice eighteen summits have been held, the last of them at Kathmandu in 2014.
The nineteenth was to be held at Islamabad in November 2016. After an attack on an Indian army base at Uri in September that year, India announced it would not attend, several other members followed, and the summit was postponed. None has been held since. India has meanwhile given more attention to other regional forums that do not include Pakistan.
11.4.2 The Aims Of SAARC
The Charter sets out eight objectives.
To promote the welfare of the peoples of South Asia and to improve their quality of life.
To accelerate economic growth, social progress and cultural development, and to give every individual the opportunity to live in dignity and realise their full potential.
To promote and strengthen collective self-reliance among the countries of South Asia.
To contribute to mutual trust, understanding and appreciation of one another’s problems.
To promote active collaboration and mutual assistance in the economic, social, cultural, technical and scientific fields.
To strengthen cooperation with other developing countries.
To strengthen cooperation among themselves in international forums on matters of common interest.
To cooperate with international and regional organisations with similar aims and purposes.
The third objective carries a particular history. Collective self-reliance is the idea that developing countries should meet their needs by pooling their own resources and markets, rather than depending on the aid, capital and goods of richer states.
That idea was widely held across the developing world in the 1980s, and it explains why the aims speak of welfare, dignity and mutual assistance before they speak of trade. Notice, in fact, that the eight objectives contain no mention of a free trade area at all. The trade agreements described below were added later.
11.4.3 The Economic Achievements Of SAARC
Building A Trade Arrangement, Step By Step
Economic cooperation began slowly. The first agreement, the South Asian Preferential Trading Arrangement, was signed in 1993 and came into force in 1995. Under it members granted each other reduced tariffs on selected products, negotiated item by item.
The larger step was the South Asian Free Trade Area, signed in 2004 and in force from 2006. It commits members to phased tariff cuts across a broad range of goods, with longer timetables for the least developed members. A further agreement extended the approach to trade in services.
Funds, Institutions And Practical Schemes
Alongside trade, the members built a set of common institutions. The SAARC Development Fund, with its office in Thimphu, finances projects in poverty reduction, health, education and infrastructure across the region.
The South Asian University in New Delhi teaches students from all member countries. A regional food bank was created to hold reserves against shortages, and a seed bank to share planting material. A visa exemption scheme allows certain categories of travellers — including judges, parliamentarians, journalists and business people — to move within the region without a visa.
The members have also signed a framework agreement on trading electricity, which matters greatly in a region where Nepal and Bhutan have large hydroelectric potential and their neighbours have persistent shortages.
The Result, Measured Honestly
Set against the aims, the record is thin. About 5 per cent of South Asia’s total trade is with South Asia itself. The comparable figure for ASEAN is roughly 21.5 per cent, and for the European Union it is far higher still.
Studies by economists at the World Bank and elsewhere estimate that trade within the region is running at a fraction of what its size and proximity would predict. The gap is not caused by geography, since these countries share borders, rivers and ports.
Table 11.3 sets the two Asian groupings side by side. Read the rows carefully, because the most interesting thing about them is how similar the machinery looks.
The decision rules are almost the same. What differs is that ASEAN’s members, whatever their quarrels, have kept meeting and kept signing; SAARC’s have not.
None of this makes SAARC pointless. It created the region’s first common institutions, its first trade agreements and its first shared funds, and those exist to be used whenever the politics permits. Whether that counts as achievement or as unfulfilled promise is a judgement you are now equipped to make.
11.5 BRICS
Every grouping studied so far is a neighbourhood. BRICS is not. Its members lie on four continents, share no border, no common market and no common history of cooperation.
What holds them together is a shared position rather than a shared map. Each is a large economy that grew rapidly, and each believes that the institutions running the world economy were built before it mattered and have not been redesigned since.
11.5.1 What BRICS Is
BRICS is an association of major emerging economies that meets at the level of heads of state and government, without a founding treaty, a charter or a permanent secretariat. It works through annual summits and a rotating chairmanship.
South Africa was invited to join in 2010 and attended its first summit as a member in 2011, at which point the acronym gained its final letter. The grouping then stayed at five members for more than a decade.
A large expansion followed. Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates joined in 2024, and Indonesia in 2025, bringing the membership to eleven. A further category of partner countries was created in 2024 for states that take part in BRICS activities without full membership.
The chairmanship rotates each year, and in 2026 it is held by India, which hosts the eighteenth summit. India has now chaired the grouping four times.
How Large Is BRICS?
The eleven members contain close to half the world’s population. Measuring their share of the world economy, however, gives two different answers, and the difference is worth understanding.
Measured at market exchange rates — that is, by converting each country’s output into dollars at the rate money actually trades — the members produce roughly a quarter to 30 per cent of world output.
Measured by purchasing power parity, which adjusts for the fact that the same haircut, meal or bus ride costs far less in one country than another, their share rises to about 40 per cent. On this second measure the combined output of the original five members passed that of the seven large industrial democracies of the G7 in 2022.
Neither figure is wrong. They answer different questions: the first measures weight in world markets, the second measures how much people can actually buy. A careful reader always asks which measure a claim about BRICS is using.
11.5.2 The Aims Of BRICS
BRICS has no charter, so its aims are found in the declarations issued at its summits. They may be grouped under four heads.
To strengthen economic cooperation among members through trade, investment and finance.
To increase the influence of member countries in global governance and in international institutions such as the United Nations, the International Monetary Fund and the World Bank.
To promote a multipolar world and a more equitable international economic order.
To facilitate exchanges in culture, education, science, technology and sport.
The third aim carries the most weight. A multipolar world is one in which several centres of power exist, rather than one dominant state or two rival camps. The members argue that the world economy is already multipolar in fact, and that its institutions have not caught up.
Their central complaint is about voting power. In the International Monetary Fund and the World Bank, a country’s say is broadly proportional to the money it contributes, and those shares were fixed when today’s emerging economies were small and poor.
BRICS also presents itself as a voice for the Global South — the developing countries of Asia, Africa and Latin America, considered together in international politics. India’s stated position is that these institutions should be reformed rather than replaced, and that BRICS should not be understood as a bloc directed against any other country.
11.5.3 The Economic Achievements Of BRICS
Winning A Larger Say
The first achievement is one of influence rather than construction. Pressed by the financial crisis of 2008, the members of the International Monetary Fund agreed in 2010 to shift more than 6 per cent of voting quota towards emerging and developing economies, and to double the Fund’s resources.
The reform took until 2016 to come into force. That delay is itself part of the story, and it shaped what BRICS did next.
A Financial Safety Net
Alongside the bank, the members created a Contingent Reserve Arrangement of US$100 billion. It is a promise of mutual support: a member facing a sudden shortage of foreign currency can draw on the pool rather than turn immediately elsewhere.
The arrangement has rarely been used. Its value lies in existing — a country known to have a fallback is less likely to face a run on its currency in the first place.
Trade, Payments And Currencies
Members have expanded trade and investment among themselves, and several pairs of members now settle part of their trade in their own currencies instead of in dollars. A shared payments system has been under discussion for some years.
Two claims about BRICS should be treated with care. There is no BRICS currency: the idea has been raised at summits and repeatedly set aside, and India has publicly distanced itself from it. Nor has any BRICS digital currency been adopted, though payment technologies have been discussed. What exists is a set of arrangements for using national currencies more often.
Weight In Commodities
The expansion of 2024 and 2025 changed the grouping’s economic character. With Iran, Saudi Arabia and the United Arab Emirates inside, the members together account for a very large share of world oil production, alongside China’s dominance in manufacturing and Brazil’s and Russia’s in food and minerals.
That gives the grouping real weight in commodity markets. It also sharpens an old difficulty: members who sell oil and members who buy it do not want the same price.
The deepest question about BRICS is whether eleven states with such different political systems, income levels and interests can agree on enough to act together. Two of them, India and China, are themselves in a long-running border dispute. The grouping’s achievements so far have come in the areas where their interests genuinely overlap — finance, voting power and the terms of trade — and stopped where they do not.
11.6 QUAD: The Quadrilateral Security Dialogue
The last grouping in this chapter is the least like an organisation. It has no treaty, no charter, no headquarters and no staff. It cannot sign a trade agreement, and it has never promised to defend anybody.
It is nevertheless taken very seriously by governments across Asia, and India is one of its four members. Working out what it is, and what it has actually produced, is a good test of everything this chapter has taught.
11.6.1 What The QUAD Is
The Quadrilateral Security Dialogue, usually called the QUAD, is an informal grouping of four countries: Australia, India, Japan and the United States. Its members describe it as a partnership of maritime democracies working together across the Indo-Pacific.
The Indo-Pacific is the maritime space that joins the Indian Ocean to the western Pacific. Treating these two oceans as a single strategic region is a recent habit in policy-making, and it reflects how much of the world’s trade now passes through them. Map 11.2 shows the region and the four members.
Map
Map 11.2 Caption: The four QUAD members and the Indo-Pacific maritime region. Brief: A map of the Indian Ocean and the western Pacific, with Australia, India, Japan and the United States shaded and labelled, and the principal shipping lanes between the Persian Gulf, the Strait of Malacca and East Asia marked as broken lines. India must be shown in full extent as officially defined by the Government of India, including Jammu and Kashmir and Ladakh, and all international boundaries must follow those officially recognised by the Government of India. Do not mark any maritime claims, disputed zones or military installations.
How It Began, Ended And Began Again
The origins lie in a disaster. When the Indian Ocean tsunami struck in December 2004, killing more than two hundred thousand people across a dozen countries, the four navies best placed to respond formed an informal core group to coordinate relief. They discovered they could work together at short notice.
In 2007 the Japanese Prime Minister, Shinzo Abe, proposed turning that cooperation into a standing dialogue, and officials of the four countries met for the first time that year. The arrangement lapsed almost immediately, when Australia stepped back in 2008.
It was revived in 2017 at the level of officials. Foreign ministers began meeting from 2019, and the four heads of government first met in 2021, at first by video link and then in person.
An Informal Grouping
The QUAD is not an alliance. Its members have no mutual defence obligation of the kind that binds the members of the North Atlantic Treaty Organization, and no member is required to come to another’s aid.
It has no permanent secretariat either. It works through summits, ministerial meetings and a growing number of working groups, and its decisions take the form of announcements rather than binding agreements.
That informality has costs as well as benefits. Meetings depend on the priorities of whoever is in office in four capitals: no leaders’ summit was held in 2025, although the foreign ministers met at New Delhi in May 2026 and announced fresh initiatives.
11.6.2 The Aims Of The QUAD
The QUAD has no charter, so its aims must be read from the statements the four governments issue jointly. They may be summarised as follows.
To support a free, open, inclusive and prosperous Indo-Pacific.
To uphold a rules-based international order, including freedom of navigation, respect for territorial integrity and the peaceful settlement of disputes.
To strengthen maritime security and cooperation among the region’s states.
To build resilient supply chains in critical technologies, minerals and medicines.
To deliver practical public goods to the region — vaccines, infrastructure, climate finance and disaster relief.
To support ASEAN’s central place in the region’s diplomacy.
The members do not name any country as their target. It is widely understood, and openly discussed, that the grouping took shape as China’s economic and military weight in the region grew, and China’s government has criticised it as an attempt to build an Asian version of NATO.
11.6.3 The Economic Achievements Of The QUAD
The QUAD has no common market, no common tariff and no common fund. Its economic work therefore takes a different form from the other groupings: the four coordinate what each of them spends and builds, rather than pooling anything.
Infrastructure Finance
In 2022 the four announced that they would provide more than US$50 billion in infrastructure assistance and investment across the Indo-Pacific over five years, working through their national development-finance agencies.
The declared purpose is to offer an alternative for countries needing ports, power stations and digital networks — one that keeps the borrower’s debts at a sustainable level. A fellowship programme trains officials from across the region in planning and financing such projects.
Supply Chains And Technology
A supply chain is the sequence of suppliers, factories and transport links through which a finished product is made. The pandemic showed how badly a country can be hurt when one link in a chain it does not control breaks.
The four have therefore worked on securing supplies of semiconductors, on the minerals used in batteries and electronics, and on the undersea cables that carry almost all international data. A framework for coordinating investment in critical minerals — including mining, processing and recycling — was announced in 2026.
Health And Vaccines
The QUAD Vaccine Partnership of 2021 was its most visible economic effort. It combined vaccine technology from the United States, financing from Japan and Australia, and manufacturing capacity in India, to supply COVID-19 vaccines across the region.
The results were mixed and should be reported honestly. Substantial numbers of doses were delivered, but far fewer and far later than the target announced at the start, partly because India restricted vaccine exports during its own severe wave in 2021. The partnership has since broadened into work on pandemic preparedness and, from 2024, on cervical cancer in the region.
Maritime Information And Disaster Relief
The four launched a partnership in 2022 to give countries across the Indo-Pacific access to satellite-based information about shipping in their own waters. This is an economic measure as much as a security one: illegal fishing takes a heavy toll on the incomes of small coastal states.
Disaster relief, where the grouping began, remains one of its most practical activities, with agreed guidelines for working together when a cyclone, earthquake or tsunami strikes.
The Five Groupings Side By Side
The chapter can now be seen whole. Table 11.4 places the five groupings against the ladder of economic integration introduced in section 11.1.2, and the pattern is worth studying before you read the summary.
Read down the last column and a conclusion emerges. Depth of integration does not follow from geography, from size, or even from how long a grouping has existed. It follows from whether members are willing, year after year, to accept rules that limit them — and that willingness is a political fact, not an economic one.
11.7 Summary
The Idea Of Regional Cooperation
Regional cooperation is states in a region working together under agreed rules to reach goals they cannot reach alone. When it is meant to last, they build a regional organisation to run it.
A region is defined by politics as much as by geography. BRICS members lie on four continents, and the Indo-Pacific is an ocean space rather than a landmass.
Cooperation runs from mere consultation to deep integration. Members stay sovereign throughout; what changes is how much freedom of action they trade for shared gains.
It takes place in five fields: economic, political and diplomatic, security, socio-cultural, and functional or technical.
Economic integration has a ladder of four rungs — free trade area, customs union, common market, monetary union. Each rung upward means less national control.
States cooperate for a larger market and economies of scale, for bargaining power, for peace through interdependence, and to handle problems that cross borders.
The costs are real: lost freedom of action, unequal gains, a veto rule that can freeze a group, and agreements that stay on paper.
During the Cold War, regional bodies were mainly military. After 1991 states no longer had to pick a camp, growth became the measure of standing, and trade groupings multiplied.
ASEAN
Founded on 8 August 1967 by the Bangkok Declaration, signed by Indonesia, Malaysia, the Philippines, Singapore and Thailand. Membership reached eleven when Timor-Leste joined in 2025. The Secretariat is at Jakarta.
Its declared aims begin with faster economic growth, social progress and cultural development, and go on to regional peace, mutual assistance, training and research, trade and transport, South-East Asian studies, and cooperation with other organisations. There is no defence commitment among them.
The ASEAN Way — decisions by consensus and non-interference in members’ internal affairs — has held the grouping together but leaves it unable to enforce anything.
Economically, ASEAN is the world’s fifth-largest economy taken as a bloc, with about 683 million people and a combined GDP of roughly US$3.9 trillion in 2024.
Its achievements are the ASEAN Free Trade Area of 1992, heavy inflows of foreign direct investment, the ASEAN Economic Community of 2015, and trade agreements with major partners culminating in RCEP. India took part in the RCEP talks and withdrew in 2019.
Its limits are non-tariff barriers, a wide development gap between members, and intra-ASEAN trade still at about 21.5 per cent of the members’ total trade.
The European Union
It grew from the pooling of coal and steel by six states in 1951, and took its present form when the Maastricht Treaty came into force in 1993. It now has 27 members after the United Kingdom’s withdrawal in 2020.
Its founding aim was peace pursued by economic means. Its treaty aims include an internal market, balanced growth and price stability, social justice, cohesion between richer and poorer regions, a monetary union, and an area without internal frontiers. It received the Nobel Peace Prize in 2012.
Its central achievement is the single market, in which goods, services, capital and people move between members almost as freely as within one state — a market of about 449 million people.
The euro, launched in 1999 and in people’s hands from 2002, is now used by 21 of the 27 members and is the world’s second most held reserve currency. Members using it cannot devalue or set their own interest rates, which made the crisis after 2008 far harder to absorb.
The Union negotiates trade as one bloc, runs a budget that transfers money to poorer regions, and funds shared research and its own satellite navigation system.
It is the only grouping in the chapter with institutions of its own, including a directly elected parliament and a court whose rulings bind governments. It is also the only one a member has left.
SAARC
Established on 8 December 1985 at Dhaka by seven states, with Afghanistan joining in 2007. The Secretariat is at Kathmandu. The members hold about 1.9 billion people and some US$5 trillion of output, of which India accounts for close to three-quarters.
Its Charter sets out eight objectives, built around welfare, economic growth, collective self-reliance and mutual trust. None of them mentions a free trade area.
Two Charter rules govern everything: unanimity at every level, and the exclusion of bilateral disputes from its deliberations.
Its economic achievements are SAPTA of 1993, the South Asian Free Trade Area of 2004 in force from 2006, an agreement on services, the SAARC Development Fund, the South Asian University, a food bank and a visa exemption scheme.
Long sensitive lists, non-tariff barriers and weak transport links have kept intra-regional trade at about 5 per cent of South Asia’s total trade — the lowest of any major region. No summit has been held since 2014.
BRICS
Brazil, Russia, India and China began meeting as BRIC in 2006 and held their first summit at Yekaterinburg in 2009. South Africa joined in 2010, and six more members between 2024 and 2025 brought the total to eleven. India chairs the grouping in 2026.
It has no treaty, charter or secretariat, and works through annual summits and a rotating chair.
Its aims are stronger economic cooperation among members, greater influence in global institutions, a multipolar world and a more equitable economic order, and exchanges in culture, education and science.
Its members hold close to half the world’s population, produce about 40 per cent of world output measured by purchasing power parity, and about a quarter to 30 per cent at market exchange rates.
Its achievements are the shift of voting quota to emerging economies at the International Monetary Fund, agreed in 2010 and in force from 2016; the New Development Bank agreed at Fortaleza in 2014, with equal shares for its founders; a US$100 billion Contingent Reserve Arrangement; and growing settlement of trade in members’ own currencies.
There is no BRICS currency, and none has been adopted in digital form either.
The QUAD
An informal grouping of Australia, India, Japan and the United States, with no treaty, secretariat or mutual defence obligation. It grew out of joint relief work after the 2004 tsunami, first met in 2007, lapsed in 2008 and was revived in 2017.
Its aims are a free, open and prosperous Indo-Pacific, a rules-based order with freedom of navigation, maritime security, resilient supply chains, practical public goods for the region, and support for ASEAN’s central place in regional diplomacy.
Because it pools nothing, its economic work takes the form of coordinated national spending: more than US$50 billion pledged for Indo-Pacific infrastructure from 2022, work on semiconductors, critical minerals and undersea cables, the Vaccine Partnership of 2021, satellite-based maritime information, and disaster relief.
Informality buys speed and costs reliability. No leaders’ summit was held in 2025, though the foreign ministers met at New Delhi in May 2026.
The Pattern Across The Five
Depth of integration does not follow from geography, size or age. SAARC’s members are neighbours who trade little; BRICS members share no border and have built a bank.
What decides it is whether members will accept, year after year, rules that limit them — and that is a political fact rather than an economic one.
Every gain in this chapter was bought with a loss of national control, and every grouping is therefore an answer to the same question: how much is a state willing to give up, and to whom?
11.8 Key Terms
ASEAN Way — ASEAN’s working method, under which decisions are taken by consensus and members do not interfere in one another’s internal affairs.
Collective self-reliance — the idea that developing countries should meet their needs by pooling their own resources and markets rather than depending on richer states.
Common market — a customs union that also allows services, capital and workers to move freely between member states.
Customs union — a free trade area whose members also apply a single agreed tariff to goods coming from outside the group.
Foreign direct investment — money invested by a firm in one country to build or buy productive assets, such as a factory, in another country.
Free trade area — a group whose members abolish tariffs on goods traded among themselves while each keeps its own tariffs on outsiders.
Global South — the developing countries of Asia, Africa and Latin America, considered together as a group in international politics.
Indo-Pacific — the maritime region joining the Indian Ocean to the western Pacific, treated in recent policy as a single strategic space.
Monetary union — a group whose members share a single currency and a single monetary policy, and therefore one set of interest rates.
Multipolar world — a world in which several centres of power exist, rather than one dominant state or two rival camps.
Non-tariff barrier — any rule other than a tariff that keeps foreign goods out, such as a quota, a licensing requirement, a testing standard or a customs delay.
Purchasing power parity — a way of comparing economies that adjusts for the fact that the same goods and services cost different amounts in different countries.
Regional cooperation — states in a region working together under agreed rules to pursue goals they cannot reach alone.
Regional organisation — a permanent body created to carry on such cooperation, with named members, a founding charter and regular meetings.
Reserve currency — a currency that central banks hold in their official reserves and use to settle international payments.
Sensitive list — the schedule of goods a member of a trade agreement keeps outside the agreed tariff cuts, usually to protect farmers or a domestic industry.
Single market — an area in which goods, services, capital and workers move between member states almost as freely as within one state.
Supply chain — the sequence of suppliers, factories and transport links through which a finished product is made and delivered.
Tariff — a tax charged by a government on goods entering its territory, which raises their price and shelters producers at home.
11.9 Points to Ponder
Every rung on the ladder of economic integration costs a state some control over its own decisions. At what point along that ladder does a member stop being sovereign in any meaningful sense — or does it never stop?
SAARC’s Charter keeps disputes between members off its agenda so that the association can survive them. Is a forum that cannot discuss its members’ real quarrels worth having?
ASEAN and SAARC both require the agreement of every member, yet one has built a working trade area and the other has not. How much can the design of an institution explain, and where must the explanation come from somewhere else?
The BRICS members share no border, no common market and no common political system. Can a shared grievance about how the world is governed hold a grouping together as firmly as geography once did?
The QUAD has no treaty, no secretariat and no common fund, yet it has delivered vaccines, cables and disaster relief. Does a grouping need binding rules to be effective, or only members who keep turning up?
Regional cooperation is always justified by the gains it brings to a country. Inside that country, who actually receives those gains, and who bears the cost of the rules that produce them?
11.10 Objective Questions
- In a customs union, member states:
- abolish tariffs among themselves but each keeps its own tariffs on outsiders
- abolish tariffs among themselves and apply a common tariff to outsiders
- share a single currency and a single rate of interest
- allow workers of every member to take up employment anywhere in the group [1 mark]
- The aim stated first in the ASEAN Declaration of 1967 is:
- the joint defence of South-East Asia
- the creation of a single currency for the region
- accelerating economic growth, social progress and cultural development
- promoting the study of South-East Asia [1 mark]
- The Secretariat of SAARC is located at:
- Dhaka
- New Delhi
- Thimphu
- Kathmandu [1 mark]
- The agreement establishing the New Development Bank was signed at the BRICS summit held at:
- Yekaterinburg
- Fortaleza
- Sanya
- Kazan [1 mark]
- Which of the following is not a member of the QUAD?
- Japan
- Australia
- Indonesia
- India [1 mark]
- Assertion (A): Trade within South Asia is among the lowest of any region in the world. Reason (R): The SAARC Charter excludes disputes between member states from its deliberations.
- Both A and R are true, and R is the correct explanation of A.
- Both A and R are true, but R is not the correct explanation of A.
- A is true, but R is false.
- A is false, but R is true. [1 mark]
- Assertion (A): The QUAD is not a military alliance. Reason (R): Its four members have not accepted any obligation to defend one another.
- Both A and R are true, and R is the correct explanation of A.
- Both A and R are true, but R is not the correct explanation of A.
- A is true, but R is false.
- A is false, but R is true. [1 mark]
- Match each grouping in Column A with the arrangement associated with it in Column B. [4 marks]
| Column A | Column B |
|---|---|
| a. ASEAN | i. the New Development Bank |
| b. SAARC | ii. the single market |
| c. European Union | iii. AFTA |
| d. BRICS | iv. SAFTA |
Fill in the blank: The euro was launched in 1999 and reached people’s hands as banknotes and coins in ______. [1 mark]
Fill in the blank: ______ was admitted in 2025 as the eleventh member state of ASEAN. [1 mark]
State whether the following statement is true or false: BRICS works through a permanent secretariat and a founding charter. [1 mark]
11.11 Check Your Concepts
Define regional cooperation. [2 marks]
State any two aims of BRICS. [2 marks]
What is meant by a non-tariff barrier? Give one example. [2 marks]
Differentiate between a free trade area and a customs union. [3 marks]
Explain briefly what is meant by the ASEAN Way. [3 marks]
Give three reasons why states choose to cooperate with their neighbours. [3 marks]
Explain, with an example from this chapter, how membership of a regional grouping increases a state’s bargaining power. [4 marks]
Describe the economic achievements of the QUAD in infrastructure and in supply chains. [4 marks]
‘A single currency brings gains that no free trade area can deliver.’ Evaluate this claim. [4 marks]
State the aims of SAARC and assess its economic achievements, giving reasons for their limited success. [6 marks]
Compare the economic achievements of ASEAN with those of the European Union. [6 marks]
Discuss the causes and the consequences of the shift in regional cooperation from military alliances to economic groupings after the Cold War. [6 marks]
11.12 Source & Passage-Based Questions
- A small country shares a long land border with a neighbour whose economy is twenty times larger. Its government is considering joining a regional free trade area that the larger neighbour already dominates. Its industry associations warn that local factories will not survive the competition. Its exporters point out that the group’s ports and roads offer their only route to the wider world.
- Identify the two benefits of regional cooperation that the exporters are relying on. [2 marks]
- Explain the cost of cooperation that the industry associations are pointing to. [2 marks]
- State two things the government would need to know before deciding. [2 marks]
- Study the following description of a cartoon and answer the questions below. A long queue of loaded trucks stands at a border post between two neighbouring countries. The barrier is down. A large signboard above the barrier reads ‘FREE TRADE AGREEMENT — SIGNED’. Beside the barrier an official is stamping an enormous pile of papers, and a second signboard lists testing, licensing and inspection requirements.
- What claim is the cartoonist making about the agreement? [2 marks]
- Name the concept from this chapter that explains why the trucks are still waiting, and define it. [2 marks]
- State one thing this cartoon cannot tell you about trade between the two countries. [2 marks]
- In 2019, after seven years of negotiation, India withdrew from the Regional Comprehensive Economic Partnership. The reasons stated by the government included the risk of a surge of imports, an existing trade deficit with several members, and inadequate safeguards for farmers and small producers. The agreement was signed by the remaining fifteen countries in 2020 and came into force in 2022.
- Explain why a large market can be a reason to join a trade agreement and also a reason to stay out of one. [3 marks]
- Set out one argument in support of the decision and one argument against it. [3 marks]
- A regional association takes every decision by unanimity. At its annual meeting, seven of its eight members support a proposal to cut tariffs on a list of farm products. The eighth member objects, on the ground that its own farmers would be undercut. The proposal lapses, and the meeting ends without a decision.
- Explain why groupings adopt a rule of unanimity in the first place. [2 marks]
- State two consequences of such a rule for what the grouping can achieve. [2 marks]
- Suggest one change to the decision rule, and state one risk that your change would create. [2 marks]
11.13 Practice With Data
- Study the figures below and answer the questions.
| Grouping | Trade with fellow members, as a share of the group’s total trade |
|---|---|
| ASEAN | about 21.5 per cent |
| SAARC | about 5 per cent |
a. By how many percentage points does the ASEAN figure exceed the SAARC figure? [1 mark]
b. Give two reasons for the difference between them. [4 marks]
c. State one thing these two figures cannot tell you about either region. [1 mark]- The eleven BRICS members produce about 40 per cent of world output when measured by purchasing power parity, but only about a quarter to 30 per cent when measured at market exchange rates.
- Explain why the same group of countries produces two different figures. [2 marks]
- Which measure would you use to argue that BRICS should have more votes in the International Monetary Fund, and why? [3 marks]
- State one conclusion that neither figure can settle. [1 mark]
- Study Table 11.4, which sets the five groupings of this chapter side by side, and answer the questions.
- Name the grouping that has climbed highest on the ladder of economic integration, and state the rung it has reached. [2 marks]
- SAARC’s members are neighbours and BRICS members are not, yet BRICS has built a bank while SAARC’s trade area remains narrow. What does this suggest about the importance of geography? [3 marks]
- State one thing the table flattens or leaves out. [1 mark]