I spent last
week in Indonesia, working on a series for BBC Radio about four of the world’s
most populous non-BRIC emerging economies. The BRIC countries—Brazil, Russia,
India and China—are already closely watched. The group I’m studying for this
project—let’s call them the MINT economies—deserve no less attention. Mexico,
Indonesia, Nigeria and Turkey all have very favorable demographics for at least
the next 20 years, and their economic prospects are interesting.
Policymakers
and thinkers in the MINT countries have often asked me why I left them out of
that first classification. Indonesians made the point with particular force.
Over the years I’ve become accustomed to being told that the BRIC countries
should have been the BRIICs all along, or maybe even the BIICs. Wasn’t
Indonesia’s economic potential more compelling than Russia’s? Despite the size
of its relatively young population (a tremendous asset), I thought it unlikely
that Indonesia would do enough on the economic-policy front to quickly realize
that potential.
Now, meeting
a diverse group of Indonesians—from the leading candidates for the 2014
presidential elections to shoppers in Jakarta’s busy malls—I found a healthy
preoccupation with the country’s economic prospects. Could Indonesia do what’s
needed to lift the country’s growth rate to 7% or more, they were asking, or
would it have to settle for just 5%?
Contrasting
ambitions
During the
trip, I got word that Russia’s economy minister, Alexei Ulyukayev, had suggested
Russia was likely to grow by just 2.5% a year over the next 20 years. How’s
that for contrasting ambitions? It made me wonder about the ‘R’ all over again.
Certainly if
Russia can only grow by 2.5% this decade and beyond—far too little to maintain,
let alone increase, its share of global output—that would be cause for concern.
Not least because the country faces a growing demographic challenge as it moves
toward 2050. By that year, I and many others assume Russia’s population will be
closer to 100 million than today’s 140 million. This worsening demographic drag
will slow the economy further.
Russia’s
recent economic performance has undoubtedly been poor, and demography isn’t the
only problem. The country is far too dependent on oil and gas, afflicted with
corruption, and lacking a credible legal framework for business. Even so, one
wonders about the thinking behind Ulyukayev’s public pessimism. Until recently,
Russian officials were determinedly upbeat. I recall in 2008 telling a group in
St. Petersburg that Russia would probably grow at 4% a year or less through
2020, and that it was a mistake to assume ever-rising oil prices. As they made
very clear, that wasn’t what they wanted to hear. I suspect the new pessimism
may be deliberately exaggerated. Maybe some influential policymakers are trying
to build support for genuine reform—by saying, see what happens if we don’t
act. Let’s hope so.
Last week
also saw the buildup to the much-anticipated meeting of China’s leaders that
began over the weekend. As I discuss in a new book, The BRIC Road to Growth,
China has a unique role in the group, not just because of its size but also
because of its global economic reach and ambition. Nonetheless, its approach to
development needs to be adjusted. Reports suggest that the government is
considering new steps to create a more consumer-led economy, which is indeed
necessary to lessen China’s dependence on low-value exports and state-directed
investment.
Clear
thinking
That will be
a difficult transition to manage, but, by emerging-economy standards, China’s
leadership has a history of clear thinking about economic strategy—not to
mention an unmatched record of success. The policy review coincides with new
economic figures that continue to be somewhat better than expected. China is
likely to grow by more than 7.5% this year. If so, it will have beaten my
expectations for growth since the start of this decade, the only BRIC country
to have done so.
By the end
of this year, China’s annual output will be more than $9 trillion—not far off
1.5 times the output of the other three BRIC countries put together. If its
leaders can deliver the reforms they’ve been discussing since the weekend, the
country’s rapid growth can be sustained. The global economy will continue to be
transformed, and the other BRIC and MINT economies will have an even more
daunting standard against which to measure their performance.
Jim O’Neill Bloomberg
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