Move over Brics, Next 11 countries waiting in the wings

While China and India continue to drive the global economy, they are joined by a number of other high-population, high-potential countries, particularly in Asia. It’s no more one powerhouse country, but on region-wide gains in prosperity. On a recent holiday in Vietnam, Cambodia, and Laos, I couldn’t resist thinking about these countries’ economic potential and ongoing policy challenges. After all, in 2005, my Goldman Sachs colleagues and I had listed Vietnam as one of the Next Eleven (N-11) — all countries with the potential to become important economies during this century.

The N-11 never acquired the cachet of the BRIC acronym, which I coined in 2001 to describe a bloc of emerging economies (Brazil, Russia, India, and China) that stood to have a significant impact on the world economy in the future. The N-11 countries weren’t at the level of the BRICs, but nor was either acronym intended to be an investment theme. Rather, N-11 was simply a label we applied to the next 11 most populous, highest-potential emerging economies after the BRICs.

Around the time that we published the 2005 paper “How Solid are the BRICs?”, in which we first identified the N-11, I often joked that we chose 11 simply because it was the number of players on a soccer team. When others would point out that we had excluded more populous countries such as Congo and Ethiopia, I would muse that Ethiopia could be the N-11’s Ole Gunnar Solskjaer, in reference to Manchester United’s brilliant sub-in scorer during the 1990s.

Then as now, the N-11 comprised a mixed bag: South Korea, Mexico, Indonesia, Turkey, Iran, Egypt, Nigeria, the Philippines, Pakistan, Bangladesh, and Vietnam. These countries have extremely diverse economic and social conditions, and very different levels of wealth. For example, South Koreans now enjoy a standard of living similar to that in the European Union, which makes many analysts’ persistent categorisation of South Korea as an “emerging economy” all the more baffling.

Meanwhile, Mexico’s and Turkey’s levels of wealth haven’t come anywhere near that of South Korea, and yet they are considerably wealthier than the rest of the N-11, some of which remain among the poorest countries in the world. At the same time, Asian N-11 countries such as the Philippines and Vietnam have grown significantly since 2005, while Mexico’s performance has been somewhat disappointing, and Egypt’s even more so.

Collectively, the N-11 comprises some 1.5 billion people, and its current nominal GDP is around $6.5 trillion. In other words, while its population is slightly larger than that of China or India, its economy is about half the size of China’s, but larger than Japan’s and more than twice the size of India’s.

These divergences help to explain why a number of new acronymic groupings have since been carved out of the N-11, including the MINT (Mexico, Indonesia, Nigeria, Turkey) and the MIST (swapping in South Korea for Nigeria). I didn’t devise these groupings, but I have come to be associated with them, having produced a BBC radio documentary on the MINT countries in 2014. At any rate, they were in keeping with earlier points I had raised; namely, that by 2010, Mexico, Indonesia, South Korea, and Turkey would each account for more than 1 per cent of global GDP.

Eight years later, the MIST economies still have a chance to account for around 2-3 per cent of world GDP in the future. None is likely to reach the size of any of the BRIC economies, except, perhaps, Russia. Owing to its current problems, Russia’s GDP is now around the same size as South Korea’s. If it doesn’t sort itself out soon, its GDP could fall below that of Mexico, or even Indonesia.

Of the other seven N-11 economies, Nigeria, Vietnam, and perhaps Iran stand out for having the most potential. Still, each faces serious obstacles to becoming a $1 trillion economy, never mind accounting for 2-3 per cent of world GDP.

Looking beyond each of these countries’ individual prospects, what is important for economic observers and investment professionals to understand is that the N-11 as a bloc has grown by around 4.5 per cent so far this decade, after growing by almost 4 per cent in the previous decade. Given the size of its output, the N-11’s growth is contributing significantly to the world economy, alongside the primary drivers of China and India.

I kept reminding myself of this fact while traveling around Vietnam, where my tranquility was repeatedly interrupted by blaring headlines about US President Donald Trump’s tweets and escalating violence in the Middle East. —Project Syndicate Jim O’Neill is Honorary Professor of Economics at Manchester University and former Chairman of the Review on Antimicrobial Resistance.

The N-11 as a bloc has grown by around 4.5 per cent so far this decade, after growing by almost 4 per cent in the previous decade