Bankers love a good acronym.
Thirteen years ago, Jim O’Neill, former chief economist and head of asset management at Goldman Sachs, coined the term BRIC for four countries (Brazil, Russia, India and China) poised to join the G6 in the economic big time. South Africa, added later, made it BRICS. Then, 11 emerging countries, including Iran, South Korea and Pakistan, were singled out as the N11 (Next-11).
Now O’Neill is back, marking out four countries (Mexico, Indonesia, Nigeria and Turkey) from the N11 as ones to watch for huge economic growth.
‘If they get their act together, they’ve got the ability to get so much bigger,’ said O’Neill of the MINT countries, the subject of his upcoming BBC radio series, MINT: The Next Economic Giants (Radio 4, January 6 to 9 at 9am). ‘If not as big as the BRICs, then not that far off.’
Mexico, O’Neill argues, previously lost out to China on cheap exports and labour. But with wages increasing in China, Mexico can capitalise, especially with its proximity to the US.
‘It’s probably the most competitive OECD country at the moment,’ said O’Neill. ‘And these guys have a bunch of young reformers who make Maggie Thatcher look like a pussycat.’
Indonesia has a chance to boom, like Mexico, because of a large, willing workforce and a rapidly urbanising population, said O’Neill. ‘There are 240m of them in Indonesia, the third largest populated country in the world.’
Turkey, meanwhile, benefits from its geographical position between East and West and ‘because they know how to deal with us in the West, with the Middle East, with the Russians’.
But is the MINT prediction solid or just a random selection of countries which make up a clever acronym?
‘You could say the MINT countries are a bit predictable because the group weeds out the countries which are basket cases at the moment,’ said Felix Martin, author of Money: The Unauthorised Biography. ‘The problem is many of the countries that made the most convincing advances in economic development over the last century were anything but predictable. Real progress often started from crisis and in the most unexpected places. A good example is Korea. It was poorer than Ghana in 1960 and, no doubt, in 1960, Goldman Sachs would’ve said Ghana, rather than Korea, was the next big thing. But the devastation caused by the Korean War meant Korea modernised exceptionally quickly, whilst peaceful, promising Ghana went nowhere.
‘I’d diversify my bets across several countries currently in the midst of profound social change. For example, Egypt, Iran, Thailand and, with any luck, Ukraine. Not all these will prosper but the ones that do are likely to be on a genuinely fresh path.’
Regardless of whoever is next to get minted, a major question in any country’s economic growth is this: ‘Who benefits?’. Pope Francis recently condemned faith in the ‘trickle down’ theory, which too often leaves wealth in the hands of the few, rather than benefitting a country’s entire population, including the poor. Despite massive growth, Brazil still has one of the most unequal societies in the world, with millions living in poverty while record numbers of millionaires are produced. The other BRIC countries – Russia, India and China – have all seen a widening gap between rich and poor.
Good, determined and corruption-free governments are key to steering economic development to benefit the many, said O’Neill. But he dismisses the notion that banks and investors could also help by behaving more ethically. Many argue, for example, that Mexico’s drug-fuelled instability is exacerbated by major banks, such as HSBC, laundering drug cartels’ money. In Nigeria, bankers, investors and companies, such as Shell, are accused of being part of a corrupt system that profits from the country’s resources but fuels poverty. However, O’Neill says a bank is merely ‘an intermediary who’s just transmitting money from one place to another’.
Nick Dearden, director of the World Development Movement, disagrees. ‘Banks are massively powerful players whose operations can exacerbate poverty and inequality and erode democracy,’ he said. ‘Look at the Third World debt crisis in the 1980s and 90s, in which dozens of countries became much poorer and millions suffered and died in South America and Africa. Banks created that crisis through unjust lending. Or the Southeast Asian crisis in 1997, in which Thailand and Indonesia were sent into depression by financial speculation. It’s the same with the Euro crisis today.’ Some of the MINT countries are ‘exciting’ because of their competitiveness, which is based, in part, on large numbers of people prepared to work for low wages.
‘O’Neill’s choice of countries is really interesting because in both Nigeria and Indonesia, poverty is rising at the same time as wealth is rising,’ said Dearden. ‘We’re seeing a form of “development”, driven by finance and high commodity prices, which hugely benefits the rich but makes the lives of the poor even harder. It’s locking countries into a form of growth which is all about making the rich even more rich and the poor even more poor.’