The Growth Map
The Growth Map
by Jim O'Neill
Portfolio Penguin
Jim O'Neill is one of the world's most quoted economic advisers. It was he who in 2001 coined the acronym 'BRIC' to describe the world's four fastest-growing countries and predicted that they would overtake the six largest Western economies within 40 years.
BRIC - Brazil, Russia, India and China - has become part of the English language; their success over the past decade has surpassed his most ambitious forecasts. (In 2010, South Africa was added, changing the acronym to BRICS.) This has changed the way we see the world and has made O'Neill, chairman of Goldman Sachs Asset Management, a sought-after investment adviser and conference speaker.
This book, subtitled Economic Opportunity in the BRICs and Beyond, gives his analysis of the economies of the original four over the past decade and points us to the countries that will follow them.
The new acronym is 'Next Eleven' or N-11 - Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria, Pakistan, the Philippines, Turkey and Vietnam.
'In early 2011 I decided that the term 'emerging markets' could no longer be applied to the BRICs or four of the N-11 - Indonesia, South Korea, Mexico and Turkey. 'Growth Markets' would be more accurate,' O'Neill writes. 'They have the right demographics and productivity momentum to grow faster than the world average. They have superior growth environments to most emerging markets and the financial infrastructure, market size and depth required by international investors. They offer plenty of different, liquid investment opportunities.'
He is optimistic about the world economy. 'We at Goldman Sachs estimate that two billion people are going to be brought into the global middle class between now and 2030 as the BRIC and N-11 economies develop ... International trade is good for everyone.'
He argues that this growth is the future for the developed countries and Western multinationals. The resurrection of General Motors, nearly bankrupt in June 2009, is largely due to a dramatic increase in its sales in China.
He highlights German companies such as BMW, Bosch, Mercedes-Benz and Siemens as most successful in seizing this opportunity. 'Germany's exports to the BRICs have already become bigger than its exports to France. If current growth continues, within two years, German trade with China will be bigger than with France.'
He believes international organisations such as the G7, the International Monetary Fund and the World Bank do not properly reflect the new strength of the BRICs. He proposes that, in the G7 and the G20, the memberships of France, Germany and Italy be merged into a single EU common currency membership.
'China is the second-largest economy in the world. Brazil is bigger now than Italy. France, Germany and Italy share a single currency. Brazil, India and Russia are each bigger than Canada. Yet the G7 still meet, and their leaders still behave as though their nations dominate the world,' O'Neill writes. He proposes a reformed G20 with membership limited to countries which account for at least one per cent of global GDP. This would exclude current members Spain, Australia, South Africa, Argentina and Saudi Arabia.
