There is plainly a demographic dividend around the corner. It has taken the form of an assumption that populous countries are a sound guarantee against under-consumption. That seems to be the hypothesis underlying Goldman Sachs? preoccupation with eleven new economies apart from the Bric (Brazil, Russia, India and China). That lot, which goes under the collective rubric of N-11, includes Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, South Korea, Turkey and Vietnam?and their main common ground, and reason for selection, was that they were the next set of large-population countries beyond the Bric countries.
The result, which Goldman Sachs reported in Brics and Beyond (2007) has been to evaluate a very diverse agglomeration that includes Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey and Vietnam. And, rather like the Bric, they are heterogeneous in intent and purpose: some, like Mexico, South Korea and (of late) even Vietnam, are very familiar to investors and industrialists from across the world.
They are manufacturing or outsourcing hubs, even if that is of recent ilk. Others, though, are natural resource cornucopias, such as Nigeria, Indonesia (both members of Opec) while others have yet to find their feet?Pakistan, Bangladesh and others. Mexico, South Korea and Turkey even belong to the OECD, and South Korea is classified as developed.
Of the N-11, only Mexico, Korea and, to a lesser degree, Turkey and Vietnam have both the potential and the conditions to rival the current major economies or the Bric themselves. Still, Goldman Sachs seems persuaded that at least some, if not all, of the N-11 may shadow the performance of the Bric and might even come to challenge the G-7?s supremacy. They may do so by becoming new centres of industrial, or service-sector growth led by the quantum of demand that gets generated within their economies. Indeed, part of the Goldman Sachs thesis is that these dawning stars of demand would be absolutely vital to deliver the type of demand that the developed world would be increasingly hard put to find.
Maybe, too, there is another aspect of the economic development of these countries which just might vindicate Goldman Sachs? faith in them?but in a manner that could make the financial giant echo the saying, ?men make history, but not as they please?.
There is, thus, a big chance that rather a large number of these populous, natural disaster-prone, island, land-locked, or malnourished countries would prefer to seek economic succour in the primary sector (agricultural and related) pursuits rather than be drawn into the familiar cycle of industrialisation?with its attendant rip-offs, including the welfare-reducing ill-effects of environmental degradation, urbanisation, displacement from land and falling water tables.
It is, after all, far more plausible that industrial success?and the sort of traumatising pollution that it has unleashed in China?will have Bric and OECD citizens pining for periodic ?opt-outs?, which is when locations such as the N-11?s would come into their own as havens for tourism.
Then there is the factor of uncertainty too, that is plain from any recent snapshot of international markets and institutions. To elaborate on that?there is still no certainty that the Doha Round will get to be completed?or, at least, be signed and sealed in a manner that affords open access, or a non-NTB ambience for primary exports from developing economies. The Bric may live with that by trading within themselves. Also, some of them are sufficiently industrialised: China?s recent inflation is attributable to the accelerating prices of agricultural goods, no less?while the share of primary exports in India?s trading basket has been falling while imports (like incomes) are on the rise.
Accordingly, the smaller of the N-11 economies need to factor in the possibility, and potential, of such external shocks before they even embark on a path that promises ?export-led? growth.
The Goldman Sachs report stresses that they are more integrated globally than they used to be: ?The N-11?s weight in the global economy and global trade has been slowly increasing, with a contribution to global growth of around 9% over the last few years.? But they also admit that only one economy, that of Vietnam?s ?has managed growth comparable to China, Russia and India?. It is cold comfort that five others had averaged growth rates of 5%-plus over 2002-07.