The term BRIC (Brazil Russia India China) was coined by Jim O Neil to signify the impact that these four countries will have on the world economy. BRIC today has expanded itself to become BRICS with the inclusion of South Africa and is widely regarded as a trading block that will dictate terms of world economic growth in the 21st century. Ironically, the same person also coined the term MIKT (also referred as MIST) to denote the countries that will leave the maximum impact in the global economy in the next half of the century. MIKT refers to the block led by Mexico, Indonesia, South Korea and Turkey. How is BRICS and MIKT faring against each other? The article looks at certain metrics to find the answer.
Brief Overview:
BRICS
Brazil: The fifth largest country in the world both in terms of geographical area and population, it also boasts of the seventh largest economy in terms of nominal GDP and purchasing power parity basis. Potential game-changer: Unproven but estimated to be substantially high oil reserves in the eastern coast.
Russia: The largest country in the world, it also has the 8th largest nominal GDP in the world. Under the leadership of Putin and its new found oil power, the country has become an economic force to reckon with.
India: Home to over a billion people, the country is today one of the driving forces of the world economy. It is estimated that India will become the 3rd largest economy in the world in terms of real GDP by the year 2050.
China: The next superpower in the making, China today can safely be regarded as the manufacturing epicentre and the largest creditor of the world economy. The country aspires to eventually replace the USD as the world’s reserve currency and is already the second largest economy in the world.
South Africa: The newest entrant to the economic block, the country boasts of one of the fastest growing economies in Africa and is also regarded as the most politically stable country in the continent. A booming automobile sector along with rich availability of precious metals are the areas to watch out for.
MIKT
Mexico: Lying to the south of USA, the country has a clear advantage in manufacturing sector owing availability of cheap labour and a young population. Demographics may prove to be its biggest source of growth in this century.
Indonesia: The country not only has the seventh largest population, but it is also supposed to become the seventh largest economy in the world by 2050. The country is already regarded as an economic powerhouse and is located in strategic location geographically in the Asia-pacific region.
Korea (South Korea): South Korea can be safely regarded as one of the most developed nations in the region. Goldman Sachs in a report titled “A unified Korea?” in 2009 had predicted in case North and South Korea unified, it can easily surpass Japan in terms of GDP by 2050 due to the large mineral reserves of North and technological prowess of the South.
Turkey: Located strategically as the gateway to Europe, Middle-east and Africa, Turkey can emerge as a major economic player once it formally joins the Eurozone. It has the 15th largest GDP( PPP terms) in the world and is a founding member of OECD.
Parameters considered:
Source of primary data for analysis: World Bank
Parameter 1: Cash Surplus/deficit as % of GDP
The fiscal surplus or deficit status as percentage of GDP is an important parameter to judge the state of a country’s economy. I have purposely ignored the data from China in this case as it follows a fixed currency and has enjoyed a surplus status largely owing to the undervaluation of its currency. In case of Mexico, reliable data was unavailable.
|
Country Name
|
2006
|
2007
|
2008
|
2009
|
2010
|
2011
|
|
Brazil
|
-2.88
|
-1.87
|
-1.21
|
-3.47
|
-1.67
|
-2.58
|
|
India
|
-2.24
|
-0.47
|
-4.87
|
-5.42
|
-3.64
|
-3.68
|
|
Indonesia
|
-0.62
|
-1.02
|
-0.34
|
-1.67
|
-0.56
|
-1.14
|
|
Korea, Rep.
|
1.14
|
2.32
|
1.64
|
0.02
|
1.65
|
1.82
|
|
Russian Federation
|
8.02
|
6.19
|
5.62
|
-4.21
|
-1.91
|
3.37
|
|
South Africa
|
0.91
|
1.08
|
-0.68
|
-5.14
|
-4.04
|
-4.35
|
|
Turkey
|
1.90
|
1.41
|
-2.15
|
-5.25
|
-2.92
|
-1.29
|
Barring the Russian federation and Republic of Korea, none of the other countries has been able to produce a consistent outcome in this parameter.
Key factor determination: Health of economy- Result- Tie
Parameter 2: Central Govt. Debt as percentage of Debt
|
Country Name
|
2006
|
2007
|
2008
|
2009
|
2010
|
2011
|
|
Brazil
|
55.75
|
57.39
|
56.63
|
60.00
|
52.21
|
52.79
|
|
India
|
59.11
|
56.48
|
56.11
|
54.31
|
50.43
|
48.50
|
|
Indonesia
|
38.93
|
35.18
|
33.14
|
28.36
|
26.10
|
26.22
|
|
Russian Federation
|
9.89
|
7.16
|
6.50
|
8.70
|
9.33
|
9.52
|
|
Turkey
|
51.50
|
44.35
|
44.66
|
53.56
|
50.94
|
45.92
|
*China and South Korea have been ignored owing to cash surplus in the respective economies. Reliable data for Mexico and South Africa was unavailable.
Based on the above table, only Russia seems to be carrying a very low percentage of external debt, possibly because of the foreign currency it has gained due to export of oil.
Key factor determination: Economic stability- Result- BRICS holds an edge
Parameter 3: Exports of goods and services as a percentage of GDP
The third factor that I have considered is perhaps the most important factor in my view as it shows both the interdependence of the economies as well as the strength of the internal economy to sustain itself in the event of a slowdown. Considering the data from 2001 to 2011, it throws some interesting light in the present scheme of things:
|
Country Name
|
2001
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
2008
|
2009
|
2010
|
2011
|
|
Brazil
|
12.18
|
14.10
|
14.99
|
16.43
|
15.13
|
14.37
|
13.36
|
13.66
|
10.98
|
10.87
|
11.89
|
|
China
|
22.60
|
25.13
|
29.56
|
33.95
|
37.08
|
39.13
|
38.41
|
34.98
|
26.71
|
30.61
|
31.37
|
|
India
|
12.38
|
14.05
|
14.71
|
17.55
|
19.28
|
21.07
|
20.43
|
23.60
|
20.05
|
21.94
|
23.88
|
|
Indonesia
|
39.03
|
32.69
|
30.48
|
32.22
|
34.07
|
31.03
|
29.44
|
29.81
|
24.16
|
24.62
|
26.33
|
|
Korea, Rep.
|
35.74
|
33.13
|
35.37
|
40.88
|
39.27
|
39.68
|
41.92
|
53.01
|
49.73
|
52.28
|
56.16
|
|
Mexico
|
27.56
|
26.82
|
25.35
|
26.61
|
27.10
|
27.97
|
27.93
|
28.05
|
27.72
|
30.31
|
31.67
|
|
Russian Federation
|
36.89
|
35.25
|
35.25
|
34.42
|
35.20
|
33.73
|
30.16
|
31.31
|
27.94
|
29.95
|
31.05
|
|
South Africa
|
30.13
|
32.92
|
27.88
|
26.42
|
27.38
|
30.01
|
31.29
|
35.79
|
27.40
|
27.34
|
28.82
|
|
Turkey
|
27.44
|
25.22
|
22.99
|
23.55
|
21.86
|
22.67
|
22.32
|
23.91
|
23.32
|
21.21
|
23.74
|
South Korea clearly stands out from the rest in terms of the growth in exports they have followed. Is it a good sign? Yes in short run, but definitely not in the long run. In simple metrics, any economy can only survive if it grows and emerges stronger internally and is less dependent on external factors. Korea has significantly lower population as compared to BRIC nations, thereby beyond a point the size of its internal economy will increase at a significantly low rate in future, thereby making it overly dependent on exports.
Overall BRICS nations hold an edge in this regard.
Considering a report by Goldman Sachs published in 2007, BRICS and Beyond, the predicted GDP data for the year 2050 reveal a more interesting picture:
|
Country
|
GDP in 2050 (in billion USD)
|
|
Brazil
|
11,366
|
|
Russia
|
8,580
|
|
India
|
37,668
|
|
China
|
70,710
|
|
Total
|
128,324
|
|
Mexico
|
9,340
|
|
Indonesia
|
7,010
|
|
Korea,Rep
|
4,083
|
|
Turkey
|
3,943
|
|
Total
|
24,376
|
Thus BRICS clearly standout as the winner in the long run. However, at the same point of time the impact that current economic slowdown can have in destroying this momentum is still not clear. In the short run though, MIKT can give BRICS a serious run in terms of attracting investments and emerging as the preferred destination. Overall, while I do not feel that the data that I have considered is conclusive in nature, considering the global complexities of various other parameters, yet it can give few insights in this direction.
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