Beyond BRICs: Taking a look at some of today's emerging economies

 

In the last decade, economic observers have increasingly called attention the economies of the developing world -- no longer do the countries of the G7 dominate discussions of economic growth and foreign direct investment. In fact, according to the UN Council on Trade and Development (UNCTAD), 2012 marked the first year that developing countries absorbed more FDI than developed countries, making up 52 percent of global FDI flows.

For many years, discussions about emerging economies worth keeping an eye on centered around the BRIC countries -- Brazil, Russia, India and China, viewed as the four most promising economies in the developing world. However, as the luster begins to wear off of these economies and their growth ebbs and flows, observers have begun looking for more developing economies that show promise.

James O'Neill, former asset manager at Goldman Sachs and the originator of the "BRICs" designation, has been among those observers. Among those countries that he has suggested warrant further attention are the "MINT" countries -- Mexico, Indonesia, Nigeria and Turkey. You can read more about his personal assessment of the current state of the MINT countries here.

A 2013 survey conducted by UNCTAD helps put these countries' rising importance into perspective. When a sample of 164 different transnational corporations were asked to list their preferred top destinations for FDI, Mexico, Indonesia and Turkey all made it into the top 20. Indonesia held fourth place in 2013, the same location as last year. Meanwhile, Mexico entered the top 10 for the first time, moving from 12th place to 7th place, and Turkey entered the top 20 for the first time, tied for 19th place.

Moreover, Indonesia was among the top 20 host countries for FDI in the world in 2012 -- the only MINT country on the list -- reaching 17th place with total inflows amounting to some $20 billion USD. In terms of FDI inflows, it is behind only China, Hong Kong and Singapore among East and Southeast Asian countries. But China and Hong Kong both saw decreases in FDI inflows from 2011 to 2012, whereas Indonesia (as well as Singapore) saw an increase. Preliminary figures suggest that Indonesia's FDI inflows increased once more in 2013, and observers within the country expect this trend to continue the coming year.

FDI in Mexico appears to be doing extremely well of late, as the government recently announced a record $35.2 billion in FDI inflows for 2013. This is a 178 percent increase from the previous year. This growth can largely be attributed to Belgian brewer Anheuser-Busch InBev's acquisition of Grupo Modelo, a major Mexican brewer. This growth is expected to continue as a result of economic reforms in areas such as the telecommunications and energy sectors.

But just because the MINT economies are capturing people's attention doesn't mean that their journey to prominence is marked by continuous, positive growth.

On the African continent, Nigeria leads in terms of the amount of FDI inflows, amounting to $7 billion in 2012; it is one of five African countries with inflows above $3 billion. However, Nigeria's FDI inflows for 2012 are noticeably lower than 2011, where inflow totals stood at $8.9 billion. Moreover, Nigeria is still working to establish a basic level of infrastructure and political stability, as well as fight high levels of poverty. Thus, while Nigeria is clearly a leader among other African nations -- it is the second largest economy in Africa after South Africa, though it may soon become the largest -- it still needs time to truly establish itself a major international player.

Turkey is frequently in the news recently due to its political difficulties, which is giving some investors pause. Christian Himmighoffen offers more perspective on the impact of these developments on Turkey's economy here. Additionally, Turkey saw a 23 percent decline in FDI inflows from 2011 to 2012, with a total of $12.4 billion USD flowing into the country in 2012. According to UNCTAD, this decline can be attributed in part to a 70 percent decline in cross-border mergers and acquisitions sales. Still, credit insurer Coface currently rates Turkey at A4, indicating medium to low risk, noting its "demographic vitailty and highly skilled workforce." Moreover, the economy recovered relatively smoothly after the financial crisis of 2008-2009, with steady, gradual GDP growth expected for this year and next. One recent sign of economic recovery is a recent report that the Consumer Confidence Index in Turkey saw a significant uptick in the past month after seeing sharp declines early in the year. 

Despite setbacks, each of the MINT countries represents a powerful, growing economy that already possesses significant regional importance. As such, these countries certainly warrant additional attention over the next few decades.

» The UNCTAD's World Investments Prospect Survey for 2013-2015 (English)

» The UNCTAD's World Investment Report 2013 (English)

» Global Ease of Doing Business Rankings (via The World Bank)