November 28th, 2011
01:13 AM GMT
(CNN) – With the eurozone debt crisis in full swing and a Super Committee on Capitol Hill that admitted at least temporary defeat, one could be caught flat-footed and miss a milestone anniversary.
A decade ago, November 30 to be precise, the long serving international economist Jim O’Neill in a paper outlined his research on the power of the “Big Four” of the emerging world, Brazil, Russia, India and China. In his piece, “Building Better Global Economic BRICs,” O’Neill marked a turning point in economic thinking that future growth will be driven by these large emerging markets.
O’Neill boldly stated back then that the BRIC economies will surpass the G7 economies of the industrialized world by 2027 and most of his peers have lined up behind that strategy in agreement. In 2008, most strategists believe the western led financial crisis marked the quick transformation from the G7 to the G20 context, no less than an official recognition of O’Neill’s work.
The BRIC countries sit on $4.5 trillion of foreign reserves; add in the Middle East sovereign funds and their reserves and those tally up to nearly $6 trillion. That could explain the quick embrace by leaders during the heat of the crisis.
During an interview on our program, Global Exchange, O’Neill said, “The key for these guys (BRIC economies) is to grow their domestic consumer to stop reliance on the West.”
For political reasons and with China’s support, the club has been expanded to include South Africa which is dwarfed in every category: size of GDP, population, a high jobless rate and foreign direct investment, but many believed Africa needed to be represented.
O’Neill and his team at Goldman Sachs have defined the next frontier if you will with the Next 11 or N-11 – a disparate group of economies that they believe will offer fast growth, scale and youthful populations. They may be garnering less media traction for this grouping, but countries such as Indonesia (the most populous Muslim country), Turkey (the bridge between East and West) and Mexico (America’s neighbor to the South) all have their own worthy stories to garner direct investment and the attention of fund managers the world over.
O’Neill pointed out that the BRIC plus N-11 represent nearly three-quarters of the world’s population and they are driving global consumption.
But it will be the BRIC countries that will carry sway economically and politically. They have held three annual summits, make calls for a multi-polar world and even put out their own communiqués at G-20 gatherings.
It boils down to their economic power, says O’Neill: “The increase in BRIC GDP this year will be close to creating another Italy.” Italy is a $2 trillion economy, which says a lot about how fast the BRIC players are growing today and how far they have come in 10 years.
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