Last week Jim O’Neill, former chairman of Goldman Sachs Asset Management, presented a series of radio programmes on the MINT economies. MINT, an acronym for the economies of Mexico, Indonesia, Nigeria and Turkey, has emerged as a new economic grouping to keep an eye on.
O’Neill is probably best known for popularising the term BRIC, which stands for Brazil, Russia, India and China (the term is sometimes referred to as BRICS to include South Africa). The BRICs are a group of countries that have experienced significant economic growth rates over the past decade and have become increasingly influential over geopolitical affairs. Recently however, the dominance of the BRICs has abated, with China and India currently facing a slight slowdown in their economies. This has given the MINTs an opportunity to make a name for themselves.
There are several reasons why the MINTs are hotly anticipated to be the new emerging economies. Demographics is a major factor: the percentage of the population of the ‘working age’ (typically 18-65) in each of them is high, in contrast to countries like China which suffer from ageing populations.
The MINT countries also benefit from their geographical positions. Mexico sits next to USA, the biggest economy in the world, and belongs to the North American Free Trade Agreement (NAFTA). On the other hand, Indonesia lies at the centre of South East Asia with the economic powerhouse of China on its doorstep. Turkey benefits from being connected to both the West and East whist Nigeria is on the coast of Africa, surrounded by future trading partners when they start to develop.
The growth of the MINTs has been mainly based on the primary sector. Mexico, Indonesia and Nigeria have all profited from the production of commodities, with Mexico in particular taking full advantage of its offshore oil reserves. However, specialisation in other sectors is starting to come about. Mexico is transforming into a base for manufacturing due to its abundance of labour and proximity to USA, and this will only continue as China moves up the value chain and focuses on ‘quality not quantity’.
Whilst these four countries definitely have the characteristics for growth, they also have areas of concern. It can be argued that the MINTs still lack basic institutions, such as the Rule of Law, which are essential for fostering development. Corruption in Nigeria is still present and Turkey is currently emerging from a political scandal. The provision of basic services is also a problem. The MINTs need to reform important sectors, such as education and health, which will increase the productivity of the workforce and raise standards of living. Furthermore, infrastructure and the availability of energy are key issues that need to be addressed.
Having been identified only recently (to the mainstream audience at least) the MINTs are already expected to account for 10% of economic growth by 2050. Whether this will happen depends on how much they embrace structural reform in their economies and their willingness to establish a correct and effective political system. Sure, it may be too early to judge the success of the MINTs but if there’s one thing to be certain of, the BRICs are nervously looking over their shoulder.
References:
http://www.destinyconnect.com/2014/01/09/mint-giving-bric-economies-a-run-for-their-money/
http://www.telegraph.co.uk/finance/comment/rogerbootle/10567196/Roger-Bootle-The-MINTs-are-very-different-and-might-not-all-see-stellar-growth.html
http://www.bbc.co.uk/news/magazine-25548060
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