BRICs on the Brink?
Parag Khanna: So we all agree that there are a lot of countries that have the potential to emerge and that deserve to be in these categories, but at the same time, many that have been in those categories also didn’t deserve to be. A lot of people who talk about the BRICS today actually say “BICs”--they’ve already dropped out Russia. And that’s 30 years before they were supposed to get there in the first place. So one can be highly suspicious, especially given events that in the Middle East, Goldman Sachs included Nigeria, Egypt, Iran and Pakistan in it’s next eleven, any number of those really are on the brink of collapse right now. So let’s talk about which ones are going to submerge.
Dambisa Moyo: I certainly am less sanguine about the Middle East for two real reasons. Number one, they have very large population disaffected people. But the other issue is that they are incredibly under diversified. They are absolutely obsessed with oil, which perhaps in the short-term is not such a bad thing, but you know, longer term is not a strategy for long-term economic growth.
The other region that keeps me up at night is certainly Sub-Saharan Africa. It’s got, in terms of resources again, capital in terms of labor markets and in terms of the ability to absorb productivity, it should be right up there in the front, but the obsession with an aid culture I think is really hindering economic progress in that continent.
Daniel Altman: I would take exception on Sub-Saharan Africa. We’re seeing incredible growth, just in the last five to 10 years in multi-national corporations that are based in Sub-Saharan Africa because of the liberalization of the economies there, creation increasingly of a middle class. And we’ve seen enormous gains in education there too.
Now, if you ask me where we might see trouble, it’s in the ones that have already gotten as much steam as they could out of the big trends that really get you off the bottom rungs of the growth ladder, the rural to urban migration, getting people off farms and into factories and the tendency to be able to copy produces and export them more cheaply. Some countries can’t do that anymore.
Parag Khanna: Anand, isn’t India overrated? I mean, it has a youth bulge come to think of it. People say it has the demographic sweet spot with so many young people entering the labor force, but unless you create labor for that workforce, they could wind up being disaffected masses such as what we’re seeing in the Middle East.
Anand Giridharadas: Absolutely, I think one of the assumptions people tend to make very casually in development is that all good things come together, all bad things come together. The good thing that is happening in India right now, the extraordinary thing is the unleashing of ambition in a massive society that was very hierarchically ordered and in which now a lot of people, in theory are being told you can be anyone you want to become.
What people don’t realize is, those same people who are being filled with these new ambitions have much higher expectations now. And any lack of opportunity is now perceived as a slight, and you actually destabilize countries when you raise a lot of people’s expectations must faster than you can sate them.
Parag Khanna: So most overrated economies…
Dambisa Moyo: With all due respect is probably India for a lot of the reasons that Anand outlined. I think that they have good demographics in the interim. I think that fundamentally they still have a lot of issues around corruption and infrastructure, outlays I think is something that I would be worried about.
Daniel Altman: Argentina is way up there because they are being neglected in terms of foreign direct investment simply because the country is still so corrupt.
Parag Khanna: I have no doubt that Argentina had a hand in creating that label of vista so that they could be tacked onto the end, but I think what we all agree is that even if a country gets a rose in its locker and is included in one of these sexy acronyms, for emerging markets, it really does still have to prove its fundamentals. And that’s what makes these countries so vital to determining the future of the global economy. Thanks very much for your insights. More on that and other relevant topics on BigThink.com.
On an earlier panel, Parag Khanna, Dambisa Moyo, Daniel Altman and Anand Giridharadas discussed which countries have the potential to emerge on the global stage. Here they discuss which markets are submerging.
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