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Mexico, brics and beyond Consulting firms and financial institutions have taken to research and categorize the economies they think will lead global development in the decades to come. by maría cristina rosas*

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RICS have been hogging the conversation in international diplomatic and financial circles for almost a decade now. But just what are they all about? The term –an acronym for Brazil, Russia, India, China and South Africa– was coined in 2001 by Jim O’Neill, chief economist at Goldman Sachs. In his report, Building Better Global Economic BRICs, O’Neill projected that by 2050, Brazil, Russia, India and China –South Africa wasn’t initially included– would be international actors. The idea, he says, came to him in the wake of 9/11, which revealed just how vulnerable the US was. The tragic events of that day in 2001 drove home the fact that global challenges cannot be met without the cooperation of other countries. According to O’Neill, globalization requires more active participation by influential actors because otherwise “the world won’t be able to function.” Goldman Sachs reaffirmed its projections that Brazil, Russia, India and China will be the powerhouses of the global economy by 2050 in another study, Dreaming with BRICs: The Path to 2050, published in 2003. To silence critics of such longterm forecasts, the study clearly states that these estimates are based on the premise that the countries in question will


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These large emerging economies, along with ones like Mexico and Brazil, offer countless investment opportunities. In the end, it is their performance that could prove crucial to beating the crisis, while contributing to increased competitiveness, innovation and economic stability worldwide.

maintain rates of economic development similar to those they have been posting to date, but that failure to implement policies to support growth could result in a completely different scenario. With purchasing power on the rise worldwide, Goldman Sachs ventures that BRIC countries will drive demand-led growth. By 2050, BRIC-like economies will have seized some if not all of the 10 countries that dominate today’s global economy, forcing companies to adapt their expansion strategies. In the case of South Africa, which joined the BRIC group in late 2010, Goldman Sachs does not wax as optimistic about its economic performance compared to the “original quartet.” With an average annual growth rate of 3.5%, South Africa will not be on a par with its four companions by 2050 but reduced demographic growth is expected to push its per capita income to above that of, say, Russia. Neither Mexico nor South Korea were considered in Goldman Sachs’ analysis because they were more developed than Brazil, Russia, India and China. However, in 2005, the firm compiled a category called Next 11 or N-11, which includes another clutch of developing nations –Bangladesh, South Korea, Egypt, the Philippines, Indonesia, Iran, Mexico, Nigeria, Pakistan, Turkey and Vietnam– that could potentially play a major role in the global economy in coming years, albeit to a lesser extent than BRIC countries –except for Mexico and South Korea. The BRIC concept was introduced a decade ago and while Goldman Sachs has taken pains to illustrate the importance of these countries, entrepreneurs and mutual funds the world over are exploring other options due to fears of overexposure to markets in Brazil, Russia, India and China that could create a bubble that may burst in the faces of financial institutions, whose image has already been tainted. To hedge against that eventuality, corporations, banks, consulting firms and other finan-

cial entities have been hunting down other groups of countries with BRIC-like characteristics: stable, mixed, multi-sector economies that are growing, that are strategically positioned geographically and that are not listed on international exchanges. Several groups have emerged and Mexico’s name crops up in more than one of them, which is an encouraging sign. Although which one best meets its interests and needs remains to be seen. From a country-brand viewpoint, Mexico clearly stands to benefit from the kind of attention corporations, mutual funds and the media have been paying BRIC nations. The aura of prosperity and profitability Goldman Sachs created around BRIC countries has reverted, at least to some degree, their image in the eyes of the international community. Combined with the image and public diplomacy policies all four original BRIC countries have implemented to improve how they are perceived worldwide –some to a greater extent than others– the benefits are multifold. Clearly, nations have no choice but to engage in PR tactics to be in the spotlight, because in today’s world, projecting a solid image and leadership qualities is the only way to draw investors, close deals, attract tourists and boost revenues. In the event Mexico chooses to join or actively promote a BRIC-like group, a great deal of thought needs to go into which of these is likely to best represent its interests, aspirations and/or image as a country. In November 2010, BBVA published a study on emerging and growth-leading economies, otherwise referred to as the EAGLE group. The BBVA report criticizes the BRIC concept, saying that, while innovative in its day, it is partially out of synch with today’s reality, given the growth gaps that have emerged between its four members. Nor does it take into account the other economies that now aspire to play a role at least as relevant as BRIC nations in the global economy. It would seem, then, that

the BRIC concept does not have the capacity to adapt to changing realities because “club membership” criteria is neither objective nor measurable, as became evident when South Africa joined up. In that respect, BBVA believes EAGLE to be a much more flexible concept, since countries are only invited into the “nest” based on growth projections and the evolution of their individual economies. Unlike BRIC, which focuses on a very small group of countries, the EAGLE approach does not limit the identification of attractive opportunities for BBVA customers. Only countries whose contribution to global economic growth is projected to surpass that of developed nations in the next 10 years will be admitted to the EAGLE eyrie, which, according to BBVA, includes the four original BRIC countries plus Mexico, Turkey, Indonesia, South Korea, Egypt and Taiwan. And whereas Goldman Sachs’ initial estimates vis-à-vis the state of the global economy in 2050 featured three Asian nations –if we consider Russia to be both Asian and European– and one Latin American country, the wings of EAGLE span four continents. That suggests that in its BRIC analysis, Goldman Sachs did not view either Europe or Africa as prominent players in decades to come. Since 9/11, and especially since the outbreak of the recent international financial crisis, it has become clear that certain developed countries are running out of gas. Like its European allies, Washington has not been able to reactivate its domestic economy, much less the global market. Lasting solutions appear to be out of reach and unemployment has hit unprecedented levels in several EU countries. Hence the focus on so-called emerging economies –BRIC and EAGLE broods that are going from strength to strength and that are performing well under adverse circumstances. Large corporations, international consulting firms and financial and credit institu-


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tions are seeking out new destinations with a brighter outlook than their more developed competitors. The British weekly The Economist and other influential international publications, organizations and institutions have repeatedly touted China and India as the future engines of the global economy. These large emerging economies, along with ones like Mexico and Brazil, offer countless investment opportunities. In the end, their per-

formance could prove crucial in defeating the crisis, while contributing to increased competitiveness, innovation and economic stability worldwide. Along with its EAGLE partners, Mexico belongs to a rising generation of countries with broad-based markets and a young workforce with innovative capacities. It is these attributes, plus its strategic geographical location and ever-expanding infrastruc-

ture that have attracted the attention of BBVA and other consulting firms at a time when the fate of the global economy rests on nestling economies such as these. n

*Professor and researcher in the Political and Social Sciences Faculty, National Autonomous University of Mexico (UNAM).


ProMexico: Negocios Magazine: Mexico, Brics and Beyond