The Growth Map - Review !

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In 2001, Jim O’Neill, predicted the next four emerging markets which he named the
‘BRICs’. This acronym is made up of Brazil, Russia, India and China. The acronym has come into common use as a symbol of the credible shift in global economic power away from the developed G7 economies towards the developing world. He predicted that the
BRIC economies would experience faster economic growth than the G7 nations; Germany,
Japan, Italy, United Kingdom, United States, France and Canada. This accelerated growth would raise the BRIC’s relative weights in the worlds aggregate GDP. Despite the fact that
O’Neill was criticised when he first implemented the idea, his predictions have been spot on. The average annual GDP growth rate of all the BRIC countries has exceeded that of almost all G7 countries in nearly each of the past 10 years. After O’Neill had announced his prediction in 2001, the BRICs were formally announced in 2009. Discussions between the BRIC’s began in 2006 with four formal meetings with the foreign ministers of the BRIC countries happening between 2006-2008. He also introduces his new prediction within
‘The Growth Map’, the Next 11 (N-11), these are countries that will offer great opportunities for investors over the next decade. The N-11 consists of; South Korea, Mexico, Turkey,
Pakistan, Nigeria, Iran, Phillipines, Vietnam, Indonesia, Egypt and Bangladesh. !

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Looking more closely at the individual BRIC countries. Out of the four countries O’Neill chose, Brazil was a country that had always been viewed as having the potential to become a major economy. However Brazil failed to live up to expectations until 2003 when
Lula da Silva became president, and began an efficient anti-inflation policy. The consequences of this is that O'Neill believes Brazil’s economy in 2050 will be four times larger than it is today.!

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Now looking at Russia, very few have much faith of it being worthy to be included as a
BRIC. According to O’Neill, it’s “hard to find people optimistic about Russia.” Despite its political and economic problems, O'Neill sees it as, “having the potential to have a higher
GNP per capita than the other BRICs, and, even higher than all other European countries.”
O’Neill believes that if positive changes are made, per capita income could reach $20,000 in 2020, and $60,000 in 2050. Russia has the potential to be a major consumer market.!
Next is India, the "greatest mystery." Out of all the countries, India is the country that intrigues me the most, this is probably due to the fact I spent 3 weeks travelling the south of India whereas I’m yet to visit the rest of the BRICs, I completely agree when O’Neill says It is "the most vibrant, beautiful, creative, inspiring place I have ever seen. But, the scale of poverty is astonishing, and the difficulties of getting things done are equally so".
India is now the tenth largest economy in the world, however it still needs to engage more enthusiastically with the other BRIC countries in order to become one of the leading economic powers in the world. Its worldwide known that India has impressive economic growth, it just needs to stimulate its economic reforms and take actions to be able to overcome institutional and infrastructural barriers. The revival of India’s manufacturing sector seems to be the main reason behind rapid growth in GDP. India has become one of the favoured destinations for IT, pharmaceuticals, biotechnology, automobile, consumer goods etc. According to reports recently published, India has overtaken China to lead the
Forbes list of best countries for new jobs. However the potential to participate with other
BRIC countries to drive its economic growth have not yet been fully taken advantage of. To conclude India, they have the most favourable demographics in the world giving it the potential to increase its real GDP faster than any of the other BRICs. The main advantages include; many english speakers and homegrown technology companies that !
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are expanding globally. However with everything put together India struggles, while China moves ahead.!

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At present, China has the worlds second largest economy along with the worlds largest population. Many have predicted that at some point China will have the worlds largest economy. It has advanced from emerging to emerged. China is “on the brink of a significant consumer takeoff” along with its fast rising wealth. China’s share of global GDP has risen to 11.5% in 2012 from 3.7% in 2000, O’Neill forecasted that their GDP could be worth $70 trillion by 2050. It’s clear that the past decade has been about the rise of China as a major world economy. However there are also issues that stand again China such as their ageing working population which O’Neill is worried may “peak soon”. Their investment speeding is too high, too unprofitable and therefore unsustainable. As well as including all the details about the negatives and challenges in these countries, he is committed to the positives that are transforming them and thus our world. Things cannot always be predicted in full, but as he concludes, "the day everything becomes crystal clear is probably the day we should stop investing.”!
One of the main themes of the book is that the BRIC countries have already emerged and to lump them together with other emerging countries is a disfavoured to investors. O’Neill has created the new term “growth markets” to refer to the BRIC economies. The technical definition he gave was “countries that have the right demographics and productivity momentum to grow faster than the world average. O'Neill recognises how the past decade, including the 2008 financial crisis, were very turbulent times for the global economy. O'Neill offers a view very different from those who believe there is no benefit to the crisis. He believes that the crisis creates fresh opportunities for investors of all types and sizes. For !
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Jim O'Neill, globalisation is an opportunity we need to embrace and we shouldn't fear it.
Economic growth creates job opportunities, new wealth, and more overall success across the globe. He believes that the economic problems of recent years are ones that can and will be fixed. The addition of the New Eleven countries to the growing world economy will only increase the amount of global trade and economic opportunity. Jim Suggested that- ‘’
Globalization did not need to be Americanisation; there was scope for the rest of the world to create their own definition of the term using their own characteristics’’.!

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Issues O’Neill picked up on were the fact that China and India have experienced a unstable relationship, they’ll need to develop a more positive tone in order to strengthen their economies. India has confrontations within their country because of their caste system (segregation of people, each with a traditional hereditary occupation), the variety of religion, ethnicity and languages. They also have conflicts with Pakistan, it is hoped they might one day be the same as the likes of France and Germany; fierce foes in world war two but now partners at the heart of the EU monetary Union. One of Brazil’s biggest problems is the great deal of political corruption in the country, as well as being in the middle of the world’s greatest socialistic governments, such as Venezuela and Bolivia.
Along with corruption, Russia’s problems lie within uncomfortable relations with former
Soviet republics and political views and actions originated from communism that are still in force. China’s problems involve their suppression of political objectors, insufficient fundamental freedom and their retention to change their exchange rate and/or let it free float. China and India also face great corruption which needs to be addressed.!

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What I found most important about the book is how O'Neill presents his logical analysis of the future and current global economies. He combines the growth of the BRIC countries with a real world based assessment, whilst also looking into how the BRIC countries can sustain and control their constant growth. He considers the obstacles that many believe will breakdown the BRICs, such as the increasing needs for scarce resources, and the incompetence to sustain their growth and acquire the necessary natural resources. !
I also like how he examines the growth potential of the New Eleven countries. Whilst the
BRICs have become worldwide recognised, the N-11 have not as much. Despite the fact most are smaller then the BRIC economies, the N-11 have the capability to be key players and create investment opportunities in their own right. Jim O'Neill outlines the potential for investors in both the BRIC and N-11 countries and considers them to have tremendous investment and growth potential for the future. He even provides the economic plan that he believes will add to their already considerable economic success in a globalised market.!

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