Thursday 8 December 2016

Business: Economic tale that is too good to be true

The Growth Map: Economic Opportunity in the BRICs and BeyondBy Jim O'Neill

Published 12/01/2012 | 05:00

IRISH readers of the 'The Growth Map: Economic Opportunity in the BRICs and Beyond' are likely to be in a more sceptical frame of mind than other readers of this book by Goldman Sachs economist Jim O'Neill.

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It was Mr O'Neill who coined the acronym BRIC to describe the fast-expanding economies of Brazil, Russia, India and China. Like the Celtic Tiger, the BRIC story is plausible and attractive but also too good to be true.

'The Growth Map' has been published 10 years after the term BRIC was first coined and Mr O'Neill writes that his only regret is that he did not understand just how fast the four economies would expand back in 2001 when he coined the phrase.

His new book rejects the term "emerging markets" and prefers to use "growth markets" instead. This leads him to make all sorts of predictions about growth in the years to come.

He is particularly optimistic about Russia, which he predicts will overtake Germany and all other European economies by 2030 by swapping energy exports for manufacturing.

The suggestion seems unconvincing to this reviewer; Russia would have to undergo a complete change for this to happen and attract the sort of successful exporters that we have here. The snag is that multinationals tend to avoid countries mired in corruption.

Mr O'Neill is no great fan of democracy. The lack of democracy in many emerging markets, notably China, hardly bothers him. This is refreshing; in the West we probably focus too much on one sort of system and ignore the fact that countries such as China have a reasonable system of local democracy. But Mr O'Neill fails to engage with the question in a serious way.

Indeed, much of the book is breezy in style and often a little glib. The cover describes the author as a "Goldman Sachs rock star" and this sets the tone for much of what follows.

The other big idea is what he calls the 'Next Eleven', or N-11 for short. They are Bangladesh, Egypt, Indonesia, Iran, (South) Korea, Mexico, Nigeria, Pakistan, the Philippines, Turkey and Vietnam.

All this makes for a good read but the thesis that BRIC countries are isolated from the world economy and from the forces of history is ultimately unconvincing. Like the Asian Tigers and the Celtic Tiger, the BRICs are enjoying their time in the sun, as is the man who first forecast the trend. However, this does not mean that the BRICs will not succumb to the same forces of hubris that brought down their predecessors.

The book is available with free P&P from Independent Bookshop. Telephone 01 405 9100 or visit independentbooks.ie

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