Following the success of the BRIC nations, investors and speculators worldwide have been discussing some of the world’s largest future economies. Coined the Next-11 by Goldman Sachs, the nations include Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey, and Vietnam.
Despite having varying levels of development, these countries have been selected for their high opportunity of future economic growth. While all are either abundant in human capital, natural resources, or a combination of the two, there are still major obstacles hindering the prospects of these states becoming a new global economies.
Arguably the least developed state on this list, Bangladesh has a high potential for economic growth thanks to its large population and proximity to India. However, its lack of infrastructure, rampant corruption, and ever-rising inequality will undoubtedly cause problems for the country in the future. While Bangladesh may be the last state in the N-11 to begin rapid development, it has the capability to become a burgeoning player in its regional economy.
Following the stagnant economic leadership of Hosni Mubarak, there was hope that Egypt would eventually adopt new economic policies following the 2011 revolution. Sadly, the country still remains in political and financial turmoil with the prospect of slumping growth, a widening budget deficit, and a decline in foreign currency reserves. For these reasons, Egypt will face difficult challenges in becoming a more global player.
The largest economy in Southeast Asia, Indonesia is a regional economic power that has high potential for growth thanks to its abundance of natural resources and human labor. Foreign investors seem more attracted to Indonesia following recently curbed inflation and increasing safety of its government securities. On the flip side, it also suffers from severe economic disparity within certain regions, along with high levels of corruption within the government. The economic outlook in Indonesia seems promising as a whole, and I predict that it will be one of the mid-range growers in the N-11 in the next few decades.
Possessing immense oil reserves, Iran nets handsome government revenue from selling to energy-hungry Asia. However, unlike its Gulf Arab neighbors, Iran does not seem to be ushering in the petroleum wealth seen in Qatar or the UAE. The main problems facing the Islamic Republic are the continued embargo it has with the United States and Europe, its tumultuous relationship with its Arab neighbors, and the theocracy that rules the state. Unless more liberal policies favouring privatization are adopted and what could be hyperinflation (in the high 20%’s) is stopped, the immediate economic future for Iran is bleak.
Mexico’s main pressing issues are corruption within the government, vast income inequality, and an ongoing drug conflict near the American border. Its profitable and skilled labor force has made Mexico into a major industrial exporter in basic and high-tech goods alike. Coupled with its proximity to major markets, Mexico is poised to be one of the biggest growers in the N-11 in upcoming years.
Despite being the dominant member of ECOWAS and having abundant supplies of oil to anchor the economy, Nigeria suffers from a factional divide between the predominantly Muslim north and the Christian south. The conflict has resulted in sporadic violence that has swayed foreign capital away and destabilized the region. I predict Nigeria will retain its position as a regional leader but will not become a more influential player in years to come and will be on a lower tier of growth in the N-11 group.
Pakistan poses immense potential with regards to infrastructure and its demography, but suffers its own unique share of problems. Rolling power outages, the threat of terrorism, and the loss of faith from investors have caused the richest Pakistanis to move their assets overseas. However, a growing literacy rate and gradual efforts for political reform may change the country for the better in the future. Despite some glimmers of hope, I suspect Pakistan will remain among the lower rungs of the N-11 nations for several decades to come.
The Philippines’ most valuable assets are undoubtedly its rich, fertile land and workforce. English is widely spoken throughout the country, making it easier for international business’ to communicate. Already extensive investments in industries such as automotives, mining, and electronics have built a firm foundation for future economic growth in the country. Like many of its fellow developing states though, it suffers from import-export imbalance and improper financial austerity measures. Much like its Southeast Asian neighbor, Indonesia, I predict the Philippines will be in the mid-range tier of the N-11 nations in the next few decades.
Perhaps the biggest outlier on this list, South Korea is the only full democracy1 among the N-11, has an advanced economy, and is already a wealthy country on a per capita basis. Why are they even on this list? Although its placement is controversial, Korea is argued to have the ability to become one of the world’s largest economies. I disagree with the placement of South Korea in the N-11, primarily due to its already prominent status on the international economic market.
Turkey’s strongest asset is its proximity to Europe and its already rising economic power. The biggest problems right now in Turkey are inequality, much like many other states, and regional conflict destabilizing areas, notably in the eastern part of the country, where the Turkish government is facing an ongoing conflict with Kurdish rebels. The nation already features strong infrastructure, maturing services and industrial output. In terms of future outlook, Turkey ranks alongside Mexico in being one of the most promising N-11 states in decades to come.
Possessing the highest GDP growth among the N-11 nations, Vietnam is the most likely candidate to showcase China-like economic growth in the next few decades. However, like many countries on the list, Vietnam suffers from high inflation and nepotism that leads to severe inefficiencies. Average growth for the country within the next few years hovers between the high single digits to low double digits. Rising prices in China are causing a growing number of manufacturers to shift production to Vietnam, leading to high investment and growth. Vietnam is also proving to be an invaluable strategic partner to its former adversary, the United States. I believe Vietnam will continue to grow and will be amongst the fastest growing countries within the N-11.
While these countries have their unique and separate problems, they also possess the ability to become economic powerhouses in their own right. While they may not compete against China or India in terms of raw GDP in the future, the N-11 countries do have the ability to rival the G8 states (save the United States) in decades to come.
1: According to the Democracy Index compiled by the Economist Intelligence Unit