BRICS and the business of acronyms

If ‘runaway hits' are marked up by an element of surprise in their success, then BRICS would definitely fit the bill. BRICS, the moniker for some of the fastest developing countries in the world, has breached all expectations and is today becoming not only an economic force to reckon with, but a political protagonist as well.

When Mr Jim O'Neill coined the term BRIC in 2001 to designate the economies of Brazil, Russia, India and China who could have foreseen that these four countries with hardly anything gluing them together – except economic aspirations – would converge, hold Summits, announce statements on major global economic and even political issues and attempt to take on the might of US and lay the foundation for a multi-polar world?

In fact, Mr O'Neill, the Chairman of Goldman Sachs Asset Management, has himself expressed surprise over the way these countries have grown. In a recent book he authored (The Growth Map - Economic Opportunity in the BRICS and Beyond), he says, “My only regret on the first BRICS analysis of 2001 is that we weren't bolder.”

“Between 2001 and 2010, the BRIC economies' GDP rose much more sharply than I had thought possible even in the most optimistic scenario,” he adds. However, for investment bankers and hedge funds, BRIC may merely be a strategy to make a fast buck.

But BRIC countries seem to have taken the categorisation very seriously. They have added an ‘S' (for South Africa) to the acronym.

What's more, if the Delhi Declaration of their recent Summit was any indication of their ambitions, BRICS virtually stopped humouring the US and European Union politically by not recognising the sanctions being imposed on Iran.

Apart from trade and investment, BRICS countries are also looking at cooperating on a wide range of areas including infrastructure financing, food and energy security, technical education, R&D, culture and tourism and financial market development.

The going so far has been phenomenally good for BRICS and that is precisely why calls have grown for more such clubbing of fast-growing countries or even further expansion of BRICS.

Actually, Mr O'Neill had indicated that Goldman Sachs had started work on it as early as in 2005. First they conceived the term ‘N-11' or the ‘Next Eleven' comprising countries such as Mexico, South Korea, Vietnam, Turkey, Iran, Egypt, Indonesia, the Philippines, Bangladesh, Pakistan and Nigeria.

This was mainly based on the premise that these largely populated countries have the potential to close in on the rich countries in terms of growth and development in times to come. Later, Mr O'Neill predicted that out of these ‘Growth Markets', those with the most prospects are Mexico, Indonesia, South Korea and Turkey or ‘MIST'.

Another similarly interesting acronym for emerging markets doing the rounds is ‘CIVETS' for Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa, reportedly termed in 2009 by the global forecasting director for the Economist Intelligence Unit, Mr Robert Ward. (Interestingly, barring South Africa and Colombia, all the CIVETS countries are also part of N-11.)

Going a step further, Mr Michael Geoghegan, former chief executive of HSBC Group, described CIVETS (named after an agile cat-like mammal, much like the growth story of these nations) as “the new BRICS”.

Mr Nils-Sjard Schulz, associate fellow at the European think-tank FRIDE and an independent policy adviser, in a policy brief says, “As global governance evolves, this new generation of provider countries (CIVETS) could position itself as the nascent middle class of nations.”

He opines that these CIVETS or the ‘new cats on the block' are attractive to global investors for reasons including a ‘growing consumer market', ‘attractive investment frameworks' and an ‘improving overall political-institutional setting.'

“Less aggressive than the BRICS in their struggle for a share in global power, the CIVETS focus on joint solutions with their regional peers and they are more flexible when engaging in development partnerships,” he says.

Mr Schulz predicts that the CIVETS “are bound to become strategic players at the G20, UN and IFI (International Financial Institutions such as IMF and World Bank) levels, while offering a third wave of partnerships to low- and middle-income countries.”

Also, global research firms like Gartner have increasingly started using the term BRICM (BRIC countries and Mexico) in their reports on emerging markets.

Research firm BBVA Research has done studies on another category of emerging nations called EAGLEs (Emerging and Growth-Leading Economies), whose membership, the firm says, keeps changing depending on their performance. BBVA Research study shows that currently EAGLEs has BRIC and MIST countries as well as Taiwan as its members.

In 2010, BBVA Research said EAGLEs will, in the next decade, contribute to the world economic growth more than the average of the leading industrialised nations, namely the G6 countries barring the US. BBVA Research has also come up with the EAGLEs' Nest, which is their term for a ‘watch list of countries which could eventually become an EAGLE'.

All this shows that in a dynamic and ever-changing world, if the BRICS grouping does not constantly address issues concerning its core constituency – which is the developing and poor countries – and lift themselves to a leadership position, rest assured that it will be relegated to being just another gated community eventually watching quietly the logic-defying success of a new ‘runaway hit' acronym (which may or may not include BRICS nations) to be coined by the research arms of investment banking firms as a money-spinning device.

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