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N-11’s, MISTs and BRICs: How Emerging Economies Are Winnning

By on August 7, 2012

BOARD. Original image: Photo still from Lewis Milestone’s 1960 “Ocean’s 11” film starring Peter Lawford, Frank Sinatra, Dean Martin, Sammy Davis, Jr., and Joey Bishop. ©Warner Bros

Jim O’Neill is a man of great foresight. When he was the head of Global Macroeconomic Research at Goldman Sachs, he developed some of the most important acronyms known to the world of economics. The most important of these are the BRIC countries also known as Brazil, Russia, India and China. The economic idea behind the BRICs is that these four countries would become the world’s most dominant economies by 2050.

China has already achieved this by overtaking the economy of Japan in 2010. According to Jim O’Neill it will overtake that of the USA’s by 2027.

Brazil is also another formidable country to watch. It is a well managed economy with natural resources and it is also leading the global oil shift by being the largest user of bio-diesels.

The N-11’s are another economic categorization of countries made up of Bangladesh, Egypt, Indonesia, Iran, South Korea, Mexico, Nigeria,Pakistan, Philippines, Turkey and Vietnam. The list was coined by Jim O’ Neill in 2005.

The researcher also developed another acronym for an additional bloc even within the N-11 called the MISTs or Mexico Indonesia South Korea and Turkey.

O’ Neall is now the chairman for Goldman Sachs Asset Management and he has raving reviews for the economic performance of the  N-11 group of countries due to the investment activity and FDI inflows being initiated by the BRIC countries.

“We see steady inflows into the Next 11 fund each week,” O’Neill, 55, said in a phone interview from London. “It hasn’t been affected by the disappointment in the U.S. and obviously the European markets especially, and all the disappointment in some of the BRIC markets.”

Economist Jim O’ Neill who created BRICs, N-11 and MIST concepts

Bloomberg.com says O’Neill came up with the idea for an N-11 fund on a trip to China and South Korea two years ago as a way to help investors benefit from growth beyond the BRIC nations that had dominated emerging markets investing. With populations that for the most part are younger than the U.S. and Europe and have higher birth rates, fueling economic expansion, the N-11 nations are emerging from the shadow of the BRICs, where growth is slowing and investors are pulling out funds.

The MIST economies more than doubled in size in the past decade, topping Germany last year. In Mexico, Latin America’s second-biggest economy, record auto exports are helping growth outpace Brazil’s for a second year amid waning Chinese demand for the South American nation’s commodities. Indonesia’s domestic spending and investment helped the nation’s economic growth accelerate to 6.37 percent in the second quarter, surprising economists who forecast a slowdown.

Goldman Sachs’s N-11 fund has beaten 93 percent of U.S.- based emerging-market equity funds this year, while the BRIC fund has lagged 89 percent of them, according to data compiled by Bloomberg.