By Valentina Romei and Ranjit Lall
Talk of emerging markets tends to be dominated by the mighty Brics. Yet as this week’s beyondbrics chart (after the break) shows, the countries that have moved fastest up the economic ladder in the last decade are not those big four, but Nigeria, Vietnam, Peru and Bangladesh.
Nigeria has climbed the most rapidly, moving up 15 places in the list of the world’s largest economies (in purchasing power parity terms) between 2000 and 2010. Vietnam rose 12 places, while Peru and Bangladesh both jumped seven places. By contrast, the Brics were sluggish: Russia rose four places, Brazil two, and China and India just one.
To be sure, shooting up the rankings is only a partial measure of economic success. The Brics have grown just as quickly as the biggest gainers. The reason that they have barely budged in the rankings is that they started from a relatively high baseline.
This does not detract from the remarkable achievements of the other countries. The Nigerian economy has more than doubled in size since 2000, leapfrogging countries such as Sweden and Portugal to become the world’s 31st largest. The country remains beset by corruption and calamitous infrastructure, but its growth has been aided by a jerky transition towards democracy, debt restructuring and of course oil revenues, which have been boosted by higher international oil prices.
Vietnam’s growth – which also saw its economy double in size to reach 41st place in the rankings in 2010 – was driven by rising exports, particularly in the low-end manufacturing sector, where its cheap labour costs make it internationally competitive. Information technology and commodities have also been a boon. Like China, the country has found a way to combine communist party rule with economic success.
The economies of Peru and Bangladesh have both expanded by around 75 per cent in the last decade to become the 42nd and 45th largest economies in 2010 respectively. The Latin American country was helped by rising savings and investment and improved terms of trade thanks to its exports of copper and gold.
Meanwhile Bangladesh, which is the world’s eighth most populous country, has benefited from increasing foreign direct investment and agricultural exports as well as the runaway success of its female-dominated garment making sector.
In spite of their rapid progress, however, these countries remain far behind the Brics. Although the position of the Brics has not shifted significantly since 1980, as the second chart below illustrates, they are all among the world’s 10 largest economies.
One potential claimant to Bric status is Indonesia, which surprisingly has risen only two places – from 17th to 15th – in the last decade. IMF estimates suggest that, despite its recent burst of export-driven growth, Indonesia will remain in this position for at least the next five years. Morgan Stanley’s recent call for the country to be included in the hallowed Bric group may be premature.
The chart shows that as countries come close the top of the economic hierarchy, changes in the rankings become ever slower. The Chinese economy tripled in size since 2000, but overtook only Japan in the process. Yet when these rare shifts do occur, they have enormous implications.