After the rather successful concept of BRIC economies, Goldman Sachs came in 2005 with another group of potential fast growing economies, the so called Next Eleven or N11. The group of the BRIC economies is quite known (Brazil, Russia, India and China) and the concept has been successfully adopted by politicians, researchers and media. However, this N11 idea has had until now a harder way to be generally adopted.
But first, which are the “Next Eleven” economies? This group includes Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea, and Vietnam. According to Jim O’Neill (the same person who coined the term BRIC), this group includes economies who can potentially become among the biggest ones in the world. This also implies that they should be seen as potentially great investment opportunities.
While the BRIC concept seems to me more acceptable, I rather find peculiar both the composition and diversity of the Next Eleven economies. The study by Jim O’Neill clearly acknowledges both the huge differences in income per capita as well as the different characteristics of the economies in terms of openness or perception by investors.
Probably the biggest risk these economies face (except maybe for Korea, Mexico and Philippines) is the political risk. Sudden political changes (which already affected Egypt and might potentially affect Turkey, Iran and maybe Pakistan and Nigeria), could lead to a change in the openness to investors and a good environment for business. There are also other potential risks as these economies develop more and more and it would be very interesting to see how they would cope with a crisis similar in magnitude to the Asian Crisis that hit one of the N11 economies, Korea.
An interesting and pertinent study to the issue of N11 economies has been realized by the consulting group Euromonitor International. It outlined a few other risks to the potential development of the Next Eleven. Besides the possible domestic political changes already mentioned by me, the analysis also underlined the risk of shifts in the commodity prices, as most of the Next Eleven economies are oil producers.