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Long live BRIC, welcome MIST
By Sreeram Chaulia
After setting the terms of discourse in world affairs at the
turn of the millennium with the coinage, "BRIC" (Brazil,
Russia, India and China), Jim O'Neill - the former chief
economist of
Goldman
Sachs - has just kick-started the new
decade with a fresh acronym: "MIST" (Mexico, Indonesia,
South Korea and Turkey).
The catchiness of a four-country grouping which can be
uttered in a simple abbreviated form that can play on every
stakeholder's lip has proven a sure hit with BRIC, which
captivated the
investor community and shook global
geopolitics. Whether MIST can achieve the same haloed status
as a byword for high, guaranteed return on money and as a
harbinger of further redistribution of power in the
international system remains to be seen.
O'Neill, who is now chairman of
Goldman
Sachs Asset Management, believes that
these four distinct
economies deserve to be uttered in the
same breath because each of them fulfills the size criterion
of accounting for more than 1% of global
GDP in nominal terms. He also expects the
MIST economies to rise further in size and hence makes the
case for them to be taken seriously as growth markets.
O'Neill has an uncanny knack of timing his neologisms to
coincide with large pools of
investment
funds seeking new opportunities and
pastures. The magical and solid-sounding BRIC helped channel
enormous sums of capital into its constituent countries at a
time where
interests
rates were low globally and
money
managers were on the look out for higher
yielding destinations in Asia. BRIC countries themselves
seized upon O'Neill's phrase and engaged in their own BRIC
heads-of-state summits, BRIC investment forums, and BRIC
academic seminars to cash in on the euphoria.
Today, with interest rates at an all-time low in advanced
economies, MIST might just prove to be another hit as
investors buy into O'Neill's growth markets advice for
engineering a long-term realignment of capital flows in
their direction.
South Korea, Indonesia and Turkey have already become
targets of "hot money" infusions since the economic crash of
2008 and their respective governments have been installing
checks to prevent excessive short-term speculative movements
that may hurt their macroeconomic stability. The "MIST"
concept could well hurt their immediate efforts to limit
unmanageably large sums of capital rushing in, but hardly
any contemporary government will pass up a chance to be
paraded as the ideal new place to do business.
Fast growing economies in Asia love nation-branding and
image-burnishing through certification from Western
opinion-making citadels like Goldman Sachs. This month,
Moody's raised Indonesia's credit rating to a 13-year-high
of "Ba1", which is just one step below investment grade and
right behind the positions of Brazil and India.
But the authorities in Jakarta were dissatisfied and issued
statements to the effect that their country deserved better
and that they will strive to get the coveted investment
grade in 2011 from all the principal Western rating
agencies. O'Neill could well have framed the most seductive
new term in international business from the perspective of
MIST's members.
Critics abound of the BRIC concept and it is obvious that
doubts will also be raised about MIST as a hodgepodge that
lacks unit homogeneity and does not match basic comparative
metrics. The differences in liquidity within the MIST stock
markets, per capita incomes, as well as the varied forms of
capital controls and macroeconomic models adopted by each of
these four countries will be thrown up to contend that
O'Neill is indulging in gimmickry or crass salesmanship.
Indian economist Ila Patnaik wrote last year that democratic
India had a starkly contrasting governance environment
compared to authoritarian China and Russia, and that BRIC is
a "meaningless" group for mutual learning of policy lessons.
She advocated, instead, that India learn from "countries
more like us", ie democracies such as Brazil, South Korea,
South Africa and Turkey. If her line of thinking were
advanced, India has more in common with MIST than with the
rest of BRIC.
Still, all the BRIC countries together decided that size of
gross domestic product and potential for growth were
sufficient minimum common denominators on the basis of which
they could carry across ideas and best practices for
piloting their respective rises in the global economy.
Despite O'Neill's detractors, his BRIC prophecy has been
self-fulfilling and MIST promises to follow suit.
One of the less understood consequences of O'Neill's
investor-advice catch phrases is their capacity to break
understood notions of who dominates the world order. In
hindsight, we can now see that the "unipolar moment" of the
1990s ended in the previous decade thanks to popularization
of the term BRIC.
When Russia, China, India and Brazil lay prostrate and the
US economy was "roaring" in the nineties, as economist
Joseph Stiglitz put it, the international power
configuration was decidedly unipolar. Once BRIC picked up
momentum and began registering rapid growth (partially as a
result of O'Neill's prognosis that appealed to foreign
investors), it came home that we no longer lived in a world
with a sole superpower.
Size does matter in measurement of power, no matter what the
internal divergences are among BRIC or MIST countries. The
more BRIC and MIST grow in GDP size, the greater their
capability to convert economic resources into military and
soft power gains. No one can gainsay the fact that BRIC
countries' militaries grew in power projection abilities and
technological know-how over the last ten years as a direct
result of their economic growth.
Defense outlays, which are measured as a percent of a
nation's GDP, proportionally increase as an economy grows.
Likewise, the resource base with which a state can drum up
goodwill and win more friends by playing a more global role
is economic in nature. If public diplomacy divisions of
foreign ministries of the "emerged" countries are to be
effective, the bottom line is how big their war chests are
and how well they are complemented by their respective
national capitalist classes.
Fixation with GDP has rightly been lambasted by followers of
alternative yardsticks of a nation's worth, such as low
carbon footprints, prevalence of rule of law and social
justice, lesser income inequalities, better human
development indices, and even maximum levels of "gross
happiness" among the citizenry.
But Jim O'Neill knows the pulse of the current international
political economy better. A compact between states and
markets exists wherein the pursuit of GDP growth has been
set in stone as the most desirable trait which will be
pursued at any cost, even it means producing vast multitudes
of losers in society.
In imagery, MIST evokes a vapidity unlike the tactile and
reassuring BRIC. But symbolism aside, the former might
redefine the second decade of this century by distributing
hard and soft power even more horizontally across the globe.
The word "multipolarity" will have a more populated and
dense sense if MIST (plus some inevitable additions and
self-nominations that will be inserted as more medium-sized
economies grow in Asia, Africa and Latin America) becomes
the toast of policymakers.
Sreeram Chaulia is Vice Dean of the Jindal School of
International Affairs in Sonipat, India, and the author of
the forthcoming book, International Organizations and
Civilian Protection: Power, Ideas and Humanitarian Aid in
Conflict Zones (I B Tauris).
(Copyright 2011 Asia Times Online (Holdings) Ltd. All rights
reserved. Please contact us about
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