South Korea’s economy and growth forecast make it a stronger candidate than South Africa to join the BRIC group of major emerging markets, said Goldman Sachs Asset Management’s chairman, Jim O’Neill, who first coined the term BRIC.
South Africa was formally asked on Dec. 23 to become a member of the BRIC group that comprises Brazil, Russia, India and China. President Jacob Zuma was invited to attend the third BRIC heads of state meeting in Beijing in April.
South Korea, Indonesia, Mexico and Turkey are “growth economies” because they each account for about 1 percent of global gross domestic product, O’Neill said in an e-mailed report today from London. South Africa’s economy of $285 billion compares with South Korea’s $833 billion, Turkey’s $615 billion and Mexico’s $875 billion, according to World Bank data.
“It is tough to see how South Africa matches up to these four countries, never mind the BRIC countries,” O’Neill said.
Africa’s biggest economy is less than a quarter the size of Russia, the smallest of the BRIC nations, while its population of 49 million is dwarfed by China’s 1.36 billion, India’s 1.2 billion and Brazil’s 191 million.
Based on Goldman Sachs Growth Environment Scores, which give countries a weighting to indicate their level of sustainable growth and productivity, South Africa is ranked 108th out of 181 economies, with a score of 4.88. South Korea has a score of 7.48, which is above the U.S. and Germany, O’Neill said.
South Africa has lobbied for stronger political and trade ties with the BRIC nations, with Zuma making state visits to all of the members since coming to power in May last year. Maite Nkoana-Mashabane, minister of international relations and cooperation, said on Dec. 24 that South Africa will act as a “gateway” for the BRIC nations to increase investment and trade in Africa.
“While this is clearly good news for South Africa, it is not entirely obvious to me as to why the BRIC countries should have agreed” to ask South Africa to join, O’Neill said.
O’Neill coined the BRIC term in 2001 to describe the four nations that he estimates will collectively equal the U.S. in economic size by 2020.
“When I created the acronym, I had not expected that a political club of the leaders of the BRIC countries would be formed as a result,” O’Neill said. “In that regard, the purposes of the two might be regarded differently.”
Goldman Sachs identifies 11 emerging markets -- Bangladesh, Egypt, Indonesia, Iran, Korea, Mexico, Nigeria, Pakistan, Philippines, Turkey and Vietnam -- that have fast-growing populations and the economic potential of the BRIC countries.
“If South Africa is going to be invited to be a permanent member of the BRIC political club, it suggests others might then decide to apply,” O’Neill said. “Certainly, their economic circumstances and prospects would warrant it if South Africa’s do.”