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CHAPTER THIRTEEN BEYOND THE BRICS: A LOOK AT THE ‘NEXT 11’

April 2007

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with the poorest countries posting triple-digit growth in recent years. David Heacock and Anna Stupnytska April 18. they nonetheless present interesting growth stories. Four (Mexico. ! On the whole. by Dominic Wilson and Anna Stupnytska. health and technology. Indonesia and Turkey) saw nearly $170bn invested in infrastructure projects between 1990 and 2005. as has already been the case in China and is beginning to materialise in India. urbanisation. Bangladesh and Nigeria currently spend less than $25 per head on health each year. Mexico.Beyond the BRICS: A Look at the ‘Next 11’ BEYOND THE BRICS: A LOOK AT THE ‘NEXT 11’ Which countries will be the next BRICs? We recently identified 11 countries that could rival the G7 over time. well below the BRICs’ 30% share of emissions. While the N-11 may not have the same transformative impact on the world economy that the BRICs may realise. Mexico. the N-11 include Bangladesh. Indonesia. Life expectancy among the N-11 today (65 years) is in line with the BRICs but nearly a decade below the G6 average. The explosive growth story in mobile phones is spreading to the N-11. Egypt. more than half the population is urban. Yet much more is needed going forward. ! Some of the N-11 are attractive destinations for infrastructure investment. which comprise 7% of the world economy. Iran and Turkey. human capital and technology. Nigeria. urbanisation. Korea. At the opposite end of the spectrum. infrastructure. In five. Turkey and Vietnam. 2007 161 . Here. Urbanisation in these countries should support economic growth. and several countries in this group could rival the G7 in time. Philippines. Here we look at these ‘Next 11’ (N-11) in the context of several important BRICs themes—energy. Pakistan. With the BRICs story largely having moved into the mainstream. The UN projects that life expectancy rates in the N-11 and the BRICs will converge around the current G6 level (75 years) by mid-century. are roughly at G6 levels. even if they lack the scale to become the next BRICs. Highlights include: ! The N-11. Sandra Lawson. Pakistan. ! Human capital is a critical aspect of the long-term growth story. including Korea. As laid out in our Global Economics Paper No. We have previously estimated that the N-11 together require around $600bn—4% of GDP—of infrastructure investment between 2006 and 2010. infrastructure. ! Technology adoption is also important to long-term growth and a key factor in the ‘virtual connectivity’ that we discussed last month. Iran. particularly by underpinning productivity growth. we are often asked ‘Who will be the next BRICs?’. 153. the N-11 are already highly urbanised. That paper. But health spending will need to rise significantly outside just a handful of the N-11. analyses the growth potential of the N11 and the conditions needed to realise that potential. account for 9% of the world’s energy consumption and an equal share of global CO2 emissions. Philippines. we assess their performance and prospects along a range of measures that we have discussed in other BRICs Monthly reports: energy. some. Vietnam and Bangladesh remain overwhelmingly rural (some 75%).

2 0. Among the N-11.0 es ia ic o rk ey an ri a n a s t m Ko ki st ex Eg ig e pp na do n Tu M Pa N Vi i li ng la d et es h yp in e Ir a re ! The N-11 and BRICs together accounted for more CO2 emissions than the G6 in 2004. eight of the 11 are more urbanised than China and India. compared with 29% for the BRICs and 35% for the G6 (with population shares of 43% and 11%.0 s es ia ic o rk ey an ri a n a t m na Ba Ko ki st ex Eg pp ig e do n Tu M Pa N Vi i li In Source: EIA Ph ng la d et es h yp in e Ir a re % World Carbon Dioxide Emissions 1990 …Leading to Rising CO2 Emissions 2004 2.5 0.03ppt). only Bangladesh. Pakistan is another N-11 country where energy consumption per Dollar of GDP has fallen. even the largest emitters among the N-11—Korea and Iran—trail the US by an huge margin.8 0. making these countries’ cooperation critical to future global efforts to curb emissions.6 1. ! Since 1990. while China accounts for 6% of GDP and 13% of energy consumption. Nigeria and Indonesia have seen the largest increase in their shares of urban population since 2000. each country's share of world energy consumption has risen. respectively). particularly productivity growth. 2. In Ph Source: EIA % Urban Population Ba Urban Shares 2000 2005 2030 90 80 70 60 50 40 30 20 s si a ri a n ic o t rk ey an a m pp in e ig e Ko ki st ne ex Eg na Tu M do N Pa Vi i li ng lad et es h Ir a re yp N-11 Urbanisation Potential Is Lower Than That of the BRICs ! Many of the N-11 countries are already highly urbanised. This reflects more industry-intensive economies and less energy-efficient technologies than in the developed world.5 1. Korea’s 48mn people account for less than 2% of global CO2 emissions.0 1. The latter two have seen a significant improvement in energy intensity. The increase is highest in Korea (by 1ppt) and lowest in Nigeria and Mexico (each a mere 0.4 0.0 0. ! On a per capita basis. the N-11 (with almost 19% of the world’s population) accounted for 9% of total emissions. and Iran’s 70mn for just 1. Ph In Source: UN World Population Prospects Database 162 Ba . compared with 20% for the 300mn people in the US. While no N-11 country beats Brazil on this metric.5%. Philippines.Beyond the BRICS: A Look at the ‘Next 11’ % World Primary Energy Consumption 1990 2004 Energy Consumption Increasing in N-11… ! The N-11 together account for 7% of global GDP and 9% of the world’s energy consumption. ! The process of urbanisation should help to underpin growth. Vietnam and Pakistan (and India and China in the BRICs) have a scope for a significant increase in urbanisation over the next 25 years.0 1. In 2004.

Korea and Turkey rival Brazil and Russia. the two bestscoring BRICs. raising their share of population with access to improved water sources by 20ppt and 15ppt. reflecting a broader trend in many low-income countries. Communications technology in the N-11 has spread fast in recent years. respectively. mainly driven by mobiles. Much more is needed to support growth.400 1. Yet water access in Nigeria and Philippines has deteriorated even further. In terms of growth rates. Philippines. Vietnam and Mexico have shown most improvement. 1990-2005 Some Benefit From Private Infrastructure Investment Private-sector investment in infrastructure projects has somewhat sidestepped the N-11 since 1990. Only Mexico is among the top 10 developing economies ranked by the number of infrastructure projects involving private participation. In Dollar terms. Indonesia and Turkey join Mexico in the top 10. The other five still have a substantial gap to close.000 800 600 400 200 0 Ba ng Ir a n t Fixed Line and Mobile Phone Subscribers 2000 2004 Some N-11 Countries Rival the BRICs in Technology Adoption Virtual infrastructure is an important growth driver in the developing world. These four together accounted for almost $170bn invested in infrastructure between 1990 and 2005. In levels of phone penetration. trailing the BRICs and Argentina.Beyond the BRICS: A Look at the ‘Next 11’ Number of projects 160 140 120 100 80 60 40 20 0 Infrastructure Projects with Private Participation Number of infrastructure projects with private participation. as we highlighted last month in our look at virtual connectivity. re a n rk e M y P h ex ic ilip o pi ne s yp t sia ria I ra et na ge ta n Ba ng Ko Eg ne Tu Ni kis do Source: World Bank In Pa Vi la de sh m % Population 110 100 90 80 70 60 50 40 Access to Improved Water Source 1990 2004 Expanded Access to Water Has Been Mixed The water supply picture varies across the N-11. The N-11’s progress since 1990 in expanding water access has also been mixed. 163 s ic o rk ey si a an na es h la d yp in e Ir a re ki st Eg Ko Tu pp et ne ex M Pa Vi i li do Ph In Source: World Bank Ba ng N ig e ri a n t a m . s ri a si a ic o an rk ey m es h la d in e yp ki st ne ex ig e pp Tu Eg M do Pa N Vi i li et na Ph In Source: World Bank Private Participation in Inf rastructure Database Per 1. In six. almost as high as levels in the developed world.000 people 1. We have previously estimated that the BRICs as a whole will require $120bn in annual infrastructure spending between 2006 and 2010 (Global Economics Weekly 06/22).200 1. Phone penetration in Bangladesh and Nigeria increased by roughly 140%-150% in 2004 (albeit from a low base). more than 90% of population have access to improved water source. poorer countries have posted outstanding performance since 2000.

reaching 61 years by 2050. but nine years below the G6. nearly 20 years lower than Bangladesh. N-11 health expenditure is just one-quarter of the world average. slightly higher than the estimated 64 years for the BRICs. Mexico and Turkey also exceeded all four of the BRICs on healthcare expenditure.Beyond the BRICS: A Look at the ‘Next 11’ Years Life Expectancy at Birth 1990 2006 2050 85 80 75 70 65 60 55 50 45 40 s es ia ic o rk ey an es h in e Ir a re yp ri a n a m t na Ko pp ki st ex Eg Tu do n la d et M Pa Vi i li ng N ig e N-11 Life Expectancy to Approach G6 Levels by 2050 ! The N-11 countries had an average life expectancy of 65 years in 2006. reaching $705. Ph In Source: UN Population Division Per capita. 2003 US$ Ba Health Expenditure Per Capita 800 700 600 500 400 300 200 100 0 s es ia ri a n t ic o rk ey na ig e es h yp in e Ir a re Ko pp Tu do n M N la d et ng Pa Vi i li ki st ex Eg an a m The N-11 Surpass the BRICs in Healthcare Expenditure ! Per capita health expenditure (both public and private) in the N-11 exceeded that of the BRICs in 2003. This is well above the $587 world average. Pakistan is the marked underperformer. Both the N-11 and the BRICs are projected to near G6 current life expectancy levels by 2050. ! Korea’s per capita healthcare spending more than doubled between 1998 and 2003. life expectancy there is expected to rise. averaging $152 against $117 in the BRICs. and the only country in the N-11 to see life expectancy fall since 1990. spending just $13 per person on healthcare in 2003. 2003 BRICs Average W orld Average Ph In Source: World Bank 164 Ba . ! Nigeria stands out as the clear laggard. As access to healthcare and safe water sources increases. a figure that has fallen 13% since 1998. However. with a life expectancy in 2006 of just 43 years.