Each day TFO Canada publishes a sample of trade news on the Canadian import market along with any new, updated or changed regulations and legislations regarding international trade; countries in which TFO Canada offers services and on the export sectors which it promotes.
Opportunities Beyond the BRICsFriday, January 21, 2011 > 10:12:32
(Export Development Canada – Peter G. Hall)
Browse media reports on any given day and you’ll find a litany of stories on the BRIC countries, and with good reason. Their growth record is stunning, and they have strong future potential. They each possess huge internal markets that give new meaning to the word ‘scale’. Their economic rise is increasing their influence in world affairs at the same time as established powers are grappling with diminished growth potential. It’s hardly surprising that the world is eager to harness this potential.
But prominence has its downsides. The BRICs are so weighty that they can eclipse a lot of other hot global potential. Various other nations have equally dynamic growth, but because of smaller size, command far fewer headlines. Southeast Asia holds a lot of this potential, and when compared with the BRICs, the economies of Indonesia, Malaysia, Thailand and Vietnam yield surprising results.
Calculations of potential output give the first clue. Potential output is a key measure, as it incorporates the three major building blocks of the economy: labour, capital and the technical efficiency with which these two factors come together to make goods and services. Not surprisingly, India and China hold sway in this category. But the four sub-BRICs take the next four slots, with Brazil and Russia bringing up the rear. Of the four, the least developed, Vietnam, rings in with the highest potential growth.
Labour market fundamentals lend strength to each of the four sub-BRIC markets. Taking size and trend growth into consideration, population dynamics rank well against the big players. Adding labour market efficiency to the equation gives the smaller economies a big boost. Three of the four occupy the top spots in this ranking, while the fourth, Indonesia, is well-placed in the middle of the pack.
Regarding investment potential, again, the four less-visible nations score well. For this measure, they rank solidly in the middle of the pack. Infrastructure is a more mixed story. Malaysia comes out on top, while Thailand, Indonesia and Vietnam fall into the latter half, managing to outscore only India, whose current infrastructure challenges are well known.
The BRIC countries are often cited for their superior productivity performance. China and India are again ahead of the pack on this measure, but the smaller economies also manage to score well. Indonesia, Vietnam and Thailand outperform the remaining BRICs, and Malaysia avoids last spot by edging out Brazil.
Other measures of overall competitiveness compare quite favourably. On overall openness, the smaller economies are ahead. Regarding ease of doing business, Malaysia and Thailand score particularly well, Vietnam is even with China, and Indonesia outscores the other three BRICs. It makes sense, as in the smaller nations trade is a much larger share of overall economic activity. Concerning the management of public finances, results are a mixed bag, depending on the country.
The bottom line? Although often overshadowed by the BRIC countries, smaller nations still hold tremendous future trade opportunity. Here is a sample of four nations that compare favourably with the big guns. Clearly they benefit from proximity to fast-growers, but their own characteristics and strategic decisions are contributing to a bright future for them and for their trading partners.