Emerging Markets Reach for the Torch
As we speak, the 2012 Summer Olympics torch relay is in progress. The famed torch is making its way to Olympic Stadium in London to mark the start of the international games in July. The Olympic flame, dating back to the ancient Olympic games in Greece, is not only a token of the games, but also a symbol of countries coming together, united in pride, sportsmanship and healthy competition. The Olympics may be the one of the best examples of global collaboration.
As the torch is handed off person-to-person, and relayed from country to country, I’m reminded of a different global “torch” being passed–one that affects international growth as smaller nations mature and become increasingly important to the global economy.
The Great Recession has forced powerhouse nations like the United States to work to rebalance their economies. And Brazil, Russia, India, and China (often referred to as BRICs), which have attracted tremendous investment interests in recent years, are seeing slower growth rates as their labor productivity peaks. The change has fueled the fire for smaller economies, allowing them to emerge with the torch and play a significant role in the global supply chain.
For example, Colombia has a young and growing population with a median age of 28. Energy, mining and agriculture remain key sectors there, and the free trade agreement with the United States (and ongoing negotiations elsewhere) should help Colombia improve productivity and help its economy shift further up the value chain.
Turkey’s population is one of the youngest in Europe. The country is uniquely situated with links to both the European Union and the Middle East, and Turkey has broadened its export base further into Africa. Auto manufacturing is a growth sector, and the country hopes to become a key energy distributor between producers in Russia and Central Asia and consumers in Europe. Media, transport and tourism are also growing service sectors.
South Africa is the largest and most developed country in Africa. Development in the financial sector is on par with many industrialized countries, making it an attractive regional hub for international banks. Mining is a key export sector, and South Africa also has a growing service sector led by retail and wholesale trade, and business services. Aggressive plans for infrastructure expansion should help provide a competitive boost longer term.
Other countries to watch include: Peru, Chile, Nigeria and Ghana, which rely on exporting commodities to grow their economies. And like their fellow emerging nations, these countries show signs of an increasingly pro-growth policy environment and can-do attitudes among business enterprises after witnessing the success of BRICs in recent years. They are positioning themselves to grab the torch for their leg of the global race for economic prosperity.