- Bang in the middle, right upfront
July 13, 2013
As the Arab Spring turns into an autumn, especially in Egypt, we ought to carefully consider just who props up radical groups across the Middle East,…
- Deflating victim Narendra Modi
July 6, 2013
With the CBI chargesheet in the Ishrat case, the carefully crafted Modi-versus-The Rest campaign has gone for a toss.
- It's time we moved mountains
July 6, 2013
Lamenting the tragedy of Uttarakhand isn't enough, we need to set up a commission to manage natural hazards, says KS Valdiya.
- In This Section
- Entire Website
From the Times Of India
- MOST POPULAR
Power of the pivot
By now, nearly everyone has heard of the BRICS (Brazil, Russia, India, China and South Africa). Less known are the CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa) and MIST (Mexico, Indonesia, South Korea and Turkey). These acronyms are the product of brilliant branding, but with all due respect to those who coined them, they tell us nothing about why these countries were chosen as the ones best built to last.
There are so many crucial differences in their circumstances, strengths and weaknesses that they can't possibly be expected to maintain similar paths. Some will rise, and others may fall. With so much volatility in today's world and so many domestic distractions for the Western governments that have traditionally done so much to contain it, individual emerging markets will need more than strength if they are to fully emerge. They'll need resilience. And that will depend on their ability to give themselves a wide range of options, particularly in the political and trade ties they forge.
In fact, with so many uncertainties these days in international politics, a developing country's ability to avoid dependence for security and prosperity on a single dominant ally has become more important than at any time in decades. Some of the states listed above - Brazil and Turkey, in particular - provide excellent examples of what we might call pivot states, those with the flexibility to pivot among potential partners. But there are other countries and regions that will profit from their ability to pivot.
Like Africa, which has now become the world's most underrated growth story. You may have heard that Africa's population surpassed one billion people in 2010, but did you know that though Africa and India have similar populations, Africans spent 35 per cent more on goods and services in 2008 than Indians did. The percentage of Africans who live in cities is now comparable to that in China. By the end of this year, the number of mobile phones across the continent is expected to reach 735 million. Total foreign direct investment in Africa grew from $9. 4 billion in 2000 to more than $60 billion in 2011. In addition, though many think of Africa's wealth primarily in terms of oil and metals production, urbanisation across the continent and growing middle classes in many countries ensure that African economies that don't export huge quantities of commodities have grown almost as quickly as those that do.
Africa has achieved this success in part because many of its governments can now pivot. For decades, African states were forced to turn almost exclusively to the International Monetary Fund, World Bank and Western governments for aid and investment, and the money often came with conditions. Things have changed.
Over the past decade, China has sharply increased its investment in Africa to secure access to oil, gas, metals, minerals and farmland across the continent. In 2010 alone, China's trade with Africa expanded by more than 43 per cent, and the country replaced the United States as Africa's largest trade partner. China and other emerging markets seem quicker than developed states to recognise the value of closer ties with Africa. That's why the BRIC countries invited South Africa to join their club in 2010, adding the 'S'. By traditional measures, South Africa's economy can't compete with those of the other BRICS. But South Africa is a member of the Southern African Development Community, a collection of emerging states that includes Angola, Africa's second largest oil producer, Botswana, world's largest diamond producer, Zambia, the continent's biggest copper producer, and Mozambique, with enormous untapped reserves of coal.
But this is not a story of emerging market triumph or of Western decline. In fact, as East African countries like Kenya, Tanzania, Mozambique and Uganda discover new deposits of oil and gas, and as they work to develop energy alternatives, Western companies like Total, Statoil, Eni and others continue to outmanoeuvre less nimble Chinese competitors. In addition, though Chinese companies have made friends within African governments by bankrolling large infrastructure projects, they have also alienated local communities by insisting that much of the materials used in these projects come from China - and that roads, bridges, port facilities and airports are built by Chinese workers.
But the real winner in this story is Africa, where dozens of governments now have choices and can expect multinational and state-owned companies from the developed and developing worlds to compete for access to local consumers and favourable investment terms. This is the power of the pivot.
The writer is president of Eurasia Group
Register for Full Access to the Crest Edition
Don't have a Facebook Account? Sign up for Times Crest here.