Friday 31 January 2014

Acronym-Mystic

A former non-executive director of Manchester United FC has just completed a thought-provoking series of four programmes for BBC Radio 4 and also the round of media interviews it seems is incumbent upon any ‘celebrity’ personality presenter.

The series was entitled ‘MINT: The next economic giants’. While music hipsters of the early part of this century might recall a programme on BBC 6 Music called ‘Mint’ – the credentials of the Radio 4 programme presenter could not be more different than those of DJ host Marc Riley, although both hail from Manchester.

As well as an ex-non-exec of a football club, presenter Jim O’Neill is a former chairman of Goldman Sachs Asset Management and very much the moment’s ‘go-to’ economist who says he sees his discipline as a social science.

MINT is an acronym which stands for Mexico, Indonesia, Nigeria and Turkey. These are the economies Jim O’Neill identifies as the next set of developing and emerging economies to which the global investment community is looking now to reap benefits in the future.

MINT is the new BRIC (Brazil, Russia, India, China) for long term investment bets, according to Jim O’Neil. While denying in an interview that he was the originator of the term BRIC, O’ Neill appeared happy to be credited with popularising its usage three years.

So popular in fact that anybody with even a passing interest in international business and investment can identify the BRICs. The very popularity is the spur which is moving the focus of global investors on to the MINTs.

In one of the radio interviews, O’Neill confessed that his focus might have been MIST and not MINT as South Korea was in the running too. Whether MINT or MIST, two of many reasons for identifying such countries were demographics and young governments with emerging democratic mandates. In the case of Mexico, a very young government with an administration led by President Enrique Peña Nieto who is just 47 years old.

Demography is on the side of developing and emerging economies in a way it isn’t for those more established. Investments always have to look to the future and there’s nothing more encouraging for a country’s future than a demographic bulge of young people poised to aspire, produce and consume.

A young population is advantageous for growth. Older societies, where pensioners increasingly outnumber the young and need to be supported by that dwindling number of young, prove burdensome to economic growth.

From an economist’s point of view, an active policy of immigration is something to look to when demographics are against growth. But the fly in the ointment for countries facing this demographic conundrum is, as Jim O’Neill pointed out, the fact that they live by the political cycle.

While the investment community thinks globally and acts for the long term, politicians think as far as their democratic tenure permits and, in the main, are guided by the populist policies of their times.

Jim O’Neill is nearly 57 years old but he talks with a speech inflection common among young people and which has been identified as ‘uptalk’. Apparently, uptalk is not appreciated by (older) senior managers as it indicates a reluctance to commit to what one has just said and infers a question and, thereby, uncertainty in the speaker.

Jim O’Neill sounded certain. Demographics are against the senior managers.


Will Mooney MRICS
Partner

Commercial, Cambridge

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