It's been more than ten years since the folks at Goldman Sachs dubbed
Brazil, Russia, India, and China the BRIC countries, and lately other countries have
been trying to glom on to that group. Korea with a K at the end, maybe South Africa with
an S at the very end of the word. The thing is, these countries are actually very
different. They're big economies, they're growing, they're important to the global economy
but they're very different, and they're not the only ones that should be getting investors'
attention right now. There are certainly interesting things happening in China, but
China is still using the low-hanging fruit for its growth in the global economy. It's
still using low wages that come from people migrating in from the countryside to the cities.
It's still using its ability to export the same products as Korea or Japan but at
lower prices. It's going to run out of gas with those things eventually, but it's
not going to happen for another few decades. Russia, on the other hand, still depends to a large
degree on commodities for its growth. It's a totally different economy from China, but
that commodity-led growth can't last forever. And the question is, will Russia be able
to convert all of the revenue that it gets from selling its oil and natural gas and other
commodities into long-term growth by investing in its people? India's a very different case
because we've never seen such an enormous country that also happens to be a democracy
trying to grow, using some of the same tools as China, perhaps, with big manufacturing
bases, but also some other ones with the developing service industry. And finally, Brazil gives
faith that you can grow in a way where you allow all of the people in your economy to
benefit. The Brazilian government has been using good economic policies combined
with various types of redistribution to try and ensure that inequality doesn't become
a byproduct of their growth. And in fact, inequality has been dropping in Brazil. But
these are four very different stories, and the reason why investors should think about
other countries as places for assets in their portfolio or maybe operations for their business
is because these four countries are not the greatest places in the world to do business.
They have a lot of corruption. They have untransparent tax systems and regulations
that customs regime are sometimes difficult to navigate, and they also don't have the
best protection for investors. If you look at other mid-sized countries, like, for example,
a Peru, a Malaysia, or a Turkey, you find much better places to do business. So unless
you absolutely have to have an enormous market with hundreds of millions of people who could
buy your products, you can go to other places where its more likely that the money you earn
will make it back to your home country because it won't be eaten away by all these other
little problems.