Notwithstanding the catchiness of the acronyms, it’s hard for us to see much that’s common to the MINT countries. Mexico, Indonesia, Nigeria and Turkey do share a superficial commonality in the sense that after the BRICs – Brazil, Russia, China and India – they make up four of the next five largest emerging economies in the world. Otherwise, however, they are a very diverse group, in terms of their current level of development, as well as the challenges that lie ahead.
We can compare the four MINT economies on some key dimensions. Turkey and Mexico are much richer and more developed than Indonesia and Nigeria. However, they are also growing at a much slower pace than the latter. We discuss here the most important bottlenecks that each economy needs to overcome.
Mexico is an emerging economy with a per capita income only one quarter that of the United States. Yet, during 2000-13, Mexico’s economic growth (2.1 per cent) barely exceeded that of the US (1.7 per cent). The country’s challenge is a very low rate of productivity growth. Many industries are highly concentrated and thus lack the incentives for innovation and efficiency. Mexico also suffers from a very high level of income inequality. The education system remains weak and the country’s R&D expenditure is a tiny 0.5 per cent of GDP.
Indonesia enjoys many advantages. It has a young population, and low labour costs are making it an attractive destination for foreign direct investment and one of the rising manufacturing hubs in Asia. However, given its stage of economic development, Indonesia’s economy needs to grow at an 8 per cent or higher pace rather than the 5-6 per cent of the last decade. The challenge for Indonesia is weak transportation infrastructure, a complex regulatory environment, a high level of corruption and almost no attention to R&D.
The MINT countries are a very diverse group, in terms of their current level of development, as well as the challenges that lie ahead
Having grown at an 8.3 per cent annual pace since 2000, Nigeria’s economy appears to be a picture of robust health. Such a conclusion would be mistaken. While Nigeria has benefited from the oil boom, it has failed to diversify beyond natural resources. The recent fall in oil prices puts Nigeria in a precarious situation. The country’s infrastructure is extremely weak and, as a result, so is the manufacturing sector. Nigeria’s challenges also include a very weak educational system and, at 0.1 per cent of GDP, hardly any expenditure on R&D.
Over the last decade, Turkey has made great strides in improving its infrastructure. Turkey also enjoys strong engineering skills and a very capable private sector. Thus we see little risk of Turkey’s growth falling below the 3.5-4 per cent range. But Turkey needs to move up the value chain and boost productivity at a faster pace. This requires beefing up the country’s investment in research and development (R&D). At 0.9 per cent of GDP, it is much lower than the 3 per cent R&D-to-GDP ratio for South Korea at a similar stage of economic development.