Late in 2005, Goldman Sachs (GS) introduced the concept of the N-11. As described by Dominic Wilson and Anna Stupnytska in the GS Global Economics Paper, No. 153 (March 28, 2007), “The N-11: More than an Acronym.”*
The N-11 appeared to be a GS effort to introduce a further tier of emerging economies and determine whether the next group of large developing countries with large populations had the potential to become ‘BRIC-like.’ Their summary conclusion:
“The diversity of the N-11 makes it difficult to generalise. But our projections confirm that many of them do have interesting potential growth stories, alongside reasonable scale, although their prospects vary widely and some face much greater challenges than others. …Of the N-11, only Mexico, Korea and, to a lesser degree, Turkey and Vietnam have both the potential and the conditions to rival the current major economies or the BRICs themselves. Other N-11 economies - Indonesia and Nigeria in particular - have the scale to be important if they can deliver sustained growth. But while the rest of the N-11 may not have a BRIC-like impact any time soon, the as a group may have the capacity to rival the G7 - if not in absolute terms, then at least in terms of new growth. And many of them could still deliver the kind of sustained growth stories in sizable markets that will be increasingly hard to find in the developed world.”
Who are these N-11? Let me describe them this way, with a focus on global governance institutions. The G20 are the G7/8 plus the G5 (the BRICSAM in other words with Russia over with the G7/8). Then to get to the G20 add Argentina, Australia, Indonesia, Saudi Arabia, South Korea and Turkey. That’s the G20. Now, the N-11 include Indonesia, South Korea and Turkey from the G20 but removes the others (3 - Argentina, Australia & Saudi Arabia) and put in their stead these 7: Bangladesh, Egypt, Iran (Mexico from the G5), Nigeria, Pakistan, the Philippines and Vietnam.
Examining these N-11 countries in global governance terms reminds us of the contrast between the GS analysis and objectives and those of us concerned with global governance. For GS, the focus is on size and economic growth. Indeed, ultimately for GS and its clients, the N-11, like the BRICs before them, may or may not offer investment opportunities. For global governance, however, there is a desire to examine the economic growth equation but, in addition, what I like to call “diplomatic leverage.” Though the BRICs have not exactly become a global governance fixture - or maybe they have, given their emergence in the Outreach 5 or the G5 and now in the G20 - as well as the first efforts to create a BRIC forum, the follow-on question is whether the N-11 create global governance possibilities also.
Bur first the question of dynamic growth. As the authors are aware:
“In gauging the chances of success, we are conscious that the recent global picture - high commodity prices, low real interest rates, solid global growth and low market volatility - has been unusually favourable for emerging markets. Until this environment is tested, it will be hard to know whether the recent optimism about some of these economies represents a fundamental sea-change or a cyclical boom. For the N-11, improving growth conditions while the global backdrop is benign is likely to offer the best chance of weathering the next storm, whenever it comes.”
Well, we have entered a far different global financial environment than the one described in the GS Report. And it’s time to assess the impact of the global financial meltdown on this outer tier of emerging countries.
*The 2005 Report is updated by Wilson and Stupnytska (March 28, 2007) and provided in a compendium entitled, “BRICs and Beyond” (2007)