Attended a Q&A with Manchester United mad fan – Jim O’ Neill – author of the BRICs report and Chief Economist of the mighty Goldman Sachs, in which he spoke about the I in BRIC. I thought the following was interesting:
He referred to the current economic crisis we’re facing as the “crisis of the developed world”; and highlighted the fact that countries like India were experiencing growth of over 6% at a time in which ours is contracting. Jim referred to this as being “pretty remarkable” as it wasn’t too long ago that economists believed that India wasn’t capable of breaching the so called 3% Hindu rate of growth that she was known of hovering around for a very long time.
In marked contrast to China, India’s growth is a result of her personal consumption. People are still spending money and it’s domestic demand is what’s keeping it going. Interestingly, the current challenges that China is facing, Jim said, was going to be good for the world as it’ll force China to rebalance their dependence on exports.
Often criticised about the inclusion of Russia in his analysis, which shows that despite what’s happened in the last year, Russia has long outperformed Goldman’s first tranche of projections to 2050 – hence keeping those arguing for the removal of the R from his BRICs analysis at bay.
On India, the recently concluded general election was welcomed by the markets, with a surge in the Sensex of approx 20% on the day after the results were announced. Interestingly, Jim’s co-authored a paper titled ‘Ten Things for India to Achieve its 2050 Potential (http://www2.goldmansachs.com/ideas/brics/ten-things-doc.pdf) in which he highlights the need for improved governance as one of these factors.
He was asked as to what indicators would demonstrate that India was taking this seriously, which was a brilliant question that needs further consideration. In many senses the answer may be as straightforward as some of India’s biggest crooks – bureaucrats and politicians – having to face penalties for their behavioural failings. O’Neill said he would start thinking of this and perhaps write something on this matter. Please leave any comments on this post if you have any ideas.
Also asked of the real impact of being surrounded by some very populous countries, he reiterated that the potential for the entire sub-continent being lifted onto a different plane if cross-border trade could be encouraged, was noted and well received.
The briefing was taking place a day after the first BRICs summit, in which the Heads of Brazil, Russia, China, and India were meeting to discuss substantive matters such as the establishment of an alternative currency to the Dollar. In response to a question on the potential of this bloc, his analysis explained that Brazil and Russia were commodity rich, whereas India and China weren’t, which suggested that if they were to work together to realise synergies like this, then the grouping would have a dramatic effect on global economics.
In addition, he highlighted that any discussion on tackling climate change without these four economies would be futie. He joked that it was time that international institutions like the G7 & G8, the UN, IMF could do more than just “invite them for coffee on the sidelines”, which drew a few sniggers from the audience.
There’s not many people on this planet that could take the credit for coining the name of an international summit that brings together future superpowers together to discuss major issues that should concern all of us.
For this and more, Jim – we salute you.
Being such a smart guy, it beats me why you’d want to support Manchester United! Viva Barcelona 🙂