Evaluation of MINT Countries - Example

Report: Evaluation of MINT Countries Executive summary Globalisation has led to shift towards a more integrated and independent global economic system from a self contained national economies. The MINT refers to the acronym that states four countries, Mexico, Indonesia, Nigeria and Turkey. The economies of these four countries are assumed to have bright future in context to the world’s economy. All these countries comprise most of the positive factors like large population of young people and strong GDP that helps them to emerge as a global leader. With respect to this, there are certain challenges that the economies of these countries still face, which further restrict them to operate effectively in the globalised era. The report focuses in the overview of the MINT countries, their opportunities to expand in the global market and finally, challenges these countries face in this context. The report lays emphasis on overview of Turkey and features perceived by it in order to become a future global leader. Table of Content Introduction Globalisation is defined as ‘the process by which liquidity can be increased and there is a multidirectional flow of people, places, objects, information and structures they encounter and create that are barriers to or accelerates these flows’ (Ritzer, pp.2, 2009). Globalisation has led to shift towards a more integrated and independent global economic system from a self contained national economies. Globalisation of markets, on the other hand, refers to merging of different national markets in which there are no trade barriers and consumers’ tastes and preferences congregate on the basis of global norm. With the advent of globalisation, barriers to the flow of goods, services and capital have been declined to a great extent. This has led to favourable environment for trade and FDI (as shown in figure 1). Technology change is another factor which drives globalisation. This is because internet, World Wide Web, microprocessors and transportation technologies have been developed at a faster pace. There are several global institutions like the General Agreement on Tariffs and Trade (GATT), the World Trade Organisation (WTO), the United Nations (UN), G20, the World Bank and the International Monetary Fund (IMF). All these global institutions help in managing and regulating the global marketplace and governing global business system while promoting the establishment of multinational treaties. Thus, it can be said that with the process of globalisation, most of the countries are making their best efforts to get universally recognised and shape up their economy in a positive direction (World trade report 2013, 2013). For instance, the BRIC countries, as coined by Jim O’Neill in 2001, constitute four countries namely Brazil, Russia, India and China. These four countries are assumed to be the most powerful in the world economy. With the existing economies of MINT that is Mexico, Indonesia, Nigeria and Turkey, it has been now expected that these nations will become the next recognisable names in the group of emerging economies. With respect to this, the following report will focus on evaluating MINT countries’ economy. Along with this, the report will also focus on domestic and international issues faced by these countries in order to develop and expand their current position into a potential global leader. Figure 1: World trade and FDI (Source: http://www.wto.org/english/res_e/booksp_e/wtr13-2c_e.pdf) Overview of MINT countries economy The MINT refers to acronym that states four countries such as Mexico, Indonesia, Nigeria and Turkey. The economies of these four countries are assumed to have bright future in context to the world’s economy. It has been assumed that a large number of population of these countries comprise of working people. Other than this, the geographical locations of these countries are favourable enough to trade internationally via both land and sea trading routes. As per the views of Daynes (2014), it has been estimated that the average growth rate of the MINT economies have experienced a growth rate of 4.7% between 2009 and 2012 as recorded by International Monetary Fund’s World Economic Outlook. Along with this, it has also been assumed that the growth rate will increase up to 5.2 % by 2018. The overview of MINT countries is as follows: Mexico The growth domestic product of Mexico is predicted to be $1.178 and the GDP growth is recorded to be 4.1%. The economy of the country comprises of young population and has a great potential of new structural reforms like financial sector, tax policy, labour legislation, education and telecommunication sector ("MINT" nations: A closer look at Mexicos and Indonesias economies, 2014). Moreover, with the establishment of new tax reforms, the country aims at funding social programs and economic development. Indonesia The GDP of the country has increased growth rate of 6.2%. The country comprises of a huge population in which the young people form the maximum part. Moreover, the people have increased disposable incomes and thus, there is more spending on goods (("MINT" nations: A closer look at Mexicos and Indonesias economies, 2014). There are many developmental plans being devised by the government, which aim at enhancing economic competitiveness. These developmental plans focus on strengthening science and technology, as well as, human resource development. Nigeria The country is considered to be major oil exporter in Africa and thus, has an increased economic growth of 7.6%. The government of the country largely focuses on the infrastructure development. The country has been efficient in adopting and implementing the Extractive and Industries Transparency initiative (EITI). EITI adoption has provided the country a new way in terms of improving its oil sector. Figure 2: Population and growth percentage of MINT countries, 2013 (Source: http://www.theguardian.com/business/2014/jan/09/mint-condition-countries-tipped-economic-powerhouses) Turkey The country is considered to have 18th largest economy in the world and is a member of OECD and the G20. Within the past 5 years, FDI has grown to $13 billion from $1 billion, thus encouraging opportunities for the international trade. Moreover, the country is the largest economic partner of EU and thus, accounts for most of the Turkish trade in 2011 (Tesseras, 2014). The population of the country mostly comprises of young people. Opportunities for success in global market With the emergence of globalisation and global market, firms of all sizes contribute to the globalisation of markets. The change in demographics of the global economy has led to the expansion of global markets. These trends include changing world trade scenario and foreign direct investment related aspects for the country. Along with this, the changing environment of the multinational enterprises also contributes to the change in demographics of the global economy. Political economy of the country is considered to be an important factor by which production and trade, distribution of national income and relation of the economy with law, government and customs of a country are defined. The political system of the country is defined as the system devised by the government of a nation and is assessed by the degree to which collectivism is emphasised. Other than this, the political system of the country is also assessed by the degree to which the nation is democratic. With respect to this, MINT countries are assumed to have great opportunities for success in the global market. All the four countries are expected to have an increased GDP (Tesseras 2014). Along with this, the countries provide a good and favourable regulatory environment for conducting business. I disagree with figure three because it depicts the wrong value growth creating a fall for the Turkey in terms of the economy. By the year 2012, the three countries (Mexico, Indonesia and Nigeria) have a constant development growth which is not correct. The MINT countries are growing up gradually in terms of economic development (Caldwell 2014). Figure 3: GDP growth in MNIT countries (Source: http://www.theguardian.com/business/2014/jan/09/mint-condition-countries-tipped-economic-powerhouses) The most advantageous aspect of the MINT countries is that all four countries have growing population, constituting enormous workforce of youths. It can be thus said that the economy in which young people form the main part tends to grow at a faster rate in comparison to those countries, where the population is ageing and shrinking. Other than this, all the three countries enjoy geographical advantage of being situated near large markets. For instance, Indonesia is situated close to China, Mexico near America and Turkey near European Union. Though Nigeria does not enjoy the geographical advantage but is still considered to have a prosperous economy as it is the major oil exporter of Africa. Along with this, the country is a member of G20 (Elliott, 2014). The three countries such as Nigeria, Indonesia and Mexico are estimated to be leading commodity producers as the demand for raw materials and fuel has increased which has further led to the industrialisation process in these countries. With respect to Mexico, the most prominent sectors where substantial growth has been observed comprise of infrastructure, energy, advanced engineering, education and retail sector. Apart from this, the Mexican government has been working with the UK Trade and Investment (UKTI) teams by which bilateral trade has been doubled to £4.2 billion by 2015. Mexico is geographically situated near the global market like U.S., and thus, experiences trade opportunities according to the North America Free Trade Agreement in 1994 (Tesseras, 2014). Other than this, the market of the country possess technologically developed infrastructure. In context to Indonesia, the country has been situated on one of the major trade routes of the world. The economy of the country benefits largely, as it possesses abundance of natural resources (Doing Business in Indonesia: 2012 Country Commercial Guide for U.S. Companies, 2012). Turkey, on the other hand, is one of the MINT countries that have shown growth opportunities in the global market. It has been reported that presently there are 2,200 UK companies that are or willing to operate in Turkey. Moreover, according to UKTI, with the increase in UK goods exports of £3.7bn, the UK bilateral trade has increased to £9.1bn in 2011 (Tesseras, 2014). Nigeria is another country in the list of MINT countries as it has been assumed to have a growing Sub-Saharan economy within the coming years. The government of the country has been effectively dealing with the problems like energy shortages. The government has been making efforts in bringing new ways for enhancing investments through which the economy of the country will grow. Moreover, the country aims at receiving clean technology fund of $100 million in order to expand the availability of renewable energy sources. Domestic and International issues faced by these countries There are many factors which have led to the assumption that MINT countries have a great potential to serve as global markets. Considering this fact, there are certain domestic and international challenges also that these countries face and thus, lay restriction for the other countries to invest capital or opt for trade related activities. For instance, the MINT countries face challenges such as bribery and corruption on a larger basis, poor infrastructure in many cases and lack of proper education systems (Tesseras, 2014). Besides this, high level of debt and strict rules and regulations laid by the government and political structure further contribute to negative features of the MINT countries. The Turkish Lira (TL) as per the restriction posed by the Turkish government is trading at a low level that is 2.19 to the USD. Thus, it can be said that the country is under political instability (Turkey Economy 2014: “MINT” Condition or “Fragile Five”, 2014). It has been recognised that infrastructure system and service networks in Indonesia are poorly developed resulting in inefficiencies related to transaction costs, thus, prohibiting the exporters and investors. Other than this, the four countries are more prone to currency crisis as they do not contribute towards the financial system of the other economies as those specified by BRICS. Though the MINT countries have high labour force but in order to gain high economic growth, it is essential that the countries need to have both domestic and international capital flows in the right direction. The legal and regulatory uncertainty in Indonesia restricts the foreign investors to operate their businesses. The political instability emerging in Indonesia with Malaysia over the oil rich sea block has led to various conflicts (Future of the MINT Defense Industry 2019 - Market Attractiveness, Competitive Landscape and Forecasts to 2019, 2014). Drug trafficking is another factor that has restricted most countries of MINT to effectively operate in the global market. For instance, Mexico has been adversely affected by drug trafficking and other crimes such as money laundering, vehicle theft, human trafficking, extortion and kidnappings. Territorial disputes like disputes for territorial rights between Turkey and Greece over the claim for Aegean continental shelf have further increased challenges for establishing itself as a global leader. Overview of Turkey Turkey is considered as one of the countries included under MINT nations. Turkey is one of the smallest countries with a population of 74 million. Along with this, it is said to be the only nation among MINT members that is a non-commodity producer. According to the reports of CIA Factbook, the country comprises the young population with an average age of 29 years. The GDP of the country has quadrupled since 2002 from US$230 bn to US$800 bn (Waterman, 2014). The quadrupling of the GDP has occurred due to strategic location that the country possesses between Europe and Asia. Moreover, the strategic positioning of the country provides an opportunity to invest in the Middle East. The country also provides a well-established stock market for the companies as compared to the Eastern Europe. It has been reported that the country is efficient in transporting central Asian oil and gas, and thus, links East and West. Though there are many advantageous factors that make Turkey one of the global future leaders, there are many challenges that hinder its future growth (Fahsi 2014). For instance, the country has experienced a trade deficit of 7.5% of GDP. This type of condition weakens the local currency, which seems to be expensive for growth of the country in the future. Moreover, the country faces political crisis, which has further worsened its economic growth to a great extent. The corruption scandals and the protests in Takism Square are some of instances that slow down the growth rate of the country (Caldwell, 2014). In the context of the construction industry and ship building, Turkey is also an emerging competitor. The energy sector of the country has also developing, and foreign companies have been capitalising on most of the resources such as natural gas, coal, hydro, etc. The policies of the Turkish government have been very stringent for foreign investors. It is important for the government of Turkey to make efforts to deal with evident problems in the country. The government should also implement different strategies and supervisory bodies that are responsible for supervising and regulating the activities of specific industries so as to bring transparency and consistency in operations and curb different corruptive activities in the economy. Conclusion Globalisation has led to shift towards a more integrated and independent global economic system from a self contained national economies. There are several factors which have led to globalisation like technological change, elimination of trade barriers and foreign direct investment. Due to such favourable factors, most of the countries have now established or making their best efforts to emerge as a global leader. Earlier in 2001, BRIC countries were considered to have the most established and well equipped economy, but now in the present era, MINT countries are assumed to have a strong position, which will make them a global leader in the future. The four countries namely Mexico, Indonesia, Nigeria and Turkey constitute the MINT. Though all these countries comprise most of the positive factors like large population of young people and strong GDP, but still there are certain challenges that the economy of these countries face. These challenges further restrict them to operate as a global leader to some extent. References Caldwell, K. 2014. How to invest in the Mint emerging markets. [Online]. Available at: http://www.telegraph.co.uk/finance/personalfinance/investing/10580108/How-to-invest-in-the-Mint-emerging-markets.html [Accessed on: 1 April 2014]. "MINT" nations: A closer look at Mexicos and Indonesias economies. 2014. [Online]. Available at: http://www.channelnewsasia.com/news/business/international/mint-nations-a-closer/965508.html [Accessed on: 21 March 2014]. Daynes, W. 2014. The rise of the MINT countries. [Online]. Available at: http://www.bus-ex.com/article/rise-mint-countries [Accessed on: 21 March 2014]. 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Beyond Fear: Thinking Sensibly About Security in an Uncertain World. Springer. Tesseras, L. 2014. The marketer’s guide to the MINT countries. [Online]. Available at: http://www.marketingweek.co.uk/analysis/essential-reads/the-marketers-guide-to-the-mint-countries/4009451.article [Accessed on: 21 March 2014]. Turkey Economy 2014: “MINT” Condition Or “Fragile Five”?. 2014. [Online]. Available at: http://opentoexport.com/article/turkey-economy-2014-mint-condition-or-fragile-five/ [Accessed on: 21 March 2014]. United States MINT. 2013. Annual Report. [Online]. Available at: https://www.usmint.gov/downloads/about/annual_report/2013AnnualReport.pdf [Accessed on: 21 March 2014]. World trade report 2013. 2013. [Online]. Available at: http://www.wto.org/english/res_e/booksp_e/wtr13-2c_e.pdf [Accessed on: 21 March 2014]. Waterman, T. 2014. "MINT" nations: The economies of Nigeria and Turkey at a glance. [Online]. Available at: http://www.channelnewsasia.com/news/business/international/mint-nations-the/966918.html [Accessed on: 1 April 2014]. Read More