In 2014, Jim O’Neill invented the acronym MINTs as the new BRICs. It was thought they would grow prodigiously but since then the situation has changed.
Who are the MINT Economies?
There are four countries in the MINTs, with the first letter of the country used for the acronym. The four MINT economies are:
All four are predicted by Goldman Sachs to be in the top 15 economies in the world by 2050. Mexico and Indonesia will crack the top 10 at 8th and 9th respectively.
To put this in perspective at the moment all four combined have about the same output per year as Germany. In 2050, Mexico and Indonesia are expected to be larger with Nigeria and Turkey each greater than 80% of the German economy.
Other than high expected future growth, there is not much that instantly makes these countries group together.
This post will give a broad overview of where the MINTs are now and what the future looks like.
Each of the MINTs are in different continents but were thought to be strategically placed.
Mexico has benefited from having the USA next door which can act as a gateway for trade between North and South America.
Turkey straddles Europe and Asia. Turkey is unique in its ability to relate to both continents and is well positioned to grow as cross continent trade extends.
Indonesia has great positioning to trade easily with China, India and Australia in particular. As the first two boom, there should be significant opportunities for Indonesia to partner with them.
Nigeria is the leader of a group of economies on the West Coast that are growing rapidly. With smaller neighbours Ghana and Ivory Coast, Nigeria looks to position itself as the hub of the region.
Figure 1 Source: World Bank
Figure 2 Source: World Bank
Since the turn of the millennium, all four countries have experienced significant growth. Nigeria and Indonesia weathered the financial crisis without slipping into recession. Turkey and Mexico have both grown above their pre-crisis peaks.
Interestingly, Turkey overtook Mexico to become the largest of the group in 2010. A clear distinction within the MINTs can be seen in Figure 2. Mexico and Turkey are currently middle income countries whilst Turkey and Indonesia lag massively behind.
Comparing the GDP per capita to developed countries, shows there is lots of scope to grow. Importantly, there has been reform activism to put these economies on the right trajectory.
Access to Technology
Figure 3 Source: World Bank
Figure 4 Source: World Bank
One aspect particularly exciting about these economies is their access to mobile internet. This opens up many paths for entrepreneurs that may have otherwise been stifled by their access to reliable infrastructure.
Oddly, Indonesia has more than one mobile subscription per person yet less than 20% of these have access to internet. There is still a mobile internet revolution to take place in Indonesia, despite strong penetration in the main cities such as Jakarta.
Nigeria has benefited in particular with several successful start-ups and social enterprises. Nigeria is in essence skipping the PC stage and leaping straight to the mobile dominant era. Jumia, dubbed “the Amazon of Africa”, initially targeted PC customers but has found that 70% of its users are mobile!
Figure 5 Source: World Bank
Figure 6 Source: World Bank
Figure 7 Source: World Bank
As living standards have improved in the MINTs, there has been impressive growth in the average life expectancy. Mexico is a notable exception due to the high loss of human life in the drug wars weighing down the male life expectancy.
The importance of life expectancy is two-fold. People have longer working lives in which to gain skills and pass these on to the next generation. Secondly, more people will take long term views. It’s much more in your interest to work hard to build a company if you are going to live long enough to reap the rewards!
Adolescent fertility rates have been dropping rapidly. This shows progress as more women are able to finish their studies and better access to family planning is available.
Indonesia is the odd one out. Sex education is not widely spread meaning that many adolescents are unaware of proper family planning. This has had dire consequences with the Deputy Health Minister claiming 45% of mothers dying in pregnancy were under 19.
The mortality rate decline is another sign of progress. Mexico is experiencing inertia around the 20 deaths per 1000 mark. For comparison, the rate in the UK is 4.9 and in Iceland is 2.4. This is an area all of the MINTs have plenty of work to do.
Since Jim O’Neill chose the MINTs, security has been the biggest drawback to businesses looking to exploit the growing markets.
Nigeria has been locked in battle with Boko Haram and despite President Buhari’s anti-corruption stance, corruption is still a major drag on Nigeria. Their currency has been in free-fall since the decision to remove the dollar peg, falling 40% between June and September. While these are ominous signs in the short term, it must not be forgotten that in 2015 Nigeria peacefully changed ruling parties after an election for the first time. If this respect for the public vote is maintained by the ruling classes in the future, it bodes well for the country to progress.
Indonesia’s president Joko Widobo is potentially the most exciting leader of the MINTs. He has committed to reforms to increase Indonesia’s competitiveness. His reforms have relaxed restrictions on foreign investment and attempted to diversify the economy away from reliance on oil and palm oil. Q2 2016 GDP surprised on the upside at 5.2%, the fastest for any of the MINTs. However, greater calls for Sharia Law to be implemented across Indonesia risks damaging Indonesia’s development. Compared to strongly Islamic populations in the Middle East, Indonesia has much higher labour force participation of women. One region, Aceh, introduced Sharia Law and two thirds of punishments have been handed to women. This risks damaging the advantage of Indonesia over other majority Muslim countries.
Turkish politics has drawn the most attention since the acronym was created. President Erdogan’s hard-line stance against opposition, particularly the Kurds, has been widely publicised. After an attempted coup in July 2016, he has led Turkey further to the right and more Islamic fundamentalist. The purge of military officers, teachers, journalists, judges, civil servants and intelligence officials is unprecedented in modern times for a democracy. With so many job losses and an iron fist on dissent, it is difficult to argue that Turkey is on the path to prosperity.
Mexico continues its struggle with drug lords and the informal economy. In the past decade, nearly 100 mayors have been murdered. Since the MINTs acronym was created, the situation has not got better. In the first trimester of 2016, there was a 15% increase in murders linked to organised crime. The president, Pena Nieto, has an approval rating of a mere 22% in a Parametria poll in August 2016. The major issues were surrounding the failure to address drug related violence and poverty. While Pena Nieto has made progress in reforming utilities, his almost unbelievable approval ratings show there is a long way to go. Under his leadership, it is hard to see a dramatic turnaround in events or public opinion.
The assumed strong relationship with the USA has come into doubt with the strong anti-Mexico stance taken by Donald Trump. It is not possible to predict what Donald Trump would actually do if elected president but in four years a lot of damage can be done and the mainstream opinion on relations with Mexico shift in the medium term. Mexican parliament has threatened to re-examine past treaties with the USA including the treaty that gave away California if Donald Trump ripped up the NAFTA agreement. The two countries going to war seems unthinkable but bickering over these treaties could apply a dramatic brake on Mexican progress.
Turkey’s internal politics have had a damning effect on their relationship with the EU. Turkey has moved further in culture from the rest of the EU, making its acceptance to the union ever less likely. Much of the optimism about Turkey was centred around it’s reforms to enable it to be part of the single market, which would give it a major boost in trade. Turkey is fighting on multiple fronts against ISIS, the Kurds and now the Gulenist movement. This is a lot of risk for anyone looking to expand to Turkey.
Nigeria has suffered greatly from the glut in oil supply as Saudi Arabia has attempted to weed out the producers with higher costs to protect their long term interests. Although Nigeria has diversified its economy in recent years, oil prices still hold significant power over its growth. This is the main reason for Nigeria to enter recession in Q2 2016. On the positive side, links with China have grown rapidly with significant investment coming inbound. Nigeria could benefit from China and the West showering investment to gain influence and approval. This forces the West to invest so they don’t miss out when Nigeria does take off.
Indonesia is an outlier in the group with a positive outlook. Indonesia has a seat at G-20 meetings and is the largest member of ASEAN, the south east Asia trade group, and has maintained good relations with its neighbours. While a territory incident did flare up with China, China has acknowledged Indonesian ownership of the islands and contest only access to the sea. The south sea Chinese territorial disputes do have potential to escalate but Indonesia wouldn’t be a major claimant. There have been terrorist attacks in the country aimed at foreigners in recent history such as the famous ‘Bali Bombings’. The UK government still advise that there is a high terrorist threat. Although Indonesians are overwhelmingly muslim, they are not strongly anti-west on a whole with 63% reporting a favourable view of the US in 2015.
The MINTs are not a mystical haven for investment despite several positive points outlined above. All of the MINTs have growing populations that are increasingly healthy and more connected. In the long term, they will be markets to be reckoned with.
The political situations in each of these countries make it very risky to bet on them in the medium term. The exception is Indonesia, with it’s relative stability and good relationships with its neighbours and global powers.
Companies looking to expand into the other MINTs may sleep easier if they hold off on the others until the political situation is calmer. There is a major opportunity for companies with in depth knowledge of the local economies to establish strong positions as potential rivals delay entering the market. Currently, they are high risk and high reward not the low risk and high reward that has been fantasised.