After ‘launching’ the BRICS (2003), in 2011 Jim O’Neill pulled out of the hat the MIKT countries, sometimes also called MIST (Mexico, Indonesia, South Korea, and Turkey). What do these four emerging economies and countries have in common? Is MIKT yet another acronym that can be useful only to investors? Or are they economic and political realities of great and lasting importance? In what ways can they contribute to the world economy and politics?
To begin with, since the take-off of the so-called ‘global’ age (let us choose 1992, the year of the end of the USSR), all four countries have experienced fast growth, despite the peso crisis of 1995, that of East Asia (into which Korea and Indonesia were heavily involved) in 1997-98, and the collapse of the Turkish lira in 2000. All were strengthened by the crises and have continued to benefit from the globalisation of goods, services, labour and knowledge. During the period 1993-2011, the average growth was 4.9% for South Korea, 4.6% for Indonesia, 4.2% for Turkey, 2.6% in Mexico (OECD data, 2012). If we sum their GDPs, these countries already constitute the fourth largest economy in the world, after the USA, China and Japan. If we consider that, with the exception of Turkey, all of them are former colonies (Korea itself was occupied by the Japanese empire during the period 1910-45); such results are even more surprising.
Obviously, there are also some fundamental differences. These countries are geographically distant and one of them, South Korea, clearly stands out for technological development, research, innovation and quality of life. Thanks to a persistent and formidable growth, the Republic of Korea is no longer a ‘developing’ country, although it does not yet enjoy the standing of a regional or global economic power. Let us now look more closely at each of the four, and consider other similarities and differences.
Mexico is the one with the largest economy. Especially since joining the NAFTA (North America Free Trade Agreement) in 1995, it has increasingly turned into an industrial powerhouse and consolidated its democratic stability with the first handover between a president of the PRI (Partido Revolucionario Institucional) and representatives of other parties, Fox and Calderon of the PAN (Partido Autonomo Nacional); in other words, it seems to have embraced the liberal idea of democratic ‘alternation’. Figures on corruption and inequalities are still impressive, but they hide realities of great importance. Mexico is the world’s largest manufacturer of televisions, the third largest producer of computers and the second largest American car maker after the USA. Enough with the romantic idea of a campesino country…Of course; newly elected president Peña Nieto is facing a tough agenda: how to promote balanced and sustainable economic growth? How to avoid excessive economic and political dependence on the U.S. (more than half of Mexico’s foreign trade is with Washington)? How to make the best use of resources (oil and shale gas), of which the country is rich? We should not forget that if the Spanish crisis continues in 2013, Mexico could become the largest economy in the Spanish-speaking world. An eye on Washington and one on the south could help play a role as a ‘bridge’ between the two hemispheres. Interestingly, in June 2012, Mexico and three other Latin American states (Colombia, Peru, and Chile), founded the Pacific Alliance, an economic bloc with ‘a clear orientation toward Asia’. The stock exchanges of Bogota, Lima and Santiago have already formed the MILA (Mercado Integrado Latino Americano, whose market capitalisation is around 800 billion dollars): will Mexico join them? Altogether they would constitute the largest equity market of Latin America, ahead of Brazil’s BOVESPA.
Similarities between Mexico and Turkey are much stronger than one might at first imagine. The two countries have comparable economic and demographic size, and both have benefited from the recent opening of international markets, after moments of crisis and subsequent restructuring (in the Turkish case, Kemal Derviş’s reforms in 2001). Turkey, too, has become a major industrial power, particularly in the production of motor vehicles, televisions and electronic products; few people may know that the glorious German group, Grundig, was bought by Istanbul’s Koç in 2007; Turkey, too, has consolidated its democratic credentials, with the transition from secular Kemalist governments to moderate Islam’s AKP (Erdoğan’ s party) in 2001. Like Mexico, Turkey has not addressed huge economic differences, especially among regions: Istanbul’s GDP makes for 27% of the country’s, while the easternmost provinces, bordering Iran, are economically comparable to Morocco or Tunisia (some 4,000$ of GDP per capita); unlike Mexico, however, Turkey lies on the border of an area of enormous social and political tensions, the Middle East, which makes the stability of Ankara more precarious and a return to power of its armed forces, traditionally guarantors of the secular state, always possible.
In this sense, the two countries on the Pacific seem to fare better, even if they could hardly be more different. Indonesia is home to about 250 million people, whose average per capita GDP is still relatively low ($ 3.600, according to CIA, 2012); most of its exports consist of raw materials and minerals; after the severe crisis of 2000-2001, Indonesia chose a more conservative and protectionist trade policy. The sustained growth in recent years (faster than in India in 2012 and probably 2013) and the democratic breakthrough in 2004 (the first fully democratic presidential elections) have convinced investors and diplomats about the potential of this insular state, which is crucially located between India, the Far East and Australia. Even more strategic, though problematic, is the geopolitical location of South Korea, between Japan, China and the threatening cousins from the North. However, South Korea is now one of the most developed and dynamic economies in the world, with a strong tendency to export and quality brands such as Samsung, LG, Hyundai, and others. Seoul produces and exports high-tech goods, and this is clearly different from the other MIKT. As of 2011, South Korea was spending 3.7% of the GDP in Research and Development, far above Turkey (0.7%), Mexico (0.4%), and Indonesia (0.1), let alone all EU countries. What South Korea shares with the other MIKT is a relatively recent democratisation; military rule there in fact ended only in the mid-eighties.
To summarize, MIKT countries, despite great historical and cultural differences, share many aspects. All are emerging industrial powers, all have benefitted from the so-called ‘globalisation’, and all are ‘young’ democracies. There is one aspect, however, that escapes at first sight, but could be decisive for the future of international relations. All MIKT are ‘bridge-countries’, located in contact zones between the political and economic ‘West’ and other regions. Mexico is located between the U.S. and Latin America; Turkey, between the EU and the Middle East/Central Asia region; Indonesia, between Australia and South East Asia; South Korea, between Japan and China. If they have courageous leadership, these countries can play important roles, and create new political syntheses. Turkey has tried to combine market economy and moderate Islam, but her ambition to lead the ‘moderate’ Arab world has partly failed. Ankara is now trying to find a new role, between her traditional loyalty to the USA and the rollback of Russia, as is evident from Syria’s conflict. Mexico and South Korea have just elected new leaders, from whom we expect more dynamic and autonomous policies. Will Mexico combine the market and modern social democracy? Will Mrs Park, the first Korean female president, find a way to talk to the North? Indonesia is then immersed in the Pacific Ocean, home of the largest world economies. You can bet its presidential elections in 2014 will be followed all over the world, except perhaps in an increasingly declining, ageing, and self-referential Europe. The European Union has once again showed its limits by failing to find a decent solution to Cyprus’s woes, and is losing ground in Eastern Europe, where Russia’s influence is rolling back and Hungary, slowly slipping into an authoritarian regime, amidst the silence of European institutions. The contrast between MIKT and EU countries could hardly be starker.