The widely accepted “BRIC” designation for the world’s largest emerging economies may soon be in need of a revision. In fact, some international business scholars have felt for many years that Jim O’Neill’s term for the developing nations of Brazil, Russia, India, and China should be updated to include at least one additional country. Morgan Stanley publicly stated as early as two years ago that the commonly referenced acronym should be revised to “BRIIC” in order to include the rapidly growing economy of Indonesia.
A report released in June of 2009 showed strong comparisons between Indonesia’s economy and that of India. This report predicted seven percent annual growth for Indonesia by 2011, but the country has already come close to that level for the past several years. Indonesian production has grown nine percent annually during a time when other similar economies were struggling through a difficult global recession.
Experts have focused on urbanization, foreign investment, and a growing middle class as major movements igniting growth in Indonesia. The growth of its middle class from 38%-57% of the nation’s population in just seven years has facilitated high levels of domestic demand for manufactured products. This creates the sort of stable growth that separates the BRIC from nations known merely for high levels of exports.
One BBC News reporter argues that a culture of corruption could be the one issue that would hold back the enormous growth potential of Indonesia. Although the democratic government has made some attempts to prosecute those guilty of illegal behaviors, there is still a large proportion of the population that avoids paying taxes, pays off public officials, and utilizes bribes as a regular form of business.
What do you think? We want to hear your opinion on this issue. Is Indonesia’s economy worthy of being included among the likes of the BRIC countries, or will corruption hold it back from reaching the enormous potential that many investors see? Comment on this post and let your voice be heard!