Nov. 30 marked the 10th anniversary of Goldman Sachs economist Jim O'Neill's anointing of the BRIC economies -- Brazil, Russia, India, and China -- as the future leaders of the global economy. Yet 10 years on, the notion of the BRICs already seems out of date. In China and Russia, demographic patterns have shifted. Their working-age populations are declining, as are exports, while still-rigid political systems stifle free thought and hamper technical advance.
Future trends still look robust in Brazil and India, but these countries should now be in new company -- a group of dynamic and democratic emerging economies. Let's call them the TIMBIs: Turkey, India, Mexico, Brazil, and Indonesia. These countries form more than just a cute acronym. They all share favorable demographics and democracy and are already large economies. Their GDPs combined have already surpassed that of China and will be much faster growing in the coming decades. Their combination of booming labor forces and political openness points to rapid increases in human capital and innovation that will propel these regional powers into global powers in the near future.
Let's take a look at the numbers. The chart below shows the trends in the population aged 15 to 59 in the countries or regions that make up the world's largest economies, using the United Nations' latest projections of future population growth and examining changes from the base level of 1950 up through 2050.
Figure 1: Growth in the Labor Force (population aged 15-59), Indexed to 1950 level= 100
The chart shows a clear division in trends from 2010 onward, with the TIMBIs enjoying labor-force growth of 10 to 30 percent from now until 2040. Meanwhile, the labor forces of Russia, Europe, Japan, and South Korea will decline by 10 to 30 percent. The United States will continue to grow from 2010 to 2040, but only by about 11 percent.
It is controversial to suggest that China's enormous growth engine may slow down or stall. Some slowing is inevitable, however. From 1980 to 2010, China's labor force grew an average of 1.7 percent per year, reaping the gains of Mao's pro-natalist policies from the 1960s and 1970s. These gains accounted for about one-fifth of China's annual economic growth in these decades. In the same years, urbanization -- a key source of the increase in productivity of China's labor force, as workers moving from farming to urban manufacturing and services brought huge increases in output per worker -- grew at a rate of 4.3 percent per year, as urbanites went from 20 percent to 45 percent of China's population. Education, yet another key element in increasing productivity, underwent a similarly rapid boom. From 1998 to 2004, total undergraduate enrollment increased from 3.4 million to 13.3 million, an incredible annual increase of 25 percent per year. These trends helped underwrite GDP growth rates of 10 percent per year.