Wednesday, December 8, 2010

The Forgotten I

            While there is much talk about the “BRIC” nations, recent economic analysis seems to point less towards a bloc of BRIC’s, but rather of BRICI’s. This last “I” stands for Indonesia, the most recent emerging power. In 2001, when the original BRIC concept was created, the country was still in turmoil, just two years after the first free parliamentary elections in that nation for nearly 30 years. The country has made enormous strides since then. According to the World Bank, its economy has grown over four percent annually for the last five years, placing it in the same territory as Brazil and Russia. It also managed to escape the late recession with a growth rate of 4.5%, in contrast to the decline in nearly every western nation. With its large population, and vast natural resources, it certainly seems to fit the bill of a new BRIC perfectly.
            Unfortunately, it also has more than its fair share of problems, both those in common with other BRIC nations, and those that are all its own. The nation continues to have sky-high corruption, making it a far less attractive place to outsource jobs, both from western nations and from other developing nations. These are probably the most important for the nation, which will be able to benefit as China’s workers become too expensive for much of the low margin manufacturing in the Pearl River valley. The most iconic of these industries is, of course, the textile industry, which “Always chases the cheapest needle”. Jobs are already fleeing the country for place like Vietnam and Bangladesh, but Indonesia obviously has the ability to take the lion’s share of these jobs, with its higher population. The industry in Indonesia is already growing, possibly by upwards of 12% on the year, sounds excellent, but not compared to Vietnam’s 60% jump in textile exports to Japan this year. However, Indonesia will not be able to advance its manufacturing sector without the cleanup that is promised by their President Yudhoyono.

            -G. Ferrante

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