EU and MINT Countries : Building Prospective Economic Partnerships?

Written by | Friday, October 3rd, 2014

In 2001, the respected, former Goldman Sachs economist Jim O’Neill defined and popularized the so-called BRIC countries which he described as economic powerhouses of the next decade(s). Thirteen years later, he comes back with his new “squad” of countries –Mexico, Indonesia, Nigeria, and Turkey – to whom he refers as ‘MINT’. In his opinion, MINT countries have many advantages when compared to BRICs, although one of his friends joked that the only difference is the “freshness” of Mint compared to Bric(k)s.

On average, MINT countries are younger than BRICs. Their demographic situation foretells that all the four countries are going to rise in the number of people eligible to work relative to their non-working populations. This “inner” demographics is the envy of many developed countries, not only BRICs. Another significant advantage of MINT countries their geography. All of them have very favourable geo-political locations: Mexico is wedged between the United States and Latin America, Indonesia is at the heart of South-East Asia while having strong ties to China, and Turkey is both in the West and in the East. Nigeria’s position is not yet so significant, but it has a great potential especially when the African continent accelerates its economic growth. In any case, even for now, Nigeria accounts for 80 percent of all EU’s trade with Western Africa together with Ghana and the Ivory Coast.

The European Union already has fairly well-establish economic bases in all MINT countries. Turkey, the closest and thus the most significant one, is the EU’s fifth most important export market. For Turkey, the EU is number one trade partner but other important partners include also Iran, Iraq, and the United Arab Emirates. However, postponing Turkey’s perspective of EU membership might cause Ankara to turn more of its attention to its Muslim partners and neighbours, a process that has been “hinted” by incumbent President Erdogan. Under Erdogan, Turkey signed almost 50 treaties with Iraq across a variety of sectors. The country even fixed its relations with Iraqi Kurds. Thus, although EU-Turkey ties are certainly very strong, political integration and reform must follow in order for them to thrive further.

When it comes to Mexico, EU’s position is similarly strong. After the United States, the EU is the country’s second most important export market and the third most important source of imports after the U.S. and China. Brussels and Mexico City signed a comprehensive free trade agreement already 17 years ago but the mutual partnership would gain its true momentum if the EU managed to sign its free trade deal with the United States as well. Finalizing TTIP will create an immense North American free trade economic space for growth, jobs, and development.

With Indonesia, the EU’s has not yet signed a free trade agreement, although efforts have intensified significantly since 2011. EU’s struggle to negotiate the so-called “Comprehensive Economic Partnership Agreement” only approves of the importance of Indonesia to the entire region. The country is the biggest member of the ASEAN grouping, accounting for 40 percent of the block’s gross domestic product. Yet, it occupies only the fifth position inside the region as EU trade partner, preceded by Singapore, Thailand, Vietnam, and Malaysia. The “archipelago economy”, as described by McKinsey, is home to the world’s 16th largest economy. In addition to its abundance in natural resources, Indonesia’s boom has been possible largely to a combination of productivity growth and increasing domestic consumption. The latter is especially important from the perspective of EU’s exports.

Nigeria, a country that managed to grow seven percent annually without a universal access to electricity, is the major economic power of West Africa region, which is in turn the crux of Europe’s economic interests in Africa, Caribbean, and the Pacific. The country’s potential of long coast and resource endowment is still untapped due to problems in infrastructure, notably in transportation, as well as institutional barriers. Generally, the country’s markets are rather fragmented. Moreover, in the light of recent Islamist violence in the country and throughout the region, positive economic prospects may be hurt by an increasing risk of militarism.

Although the European Union already has well-established economic ties with each of the MINT countries, possibilities for improvement are countless. If the MINT group really manages to fulfil its potential, though it may take as many as three decades, as Jim O’Neill hypothesizes, economic benefits for Europe mostly in terms of export-driven growth that Brussels wishes for, may be really enormous. To that end, EU policy-makers should ponder if it is wise for the Old Continent to put all its eggs into the Chinese basket.

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