What it means
The term was coined by the economist Jim O'Neill, who had earlier invented the BRIC label. In 2005 he and his colleagues looked for countries that, while not as large as the BRICs, had the demographic and economic conditions to grow quickly.
The eleven they chose were Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey and Vietnam. The idea was to give investors a simple way to think about where future demand might come from.
Large and young populations mean many future workers and consumers, and rising incomes mean growing spending on food, housing, cars, phones and financial services. For a company looking for its next market, the list works as a first filter before detailed research begins.
The countries on the list are very different from one another. South Korea was already wealthy and advanced when the list was made, while Bangladesh and Nigeria were far poorer.
Some are rich in oil and gas, some rely on manufacturing exports, and some have large service sectors, so they do not move together. Over time, the results have been mixed.
Several members, such as Indonesia, the Philippines and Vietnam, have seen strong growth, while others have been held back by political instability, inflation, weak currencies or conflict. This shows that a demographic promise does not guarantee success, because institutions, policy and security also matter.
Investors use the concept in several ways, such as in funds that hold shares of companies from these countries or in business plans for market entry. They should look closely at risks like currency swings, rules on moving profits abroad, corruption and legal protection of contracts.
The label is also now a little dated, and analysts often prefer to discuss emerging and frontier markets with more tailored groupings. A final nuance is that the list was a forecasting exercise and not an official classification.
No international body maintains it, and countries do not join or leave it. When someone mentions the Next Eleven in a meeting, they usually mean a loose group of large developing economies with growth potential.
In practice
Real-world examples.
Example
A consumer goods company with strong sales in Europe is deciding where to expand next. Its strategy team uses the Next Eleven list to shortlist Indonesia and Vietnam because of their young populations and rising incomes. They then study distribution costs, currency risk and local competition before committing $25,000,000.
Example
An asset manager launches a fund investing in listed companies from several Next Eleven countries. Because the countries have different currencies and risks, the manager limits any single country to 20% of the fund. The marketing material explains that returns can be volatile.
Example
A telecoms equipment supplier looks at the Philippines and Nigeria for new sales. It estimates that mobile phone ownership is growing quickly and sees demand for network equipment. The finance director insists that contracts be priced in dollars to reduce exposure to local currency falls.
Case study
Seen in the real world.
Atlas Home Appliances is a fictional manufacturer used for illustration. In this illustrative story, the company's sales in its home market had stopped growing, so the board asked its strategy team to find new regions. The team used the Next Eleven as a starting list and scored each country on population, income growth, ease of doing business and currency stability.
Two countries made the shortlist, and the company started with a small pilot, selling through local distributors at a cost of $3,000,000. After eighteen months, one market delivered sales of $9,000,000 while the other struggled because of import restrictions and a sharp currency fall. The board concluded that the list had been a useful starting point but that country-specific research decided the outcome.
The strategy team later wrote a short guide for the sales staff explaining why they had picked each country and what could go wrong. The guide became part of the company's standard process for entering any new market, and it required a currency plan and a local legal review before any shipments were made.
Watch out
Common mistakes.
- Treating the Next Eleven as an official or fixed list. It was one bank's forecast, and it has no formal members.
- Assuming all eleven countries behave alike. Their economies, politics and risks differ enormously.
- Believing demographics alone guarantee growth. Good institutions, stable policy and investment are also needed.
Questions
People also ask.
Who created the Next Eleven?
It was proposed in 2005 by Goldman Sachs economists led by Jim O'Neill, who also introduced the BRIC concept.
Which countries are in the group?
Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, the Philippines, South Korea, Turkey and Vietnam.
Is the term still useful?
It remains a convenient shorthand, although many analysts now use more detailed groupings of emerging and frontier markets.
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