Brics creator Jim O'Neill looks to the future of economic development

The outgoing Goldman Sachs manager, who coined the term for the Brazil, Russia, India, China and South Africa grouping in 2001, explains why his creation has staying power

Jim O'Neill, the chairman of Goldman Sachs Asset Management, proved to be an expert at the economics of foreign exchange. Simon Dawson / Bloomberg

Is there life for the Brics after the departure of the term's originator, the chairman of Goldman Sachs asset management, Jim O'Neill?

The 57-year-old economist, who coined the term in 2001 to describe the economic grouping of Brazil, Russia, India and China, is to leave the bank in a few weeks, for new but yet undefined challenges.

His departure comes as criticism of the Brics concept is growing, especially after a recent summit of officials from the four countries - plus South Africa - in Durban.

Some said that the grouping, conceived by Mr O'Neill when he was chief economist at Goldman, had been hijacked by politicians keen to form a new power bloc in the world, and that South Africa had been tacked on to give it greater global spread.

Mr O'Neill agreed with that point, to some degree. South Africa did not have the same economic clout as the others. "I was surprised they let them in," he said in an interview.

Other critics attacked the Brics for the absence of any institutional achievement, such as lacking progress on plans to set up an economic development bank. Mr O'Neill thought the idea of such a bank dedicated to the Bric countries was important, but needed Russian backing to go ahead.

Perhaps the most telling criticism of the Brics has come in the past couple of years, as the stratospheric rates of growth from earlier in the century have fallen.

This gets to the heart of the Bric controversy and puts Mr O'Neill on the defensive. "It is far too early and not particularly accurate to say the Brics have disappointed, unless one believed the 8.1 per cent average [growth of previous years] was sustainable," he said.

"As I have discussed on numerous occasions, their growth in 2001-10 was stronger than expected, so it would be not surprising if their growth rates slowed during this [current] decade," he says.

If a certain prickliness on the subject can be detected, it is probably a reflection of the fact that Mr O'Neill is undoubtedly proud of his creation.

The Brics concept has been one of the guiding principles of global investment and economic philosophy for more than a decade. It made its creator a wealthy man, much in demand as a speaker on the international conference circuit, a position he appears to enjoy.

The achievement is all the more gratifying for somebody who does not seem to be a typical Goldman Sachs man.

His background - an ordinary school in England's gritty town of Stockport, an equally ordinary university in equally gritty Sheffield - did not presage a career at the highest levels of economic policy formation.

He was attracted to a career in foreign banks in Britain "because I hadn't gone to the right schools for British ones" and proved to be an expert at the economics of foreign exchange and fixed interest theory, sufficiently outstanding to attract Goldman Sachs, where he was made chief economist in 2001, right about the time of the September 11 attacks in the United States.

"The September 11 attacks unleashed a cascade of thoughts which had been building in my own mind," he explained in his 2011 book The Growth Map. The most enduring of these thoughts was the Brics.

The four members of the grouping were chosen for what Mr O'Neill regarded as characteristics they all shared and which made them the generators of future global growth: big populations and demographic trends; high growth rates; and significant chunks of the global GDP. They also proved, he said, that "globalisation did not need to be Americanisation", another very un-Goldman idea.

Mr O'Nell's basic concept was refined and altered over the years: he introduced the Next-11 grouping of other growth countries that would help drive the global economy; and then coined the MIKT grouping - Mexico, Indonesia, South Korea, and Turkey - as economies that were battering on the Brics door.

More recently, he has been singing the praises of Nigeria as a future economic powerhouse, and "feeling the pulse of the great growth market story" in Singapore.

He has been a frequent visitor to the Arabian Gulf region and lauded the achievements of Dubai and other centres in becoming hubs for regional and global commerce. But he does not believe the GCC countries, alone or individually, have Bric potential.

"They don't really have enough people to be big enough. They can become very wealthy (some of then already are, of course) but to be Bric-potential you need to have a lot of people and GCC countries don't, even collectively. I can imagine if you included Egypt and Iran then you would have a different story."

But whatever Mr O'Neill decides to do next, he is unlikely to drop the Brics.