TOKYO -- In an effort to diversify its economy following rapid growth due to crude oil exports, Nigeria has launched the Industrial Revolution Plan. Designed to end heavy reliance on oil and create greater wealth for a population of nearly 200 million, the government plan is encouraging foreign companies to invest in the western African nation. The plan will also open up its electricity, communications and other markets.
Encouraged by signs that Nigeria is heading for a higher level of economic development, Proctor & Gamble has built a $3 million plant in the country. P&G intends the plant to help turn Nigeria into a leading base for the U.S. group's development, production and exports in Africa, said an executive of the consumer goods giant at its opening ceremony on March 13.
Seeking a new growth model
Malaysian Prime Minister Najib Razak, speaking in late February, said that Malaysia can develop in the same way that South Korea has, referring to the need for developing the nation's content industry. Malaysia's gross domestic product per capita was comparable with that of South Korea until the early 1980s, but is now about half that of its former equal.
Malaysia's economy appears solid, maintaining growth at around 5%. But the economy is mainly driven by state-affiliated enterprises and it is unclear whether the government-led growth model can remain effective, thus Najib is eager to promote development of a robust private sector.
Nigeria and Malaysia ranked an equal first among 20 major emerging economies in a study by The Nikkei Veritas, which assessed those countries on the basis of their politics, economy and future potential. Yet while Nigeria appears energetic, there is a sense of crisis in Malaysia.
Emerging economies have largely simultaneously witnessed rises and falls in their currencies and stocks. The so-called "fragile five" economies that came under strong selling pressure last year -- Indonesia, India, Turkey, South Africa and Brazil -- are rebounding.
But Jan Dehn of Ashmore Group, a leading British asset management company specializing in emerging markets, said it is no longer appropriate to place countries with political and economic problems on the same level as those without. It is time to find out which emerging economies will rise or fall.
Warning light for Turkey
Late at night on March 30 in Turkey, opposition leaders were stunned as Prime Minister Recep Tayyip Erdogan said on TV that his foes would "pay the price" for plotting his downfall. He claimed victory in key local elections, heralding crackdowns on the "Gulen movement" of religious activities present in all parts of Turkish society including political and bureaucratic circles.
Erdogan is credited with Turkey's rapid economic growth as the nation's leader for 11 years. However, warning lights are now flashing over Erdogan's reinforcement of his autocratic grip on state affairs, causing investment and other financial activities to contract. For Turkey, the coming 10 years will not necessarily be the same as for the preceding decade of growth.
Dark clouds also loom over Russia and Ukraine. A huge amount of capital has already exited Russia since its seizure of Crimea. As it will be extremely difficult for Russia to rebuild its economy in view of a series of sanctions imposed by the West, the World Bank forecasts that the Russian economy may contract 1.8% in 2014.
A close analysis of emerging markets clearly shows that they are divided into highs and lows. If investors successfully find the winners, they can choose countries and businesses to invest in.
Earlier this year, UBS began introducing companies in emerging economies with the potential to become global giants of the future. "Growth companies that are similar to Toyota Motor in its infancy can emerge," said Toru Ibayashi, executive director at UBS Securities Japan. Markets are currently sensitive to new developments in emerging nations.