The usefulness of acronyms for better understanding the global economy
A certain number of acronyms hold sway across the media (BRIC, GAFA, etc.) and highlight a phenomenon that cannot be ignored. But illustrating the fragility of hierarchical arrangements, they can be cast aside as quickly as they arise…
In 2001, Jim O’Neill, an economist at Goldman Sachs, first coined the acronym BRIC in a footnote. The concept may have seemed eccentric at the time: bringing together Brazil, Russia, India and China under the same banner is puzzling. All are emerging economies, but they differ greatly: two democracies, two authoritarian regimes, very different geographical areas and cultures, etc. However, the 2000s were undeniably marked by the impressive rise of emerging countries. China, which joined the WTO in 2001, has experienced phenomenal growth, while India has earned a place in the sun thanks to the strength of its grey matter (Bangalore). As for Brazil and Russia, the surge in commodity prices (Chinese demand has something to do with this!) provided them with substantial financial resources.
Jim O’Neill was right: the BRICs have become fashionable on the trading floor. In 2008, the United States and Europe plunged into the most serious financial crisis since 1929. Where might managers look for opportunities to offer their panicked clients? To BRIC funds, of course! The acronym invented by Jim O’Neill is a household name worldwide, and not only as an investment theme. In 2009, Russia organised the first ever BRIC summit in Yekaterinburg. Imagine that, a four-party summit bringing together 40% of the world’s population! In 2011, South Africa became the fifth member of this popular club (the S in BRICS).
Yet Goldman Sachs had to close its BRIC fund in as 2015 by merging it with a larger fund dedicated to emerging markets. Even as the BRICS have made headlines, other markets have proven much more dynamic. Between its peak in 2010 and its closure in 2015, the fund lost 88% of its assets and nearly a quarter of its value. This was due to a deep recession that hobbled Russia and Brazil and to China’s annual growth falling below 7%. But the lesson is worth hearing: Goldman Sachs created a concept that emerged in public debate because it described a phenomenon that cannot be ignored in the mid-2000s: the spectacular take-off of the major emerging economies. Today, no one ignores the BRICS, nor the economic and political power of these countries on the world stage.
The digital revolution drives the rise of acronyms
‘Labelled’ communication has a future. Because we need to understand the world around us, observers of the global economy have every interest in trying to identify trends that reveal ongoing changes, if possible before others. The digital revolution reinforces this phenomenon because hierarchies are changing at a rapid pace. The whole world is now talking about GAFAs. This acronym is obvious: the American giants Google, Apple, Facebook and Amazon now occupy so much space in our lives that they have become symbols of the new economy and American domination. With Microsoft, the acronym GAFAM is also making headway.
‘Labelled’ communication has a bright future!
But as soon as one acronym triumphs, others appear to clarify certain concepts. After all, the GAFAs flourished in the 2000s. So has-been! While undisputed leaders in their fields, they are less effective in describing the current digital revolution than… NATU. By bringing together Netflix, Airbnb, Tesla and Uber, we touch on the ‘uberisation’ of our economies, that is to say, the rise of a platform or company out of nowhere (or almost) that suddenly shakes up the big names in a sector. Maurice Lévy, the former boss of Publicis, offered a tongue-in-cheek definition of Uberisation, saying: ‘it’s when you suddenly wake up and your former profession has vanished.’ The tsunami that is the digital revolution is rolling through every sector: Netflix put an end to the reign of the major TV networks, Airbnb is making traditional hotel chains obsolete and Tesla is changing the future of the automobile. Finally, Uber revolutionised the traditional taxi industry.
Do GAFA and NATU leave you unsatisfied? Wall Street prefers to talk about the tumultuous path of the FANG… With Facebook, Amazon, Netflix and Google, investors focus more particularly on the intangible economy, the power of the Internet. Tesla and Apple remain designers of manufactured products and must therefore comply with constraints that are largely different, even if the scope of these groups, like that of the FANG, is constantly changing. Still, each acronym is justified, outpaced and, in time, replaced. China now has its BATX (Baidu, Alibaba, Tencent, and Xiami). It’s a classic acronym that covers the Chinese Internet giants but which perfectly sums up the tremendous development of the Chinese economy over the past fifteen years. From a country producing low-end manufactured goods, the Middle Kingdom (the C in BRIC for those who followed) has emerged with its own GAFAs, unlike Europe, which has failed to launch home-grown Internet giants over the past fifteen years.
We are now awaiting positive acronyms that will cast the spotlight on European leaders, the most attractive Old World start-ups or on a few emerging countries experiencing an economic boom.
Bear in mind that when the GAFAs were conquering the world at the end of the 2000s, the eurozone was mired in crisis. The European moneymen were busy scolding the countries of Southern Europe, considered profligate and undisciplined in their spending. Anglo-Saxon journalists forthwith invented the acronym PIIGS to designate Portugal, Italy, Ireland, Greece and Spain. Horrid, vulgar, mean! Well, yes, but the punning acronym at least had the merit of exposing a very real chasm and a persistent contempt on the part of a supposedly more virtuous core of the eurozone at the heart of Europe, towards peripheral countries, considered unreliable. It is, however, significant and sad that the most famous European acronym is negative and refers to the eurozone’s misfortunes.
We are now awaiting positive acronyms that will cast the spotlight on European leaders, the most attractive Old World start-ups, or on a few emerging countries experiencing an economic boom. A catchy acronym (with an appealing sequence of consonants and vowels) has every chance of garnering attention and gaining traction. Informed observers and trend-watchers, take note.