Essay on Finance: Goldman Sachs and O’neill

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The man who invented the acronym BRIC talks about globalization, growth economies and the macro- and micro-economics of Manchester United Football Club by Heather McGregor
How to label Jim O’Neill? The Chairman of Goldman
Sachs Asset Management is warm, funny, down to earth, smart and above all else a
Mancunian. Being defined by his geographical roots doesn’t bother O’Neill; rather, he is very proud to come from Manchester, in the northwest of England.

Educated at a local state school in Burnage, the same neighborhood where Noel and Liam
Gallagher of Oasis grew up, he then studied at
Sheffield University and went on to get his Ph.D. at the University of Surrey in 1982.
O’Neill says that doing his Ph.D. was the best decision he ever made. “My friends said
‘what are you doing a Ph.D. for?’ But my father was so proud.” O’Neill credits his father, a postman, with inspiring him to aim high. He says his thesis, An Empirical Study of the OPEC
Surplus and its Disposal, wasn’t an especially noteworthy piece of work but “it taught me how to work on my own for intensive periods of time.
It was a real test of mental focus.”
It is 10 years in November since he published Building Better Global Economic
BRICs, the paper that was eventually to make him world famous. Can he remember why he set out to persuade the clients of Goldman
Sachs that they needed to look further than the
US if they wanted to invest in economic growth?
It turns out that there were two powerful drivers, one micro and one macro, that drove the birth of
BRIC as an acronym.
At the micro level, in the fall of 2001 O’Neill faced the departure of his then co-head of economics, Gavyn Davies, off to chair the BBC.
Davies was a Goldman legend. He had been at


Issue four
Summer 2011

the forefront of the use of economics in the capital markets and helped to build the firm’s reputation and presence in Europe in a big way.
O’Neill had been hired by Davies and had always looked up to him; now Davies was going and O’Neill would be heading Goldman’s team of more than 80 economists around the world by himself. “Gavyn’s brain is about 10 times the size of mine, so I was thinking, ‘What do I do for people to think I’m capable of succeeding him?’” Davies and his original co-head of economics, David Morrison, had joined Goldman
Sachs in 1986, and O’Neill pays tribute to how they changed the way economic research was done in the private sector: “They brought detail and rigor that was normally only present in government departments or academia, not in the brokerage world.” Facing the empty shoes that Davies had left for him to step into, it is perhaps not surprising that O’Neill was looking for a way to make his mark.
During Davies’ very last meeting with the managing directors of the Goldman Sachs economics team, with people all over the world dialed-in via the video conference system, something happened that would change the world forever, not least from a macro-economic perspective. The date was September 11 2001.
Davies had said his farewells and left the room, but put his head back around the door to tell his colleagues that a plane had just hit the World
Trade Center. O’Neill, who had been in one of the towers two days earlier, remembers that the meeting didn’t realize at first the enormity of the situation. “We just carried on, in our own world,” he says.


The term BRICs has often been dismissed as a mere marketing tool, but the club of nations it refers to is one that many countries have yearned to join since Jim O’Neill first coined the term
10 years ago. BRICs is an acronym for the countries that he expected would be the world’s four largest economies by 2041 (later revised to 2039, then
2032). He has resisted calls to add further countries to the original four – Brazil, Russia, India and
China – chosen for a