What country is the next China? I guess it is hard to answer given the uniqueness of China in terms of its advantage, problems and institutions. A slightly more practical question may be, what country may see rapidly growing demand for global goods and services and such demand could be too large to neglect?
To answer that question, I have done a simple filter exercise on the major emerging market countries. While a filter exercise may too easily neglect some hidden treasures, what is left is arguable a strong case.
First, I focus on emerging/developing countries with population over 50 million, except China/India with uniquely huge population (and those countries have a lot of complicated issues). A large population sets an important foundation for large domestic demand.
Second, I focus on countries with trade/current account surplus and low external debt. Persistent current account deficit prevents the country from accumulating foreign exchange reserves or net foreign assets, which leaves the country vulnerable to foreign capital outflow. Money flows out when it is needed the most (e.g. during economic downturn or in case of large external shock). That leaves out countries like Indonesia, Brazil, Egypt, Turkey and South Africa. Vietnam is also excluded due to its high external indebted and underdevelopment of domestic capital markets.
Third, I focus on countries with relatively stable political and security environment. Political, violence and security risks are usually hard to price by financial markets, given its nature of large tail risk and difficulty to hedge. That leaves out countries like Pakistan, Bangladesh, Ethiopia, DR Congo and Thailand. Mexico is somewhat concerning given its security problems.
Fourth, I focus on countries with low risk of Dutch disease. It may sound a bit controversial to avoid oil countries like Russia, Nigeria, Iran and to some extent Mexico, particularly in the case of rising oil price. However, most of those countries (barring Mexico) have undiversified manufacture bases and rely heavily on oil prices. Unless the countries are very disciplined in transforming oil revenue into productive areas, oil windfall usually exacerbates inequality and political instability.
Interestingly enough, what is left is only one country, the Philippines. Admittedly the country is not without problems, with so many of its people working abroad to earn remittance, reflecting a lack of career opportunities domestically. However, with a large population and low exposure to many risk areas that I listed above, it becomes less a surprise to see the strong growth of the Filipino economy and the rising power of its middle class.