3 years


Global Capital Rules, Okay?

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Not quite. Which explains both the strength and weakness of this ‘economic travelogue’ that tries to spot tomorrow’s winners
Breakout Nations: In Pursuit of the Next Economic Miracles | Ruchir Sharma | Allen Lane | 292 pages | Rs 599

Perhaps it’s just me, but the harder one looks at Ruchir Sharma’s face, the more he seems to resemble Cinkara Man, the hero of a TV commercial who would quaff down his magic potion and acquire enough energy to smash jubilantly through a glass screen in his office. As if to confirm the point, he has written a book called Breakout Nations, which is all about identifying countries that could expand their economies fast enough to gatecrash clubs of the wealthier.

This book is written from the vantage of an analyst of emerging markets for an investment firm, which is what Sharma is, but it’s at its most readable when he writes as just himself, an observant globetrotter with an abiding curiosity in what makes other countries click. On some, like Brazil and Turkey, he achieves what one might call the Smirnoff Effect, with a reality spied through an alternate lens that is at dramatic odds with unaided appearances. On others, such as Iraq, his notes read like a data download from hell’s own PR website.

Sharma offers no grand theory on economic success, but denies any paradigm shift in favour of the poorer lot. To his mind, the spectacular sizzle of emerging economies this past decade—their so-called convergence with the rich in a sudden reversal of a half-century of slipping behind—has been a freak phenomenon, a one-off performance powered by easy money from the West, rather than any great effort of their own. And now, he argues, it’s time to get real. After the Great Recession, most will fail to regain their earlier exuberance. But there will still be a few that outpace their income-group peers to break into the next league: the ‘Breakout Nations’ of this book’s title.

The author’s list of Breakout probables does not feature the world’s usual suspects (aka BRICS). Instead, he foresees a bright future for the Czech Republic, ‘Europe’s safe haven’; South Korea, the ‘manufacturing barrier buster’; Turkey, which is now free to ‘be itself’ (and as Islamic as it wants); and Indonesia, ‘a commodity economy that works’. He also thinks that America, the world’s innovator-in-chief, will retain its lead for the foreseeable future. The big letdown he forecasts is China, which he argues is too big to keep up its frantic expansion ‘as the law of large numbers catches up with it’; and as its economy slows, it could drag every other commodity-led country down with it. That’s partly why he is bearish on Brazil, a ‘premature welfare state’ whose fate he fears India might end up sharing. Yet, India’s chances of a breakout are still fifty-fifty, he reckons. If crony capitalism is contained and overconfidence gives way to urgency, ‘the optimistic view of India may still be right’.

All in all, Sharma offers snapshots of the world’s hottest markets that global investors, who rarely look beyond statistical summaries, dare not dismiss. In doing so, he sets himself up as a contrarian, and it says something about Wall Street’s worldview that within his job context, he probably is. Wall Street can scarcely be accused of knowing too much, let alone going long on complexity—especially of the sort that calls for alternate information and imagination to analyse an oddball bounce of the globe this millennium; the years so far, after all, have been years of profound perplexity. As Miley Cyrus croons in a simple song from her 2008 album Breakout, it ain’t easy figuring out which way is up and which way is hell. This applies most acutely to those left off Sharma’s Breakout list. If they’d rather be damned than stripped of credit for their efforts, they ought to take this book as a challenge. They should get out there and show they still have what it takes, with or without the West’s money. The odds of success may not be as steep as this book would have you think.