Wednesday, 20 November 2019

A Journey To Emerging Markets

Updated: May 9, 2015 12:50 pm

To identify breakout nations, it is key to travel with an eye toward understanding which economic and political forces are in play at the moment, and whether they point to growth, and at what speed. In a world reshaped by slower global growth, we need to start looking at the emerging markets as individual cases. This book tours the world to examine which nations are likely to flourish—or disappoint—in the new era of diverging economic prospects. In this perspective, the argument of Breakout Nations is that the astonishingly rapid growth over the last decade of the world’s celebrated emerging markets is coming to an end. The era of easy money and easy growth is over. China, in particular, will soon slow, but its place will not necessarily be taken by Brazil, Russia or India, all of which Ruchir Sharma shows have weaknesses and difficulties often overlooked in the inflated expectations and emerging markets mania of the past decade.

Here it is worth mentioning that in 2001, Jim O’Neill of Goldman Sachs, coined BRIC, the acronym that represents the emerging markets of Brazil, Russia, India, and China. The term has symbolised the shifting of economic power away from the previously stalwart developed nations of the G7 towards new markets where financial returns are bountiful and the potential for growth outwardly limitless. As commodity prices soared and money poured out of the proverbial “west” and into the emerging markets, the discrepancies between these nations seemed to become less relevant and the indicators of future success less important than the financial figures of recent success. Against this backdrop, Ruchir Sharma, head on one of the world’s leading emerging market funds, has spent two decades travelling the globe to find out what is happening on the ground in developing countries. With this first-hand knowledge, he takes his readers on a tour of two dozen of the world’s most interesting economies, introducing the critical players and describing and analysing the forces—many unique to each nation—which will make the successes and the flops of the future. The books is full of surprises: Why the current mania for oil echoes the dotcom mania of 2000; how an industrial revolution in Asia is redefining what manufacturing can do for a modern economy; how the coming shakeout in the big emerging markets could shift the spotlight back to the west, especially American technology and German manufacturing; why the next two trillion-dollar economies will be big Muslim democracies. The book also contains warnings about command economies (some work, but many fail too), and shows that the EU is producing model economies as well as basket cases.

At the core of this impressive book is the counter-intuitive argument that the boom of the mid-2000s was a blip in the long historical trend for emerging economies and that the next decade may be one of decelerating. In fact, this is a book that combines keen on-the-ground reporting and economic and investment analysis with lively, lucid prose, and is basically an investors’ lonely planet guide to the world for the new century.

By Ashok Kumar

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