Review: Breakout Nations by Ruchir Sharma

Ruchir Sharma has been a regular contributor of long and detailed articles in the Economic Times. I do read those, but a lot of times skip them for my lack of interest in macro economics and for the lack of time. Nevertheless, his articles are good and always have something new for me to learn. Given that this book got published only some months ago, I issued it immediately upon spotting it in the library. After reading Taleb’s Black Swan, my view has become more critical of predictions and the sub-title ‘In the Pursuit of the Next Economic Miracles’ stood out as an eyesore. I picked up this book, after a quick read up of the contents and few pages, not for any predictions but only for gaining a precursory understanding of the economic situation prevailing in various countries. I read this one as a reference to the past than as a crystal ball.

He begins with an experience of attending a swanky ‘farmhouse’ party in Delhi, where the “valets were juggling black Bentleys and red Porsches” and Kobe beef had been flown in from Japan and white truffles from Italy. Ruchir rattles off lots of facts – “over the course of any decade since 1950, on average only one-third of emerging markets have been able to grow at an annual average of 5 percent of more“, “only four companies – P&G, GE, AT&T and DuPont – have survived on the Dow Jones index of the top-thirty U.S. industrial stocks since 1960s“, “a Bellini costs a fortune in Rio” and many more (all of these, to remind you, are all facts based on what has happened and that is what I was more interested in when I picked up this book). By the term ‘Breakout Nations’ he means “the nations that can sustain rapid growth, beating or at least matching high expectations and the average growth rates of their income class“. He predicts a slowdown in China’s growth in the next 2-3 years, because China has become so large now that to maintain the same momentum of growth it needs greater absolute increase. He also gives a peek into problems in China: of exorbitant real estate prices, of crumbling rail networks (especially during holiday season), aging demography and rising wages.

The author also uncovers some interesting points about a forever favourite debate amongst the superpowers – about economic growth and political system. Ruchir states: “in 1980s, 32 nations were growing at a rate faster than 5 percent, and 59 percent of them were democracies; in the 1990s, 59 percent of the thirty nine high-growth nations were democracies; and in the 2000s, 43 percent of the fifty three were democracies. The total for the three decades: 52 percent of the 124 high growth countries were democracies“. And with this sword he cuts the imaginary umbilical cord between political systems and economic success – though not completely, because the rest, the 48 percent, were democracies. He calls this the 50/50 rule.

On India, he writes: “lot of young people and favourable demographics – but they are in the rural countryside which doesn’t mean anything for growth; corruption is high; points to the growth in South India owing due to technology and in North because of corrective actions; compares India and Brazil culturally and cites the example of why Orkut did better in both these countries (that’s the most ridiculous reason you would ever hear!); MGNREGA is pushing rural wage inflation upwards; points to hereditary politics (I loved the facts here); compares performance of Congress and others (this also I loved); how aspirational goods are being bought even in small towns but has only 6 cities in the explosive growth category compared to 23 in China“.

In the subsequent chapters he covers various nations – Brazil, Mexico, Russia, Hungary, Poland Czech Republic, Turkey, Thailand, South Korea, Vietnam, Taiwan, Indonesia, Philippines, Malaysia, South Africa, Nigeria, Qatar, Ghana, Sri Lanka, Ukraine, Singapore, Saudi Arabia, UAE, Oman and a couple more (some of the nations are covered only briefly). For Brazil, he says: its economy is one of the most costly and over hyped, restaurants in Sao Paulo are pricier than in Paris; it is world’s leading exporter of many raw materials; is a trade partner of China (the leading importer); spends too little on roads, seeks a secure ‘stability at any cost’ philosophy; productivity is very low; invests too little (again) in schools resulting in poor labour quality, shortage of engineers and technical workers and even high end hotels struggle to get hotel rooms cleaned. In Russia, he writes, there is no organized taxi service; millions of tons of meat and poultry is imported for consumption; the government spends very little – around 20 percent; roads are falling apart; more than half of Russians now depend on the state for a living; small and middle sized enterprises form a much lower percentage than in other emerging nations; has no global brand despite so many Nobel Prize winners; is home to 100 billionaires, the third in the world and does not make it even to the top 15 of BCG’s list of maximum millionaires’ countries – that’s a huge gap – no middle ground!; most of the billionaires are a result of crony capitalism. On Turkey, he writes:  it has broken away from radical Islamists and offered a much moderate vision of Islam; debt and inflation have fallen and that Turkish exports are increasing in the Middle East. I feel for Turkey the author has been unnecessarily exuberant just based on cultural openness. And on South Korea he writes: the economy is very well balanced with a diverse set of industries (but so does India); services sector is missing there; research and development is very high on priority (which shows from Samsung, LG, Hyundai and Kia); exports in large numbers to China; has high school enrollment; banking sector is not innovative. The gold medal, finally, does go to South Korea though.

The Breakout Nations identified by Ruchir Sharma are: South Korea, Czech Republic, Indonesia, Poland and Turkey. My suggestion is that for people who are interested in economics, working in financial markets and those wanting to get the basics of economic scenario in various countries should read this. Treat this as a record of past performances and it will surely impress you. For the general reader, this book will not do because lot of technicalities of economics is discussed and I myself wasn’t able to comprehend some of them. Combining Pax Indica with this will be a good thing to do as it will result in a holistic view of diplomacy (as a tool for betterment of one’s own country). This has been less of a review and more of a brief of what is covered in the book – owing to the facts mentioned earlier.

Review: From the Ruins of Empire by Pankaj Mishra

From the Ruins of Empire

A ‘3 for 2’ offer in Landmark made me buy this and other two books much earlier than anticipated. When on the back cover I saw Pankaj Mishra’s photo I could clearly remember having seen him on either some debate on a news channel or on a talk show years ago and apart from that I knew nothing about him. A search on Amazon wasn’t useful for lack of a substantial number of reviews. However, the description on the interior of the front cover and a fleeting glance of the contents got me interested. It looks like apparently there are multiple sub titles being used for the book – one being “the revolt against the West and the remaking of Asia” and the second one being “the intellectuals who remade Asia“.

The author starts with The Battle of Tsushima between Russia and Japan in which “for the first time since the Middle Ages, a non-European country had vanquished a European power in a major war; and the news careened around a world“. He brilliantly captures the reactions this garnered around the world: in Calcutta of Lord Curzon, in South Africa of Gandhi, in Damascus of Mustafa Kemal, in England of Nehru and Sun Yat-sen, in United States of W.E.B. Du Bois and of Rabindranath Tagore. Reading the three paragraphs was like watching the beginning of a fast paced thriller movie with its contemporaries across different cities in different settings. Mishra stresses on the importance the Japanese victory as it reinvigorated non-white peoples and “seemed to negate the West’s racial hierarchies” and “infused Asian peoples with a ‘new hope’“.

A semi-biographical account of the life of Jamal al-Din al-Afghani takes the reader from Persia, his birth place, to India, then Afghanistan, Turkey, Egypt and France. Each country’s political background is introduced in a welcoming way and other major players, though not many are there, are brought into the plot only after a substantial progression of the milieu. Jamal al-Afghani’s intellect and influence on later Islamic movements is written as much as about his shrewdness in his adopting the ‘Afghani’ part in his name to hide his Shia roots and using traditional religious interpretations to bring Muslims together to revolt against imperialism though he himself was a revisionist. The part where al-Afghani’s unmarked grave is found in Istanbul and disinterred and the remains taken to Kabul reveals the contradictions – he was born in Persia rather than Afghanistan; and the donation by the U.S. for repairs of the damaged tomb in Kabul because of strikes couldn’t have been more wry.

The story then moves to China, where “Western powers had begun to nibble at the edges of the Qing Empire“. The intellectuals like Sun Yat-sen, Li Hongzhang, Kang Youwei, Mao Zedong, Tan Sitong, Yan Fu amongst others and their philosophies. The roots of the current communist China can well be understood from the treacheries of the West it was long subjected to under the garb of modernisation, liberalism and equality. That democracy cannot be successfully implemented in toto around the world is proved by the efforts of Chinese to embrace modernization to match the West and to defeat it at its own game. Japan’s own contorted view of ‘Asia for Asians’ falls apart when its hunger for growth, limited by its small size, drives out the powerful out of most of the east of Asia and a ‘Yellow Peril’ stops just in time next to India’s borders.

The last figure to be covered in sequence of the three is Rabindranath Tagore; disappointingly though the author dedicates much lesser space to him than to others. The author brings out how “proximity of lives in Indian villages helped distinguish his worldview from that of the middle-class intellectuals in Calcutta“. Tagore’s visit to various countries after becoming a Nobel Laureate throw light on his reflections and the reactions which his views provoked, especially in Japan and China – where many were vying for an embrace of developmental philosophy against Tagore’s position of retrospection rooted in Eastern values and of “moral superiority over their colonial masters“.

In the concluding part titled ‘Asia Remade’, Mishra poignantly and masterfully rues about Asia’s own acceptance of a path to industrialization and the resulting contradictions in the Islamic world and the rest of Asia. He writes of how “White men, conscious of their burden, changed the world for ever, subjecting its great diversity to their own singular outlook” and how they “squandered much of their moral authority“. He also states that “globalization doesn’t not lead to a flat world marked by increasing integration, standardization despite wishful thinking” but rather “sharpens old antipathies, and incites new ones“. This was a dig at Thomas Friedman (the famous World-is-Flat(ter/test) fame) but is at the same time debatable.

This has been, for me, one of the best books in revisionist history by an Indian writer in recent times (nevertheless, its not a complete account of all historical events which have happened from the late nineteenth century till now and at points does skip important events and movements) (around half a dozen editing mistakes exist as well). When ideas as great as in this book are probed by a mere mortal like me it results into a tumultuous spark in thinking and in no way have I been able to grasp all of them. One of the most useful sections is towards the end: Bibliographic Essay which introduces to the general reader a hugely commendable list of books on each topic as covered in the book. Throughout the conflict between the Western thought of a nation-state and the Eastern one of a community is focused on, especially the latter half when covering China and Arab countries. The three thinkers: Jamal al-Din al-Afghani, Liang Qichao and Rabindranath Tagore have been shown as powerful forces in the Eastern thought of anti-imperialism, the author also vividly covers, more than anything, the ideas and other men as the propounders in the rise of Asia. The tussle between the core centrals of Eastern philosophy of the spirit and Western philosophy of material “allows the reader to see the events of two centuries anew, through the eyes of the journalists, poets, radicals and charismatics who criss-crossed Europe and Asia“, and is a testimony to the fact that history is history only when not confined to a geography.