Book review: Breakout Nations: In Pursuit Of The Next Economic Miracles, Ruchir Sharma

FUND managers like to portray themselves as big game hunters, eyeing the horizon in search of rare beasts. Since 2008, the beast that everyone has hunting is an emerging market which could deliver a decent economic return while the developed economies of the world bump along with low interest rates and negative growth.

Ruchir Sharma is Head of Emerging Market Equities at Morgan Stanley and Breakout Nation is his attempt to identify the nations which will buck the global economic malaise and emerge as the “economic stars of the future”.

But before identifying tomorrow’s growth economies in a series of vivid pen portraits, Sharma demolishes a few economic clichés. China’s growth and dominance, he argues, is, despite predictions, not a given. India too is struggling with structural economic weaknesses which will restrict growth. In a world in which low growth is the new norm, we should look instead to unexpected economic power centres such as Turkey, Indonesia and Poland.

Poland may be more famous for mass emigration than economic growth, but Sharma points to the fact that luxury apartments in Warsaw have been doubling in value every five years to indicate that the economy of the former communist state is both attracting inward investment and proving attractive to money from outside. Poland’s low rate of debt and strong political institutions make it a “breakout nation”.

This is a book of fascinating analyses which argues that the growth nations of the future will emerge from the margins of the world economy. It will tell you the price of a cocktail in Rio and bases one fruitful line of argument on the cost of a bedroom in the Four Seasons hotel chain around the world.

My favourite fact was that when Arab nations opened Stock Exchanges, many created a special segregated trading floor to cope with the number of female traders. In the future they may be busy trading shares in Polish and Indonesian companies. «