Ruchir Sharma, head of Emerging Market Equities and Global Macro at Morgan Stanley Investment Management / Courtesy of Allen Lane

Veteran analyst says emerging nations’ fates will vary even after recovery

By Kwaak Je-yup

Anyone looking to invest in the emerging markets, pay attention: they are no longer the surefire jackpots, says this compelling book.

“Breakout Nations: In Search of the Next Economic Miracle” by Ruchir Sharma, head of Emerging Market Equities and Global Macro at Morgan Stanley Investment, tries to break the myth that the developing world will continue to rise as spectacularly and quickly as it has in the last decade. Rarely in history has the world, with the fewest of exceptional, disconnected nations, grown together in unison, he argues; after the Great Recession we are in, the fates of nations will greatly divulge.

The book reads just as well in reverse order. The final sentences are the volume’s key argument: “No nation can hope to grow as a free rider on the tailwinds of fortuitous global circumstance, as so many have in the last decade. They will have to propel their own weight, and the breakout nations of the new era will take their mantra from a Latin proverb: ‘If there is no wind, row.’”

So the author, armed with decades of investment experience and world travel — he claims that he typically spends one week per month in a developing country — goes through the states that the world and/or he have deemed noteworthy as investor destinations and offer his insight.

The result is a book of vignettes, like a world expo of investment analyses, to prove his point that the nations differ from one another politically, economically, socially, demographically, culturally, and (obviously) geographically. No serious analyst or forecaster, consequently, should lump the rising stars in one category with such names as BRICs.

It is an adequate introductory guide. Historical backgrounds, portraits of competing political forces and macroeconomic problems these states face are covered with a refreshing, honest tone. What could have been a dry volume of numbers, numbers and more numbers is surprisingly readable, thanks to the easy flow perfected by the editors at publisher Allen Lane.

As an employee of one of the world’s most resourceful and influential banks, Sharma is blessed with an enviable access to information as well as the highest-ranking officials of each country, like Russian President Vladimir Putin to name one from the book. And these anecdotes make nice sidenotes, like a peek into a meeting room of the Bilderberg Group.

But there arises a problem: the work sounds like a collection of conversations heard in first-class lounges at international airports, written on various-colored napkins. The swooping globetrotter coverage sometimes resembles those often witnessed in Monocle magazine, except with more substance.

He even makes basic factual errors (which may have yet been corrected from this proof copy provided to The Korea Times) like calling the former trouble-ridden state of Bihar the largest state in Northern India. (It is the country’s 12th largest state, about the size of Hungary, far smaller than the gigantic Rajasthan, Uttar Pradesh and Madhya Pradesh, all located in the northern Hindi belt.)

While his book is quite useful as a volume of cautionary tales against overestimating the BRICs and other economic tigers, Sharma seems to commit the same errors himself when he tries to plug Korea as the poster child of the developing world.

His all-too-rosy picture for the country’s future makes one ponder the depth of his research or perhaps he is intentionally selective about the use of data, leaving out some of the most serious underlying problems. He once categorizes Korea as a Southeast Asian country. His point about the lack of in-fighting between chaebol family members is the most ludicrous, one that ignores reality.