"Breakout Nations" by Ruchir Sharma one of the most respected personality in the investment fraternity portrays a masterpiece. Ruchir Sharma travelled the different countries of the world and provided insights about the same.For him only financial statements does not matter, what does matter was ground reality which can be known only by travelling different countries of the world.This reminds me of another star of the investment community "Mr. Jim Rogers" who attained financial freedom at the age of 40 and went on to travel the world in his car and was able to see that the next supercycle would be of commodities which is again mentioned by Ruchir Sharma in his book.
The book also portrays the rules that are essential to follow in order to become a breakout nation.It provided the surprising candidates which no one would have thought had they not read the book.Various principles that were eye catching according to me were: Richer the nation , more difficult it is for that nation to become a breakout.Law of Large numbers come into picture.This principle applies to China who was growing at a staggering growth rate which was on an average 8% during the miracle years of 2003-2007.It was as if 8 became the lucky Chinese number.India has a probability of 50% to become the breakout nation.Brazil needs to put its infra in the right place to increase its probability of achieving growth at an amazing pace keeping inflation under check.Mexico on the other hand is not a candidate due to corruption charges on the top 10 industrialists who own almost own all the sectors of that economy.This happened because government was on the brink of bankruptcy.Turkey, Indonesia , Philippines and Thailand have a very good chance of becoming breakout nations.But for Turkey, the leader Reccep Taiyip Erdogan must take inspiration from Lee Yuan Kew not from Vladmir Putin.Once the leader rules for too many years he is inclined towards becoming a dictator.That's probably the reason why in US a person can run for presidency term twice.Talking about Russia, it should now no longer be dependent solely on oil and look out for different sectors to attain growth.Also needs to give up Czarist mindset.South Korea and Taiwan who probably are the superstars of this book just because they are the only two nations in the world who were able to grow at 5% for five straight decades. Among the two, South Korea has a better chance of continuing this path in the next decade as well. This is so because it has able to enter into different sectors not solely dependent on automobiles and electronics.Taiwan 's chances might be dwindled due to fact that it is only in the field of hardware which can be easily imitated by others.The nation though possess all the right conditions but if it engages or gets caught into civil war will reduce its chances of becoming a breakout nation in the decade to come.An appropriate example in this context is Sri Lanka who possessed all the right conditions and even Lee Yuan Kew visited the nation because he was impressed by the same but then caught into endless civil war.Other examples are Iran, Iraq, Syria.It also essential for the nation to receive foreign inflows that commensurate with the size of the economy otherwise the nation would run into hyperinflation just as what happened with Vietnam.The concept of money neutrality also is appropriate in this context which states that money flowing or printing into the economy only results into inflation in the short run and takes very long time to generate growth.Therefore velocity and real output almost remains constant.Negative impact of low credit facilities simply because the central bank cannot guide the way where the money should go and also not able to bring the desired results for the economy.
Finally it talks about the boom the next decade is going to witness and that will be commodities.If I sum it up it portrays a picture of the world : Decade went past behind us and yet to come.
The book also portrays the rules that are essential to follow in order to become a breakout nation.It provided the surprising candidates which no one would have thought had they not read the book.Various principles that were eye catching according to me were: Richer the nation , more difficult it is for that nation to become a breakout.Law of Large numbers come into picture.This principle applies to China who was growing at a staggering growth rate which was on an average 8% during the miracle years of 2003-2007.It was as if 8 became the lucky Chinese number.India has a probability of 50% to become the breakout nation.Brazil needs to put its infra in the right place to increase its probability of achieving growth at an amazing pace keeping inflation under check.Mexico on the other hand is not a candidate due to corruption charges on the top 10 industrialists who own almost own all the sectors of that economy.This happened because government was on the brink of bankruptcy.Turkey, Indonesia , Philippines and Thailand have a very good chance of becoming breakout nations.But for Turkey, the leader Reccep Taiyip Erdogan must take inspiration from Lee Yuan Kew not from Vladmir Putin.Once the leader rules for too many years he is inclined towards becoming a dictator.That's probably the reason why in US a person can run for presidency term twice.Talking about Russia, it should now no longer be dependent solely on oil and look out for different sectors to attain growth.Also needs to give up Czarist mindset.South Korea and Taiwan who probably are the superstars of this book just because they are the only two nations in the world who were able to grow at 5% for five straight decades. Among the two, South Korea has a better chance of continuing this path in the next decade as well. This is so because it has able to enter into different sectors not solely dependent on automobiles and electronics.Taiwan 's chances might be dwindled due to fact that it is only in the field of hardware which can be easily imitated by others.The nation though possess all the right conditions but if it engages or gets caught into civil war will reduce its chances of becoming a breakout nation in the decade to come.An appropriate example in this context is Sri Lanka who possessed all the right conditions and even Lee Yuan Kew visited the nation because he was impressed by the same but then caught into endless civil war.Other examples are Iran, Iraq, Syria.It also essential for the nation to receive foreign inflows that commensurate with the size of the economy otherwise the nation would run into hyperinflation just as what happened with Vietnam.The concept of money neutrality also is appropriate in this context which states that money flowing or printing into the economy only results into inflation in the short run and takes very long time to generate growth.Therefore velocity and real output almost remains constant.Negative impact of low credit facilities simply because the central bank cannot guide the way where the money should go and also not able to bring the desired results for the economy.
Finally it talks about the boom the next decade is going to witness and that will be commodities.If I sum it up it portrays a picture of the world : Decade went past behind us and yet to come.
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