The long road : making sense of euphoria and despair about emerging markets

GLOBALISATION has gone into reverse gear. Trade volumes have stagnated and the value of the capital flows sloshing around the world has dropped by over half since 2007. The West is angry and inward-looking. Disappointment festers in the emerging world. In the boom years between 2003 and 2010 it appeared that a new era of openness and global supply chains would help emerging countries to grow at turbocharged rates for decades, closing the gap with the rich world. Today that idea is out of fashion. Brazil’s economy is shrinking, China’s debts are terrifying and Russia is a rusting autocracy. Emerging countries are growing at 4%, half as fast as in 2006.

Into the wreckage steps Ruchir Sharma, a fund manager and author of the bestselling “Breakout Nations”, which came out in 2012. His new book, “The Rise and Fall of Nations”, has three aims: to assess the crash; to dismantle the analysis that led investors and economists to get overexcited; and to offer a new framework for thinking about emerging countries. The result is ambitious. It covers four-fifths of the world’s population and 40% of its GDP, and though it is sometimes rambling, it is also entertaining, acute and disarmingly honest. Instead of pious statements about poverty, or portentous mutterings on the importance of American leadership, Mr Sharma sees the world from the ruthless and restless perspective of an investor.

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