Which Will Be the Fastest Growing Country in the Coming Decade?

“The old forecasting rule was to make as many forecasts as possible and publicize the ones you got right. The new rule is to forecast so far into the future that no one will know if you got it wrong.” - Ruchir Sharma.

Which is the world’s fastest growing economy currently? Without doubt, it’s China. But will China continue on the path of 9-10% growth for the next few years? Most economists think it will, but China is slowing down due to multiple reasons. It may soon witness a recession, which won’t be anywhere close to what the rest of the world encountered in 2008. China’s recession is more like a slowdown to 6% growth.

So which country will bag the gold medal for growth in the coming decade? Ruchir Sharma attempts to answer this question through his masterpiece ‘Breakout Nations’. He has analyzed the history, political scenario and sentiment of a lot of emerging markets and correlated them to the countries’ economic conditions. In this book, renowned economist Ruchir Sharma meticulously dissects countries like India, Russia, Brazil, China, South Africa, South Korea, Mexico, Turkey and others. He offers valid insights, backed up with sound stats, into the strengths, weaknesses and areas of opportunities for these emerging nations.  

'Breakout Nations' - Ruchir Sharma

Every nation has its fair share of obstacles. Whether it’s infrastructure, government overspending, policy paralysis, the refusal of political figures to give up power, stagnation or something else, each country is battling problems which have occurred due to decades of following the same patterns. Some countries like Russia, Brazil, Nigeria and South Korea have used difficult times to revamp the way they functioned, and have been rewarded handsomely. Others have chosen to stick to tried and tested (and purely functional) models which have restricted their opportunities for growth.

Ruchir Sharma isn’t just shooting from the hip like many so-called economists do.  He has toured each country extensively. He brings out astonishing details of day-to-day functioning the emerging nations. For instance, the strategy being adopted by companies in China to woo workers back from their villages after Christmas vacations. Or corporate head honchos in Brazil using helicopters to travel from one office to another within the city because of excessive traffic. Or that Russia is heavily dependent on oil prices to secure its future. Each problem (and more) has stemmed from conditions which have been building over long, and continue develop. Since this book was written in 2011, scenarios have changed a little. But most of his predictions seem on track for the coming decade.

This book is a pleasant and entertaining read for anyone who is remotely interested in economics. The language is simple yet elegant. Facts are made interesting with the help of short stories and anecdotes. It reminds me so much of Gurcharan Das’ ‘India Unbound’, another gem. Of course, after having spent years interacting with the world’s most powerful politicians and writing umpteen research papers, nothing less is expected of Ruchir Sharma. I couldn’t find a single shortcoming in the book. Partly because of my love for macro economics and also because I don’t have even 0.1% of the knowledge which the author has. Read the book to find out which are the ‘Breakout Nations’ according to the author. You will be surprised to know that they’re from among the usual suspects.

The Chinese PM Visits India - Interesting Psychological Lessons

One of the most talked about news in India currently is the arrival of Chinese Prime Minister Xi Jinping, and the promises which he brings along. This post will not focus on what Modi should’ve done, or analyze the economic and political outcomes of the meet. Many articles and discussions will cover those. Instead, I’ll talk about small psychological factors which are evident in the events as they unfold. How those aspects have the potential to change the way we think, how some of them are being used for better results… 

A report in Economic Times read “Deals worth $100 billion are said to be in the works, compared with a mere $35 billion from Japan.” So the Japanese investment news, which until now was being hyped by the Indian media is now being termed ‘mere $35 billion’. Why? Because, according to them, the amount China proposes to invest in India dwarfs the amount which Japan. By no means is $35 billion a nominal amount. But in comparison to $100 billion… well, you get the picture. This just goes to show how comparison clouds our perception. How when we compare 2 things, the smaller one may start appearing insignificant (so to speak) while it may actually be so.

2 critical concerns between India and China are not being discussed in this meeting. The Arunachal Pradesh border conflict and streamlining of processes for faster visa approvals. Many people (especially the Congress) are disappointed that these issues are not being raised. These are sensitive issues and should be addressed as soon as possible, right? Not quite. Being the shrewd tactician that Modi is, he seems to be deploying what is known as the foot-in-door technique. You make the person in front comfortable and then gradually start discussing sensitive points. Then you raise bigger concerns and can expect the person in front to be more receptive, thereby dramatically increasing chances of a positive outcome in your favor.

How Modi is extending the red carpet to China

Day 1 for Xi Jinping was spent experiencing flavors of Ahmedabad - visiting Sabarmati Ashram, savoring a full-course Gujarati thali, witnessing the infrastructure and growth of the city. Modi ensured that he displayed excellent hospitality to a politician of a country which we’re hostile towards. By doing so, he made the Chinese PM comfortable and reduced instances of the proverbial ‘cold air’. Plus, by showcasing Ahmedabad, he focused on an area which he knew as well as the back of his palm. Thus he eliminated all chances to be pointed out instances or asked questions which embarrass him. Modi was in control of every situation all the time.

So you see, however celebrated the profiles of people may be, small aspects which shape our perceptions come into play everyday. These aspects can make or break a relationship or a business deal. Keep in mind that when whether you are implementing a process, attending a meeting or doing mundane chores with your spouse, you are essentially interacting with people. Pay attention to psychological factors because they play a major role in how the person in front responds to you. Mind you, these are not to manipulate anyone; they are simply to ensure everyone walks away satisfied emotionally; no one feels like they lost out.

Are there any tips which you have to share with other readers and me? Of course you do. Share them in the comments section.

Should We Start Building Our Own Defence Equipment?

The Augusta – Westland deal (3,500 crores for 12 helicopters) is yet another case of corruption in the Indian system. New names keep cropping up regularly in the case, leaving the Defence Minister A.K. Antony wringing his hands in helplessness.

The calls for involving private sector companies in building defence equipment in India are getting louder. India has become the world’s largest recipient of arms in recent years. On the other hand, China, which held the top spot in 2006, has now fallen to fourth. Several TATA group companies, L&T, Mahindra, Reliance and others are showing increasing capabilities in developing defence equipment. The army, however, doesn’t seem too excited.

The Defence Research & Development Organization (DRDO), Defence PSUs (DPSU) and ordnance factory boards (OFBs) hold virtually a monopoly in supplying arms to the Indian army. However, these entities are plagued with corruption, inefficiency and bias. Less than 3% employees in the DRDO hold a Ph.D. An acquaintance of mine has visited the DRDO a few years ago and said a lot of time is spent by employees chatting, sleeping or lazing around. All this while almost 30% procurement and 100% R&D for arms lies in the DRDO’s hands. The DPSUs and OFBs are no better. This is a large point of concern.

3,500 crore for 12 choppers - Augusta Westland deal

Senior officials say middlemen thrive in defence deals because foreign companies do not have the bandwidth to wade through red tapism and corruption in India. India must start developing in house defence equipment. We can’t build all equipment ourselves; some arms still need to be imported. But by doing this, India will reduce dependence on other nations and corruption in this field. We are easily the best software exporters in the world. That expertise can surely be utilized by the defence sector to develop state-of-the-art arms and help India stand shoulder to shoulder with the world. Our soldiers deserve to be better equipped wherever they are deployed.

What do you think?