Cross Country Rating

Book: Breakout Nations

Author: Ruchir Sharma

Publisher: Allen Lane

Pages: 292

Price: Rs 599

What determines the economic success of countries? There are two approaches to answer this question. One takes the form of deep-sea diving. This tries to understand the underlying and often hidden dynamics that make for economic success: from demography to political structures. The other approach is the form of artful surfing: follow the ripples. Ideally, you would want to combine both approaches, but it is remarkable how few books manage to do that. Breakout Nations is decidedly in the artful surfing camp, and in that genre it is a virtuoso performance. It provides an intelligent, sharply observed, often mordantly witty tour d'horzion of several emerging economies: winners like South Korea and Poland; disappointments like Hungary and Mexico; success stories that are now under the shadow of their own past like Malaysia; potential powerhouses like Turkey and Indonesia; enigmas like Sri Lanka and the big BRICS. Sharma is pessimistic on Brazil, predicts a slowdown for China. He diplomatically gives India a fifty-fifty chance though the analysis is far more pessimistic.

What lies behind these judgements? Shorn of all the complexity, the answer is simple: does a country have the political will to take the right decisions? Political will is one of those interestingly ineffable things. Sharma's contention is that there is no mechanism which guarantees this will exist: democracies can stumble as much as authoritarian regimes, vernacular nationalist politicians like Erdogan and Rajapaksa can often display more of it than their liberal cosmopolitan counterparts. It can be on display in times of prosperity or distress; some corrupt states have immense political will, others don't. What is more interesting is the various proxies that Sharma uses to assess political will: everything ranging from inequality to urban chaos. Brazil will not grow because prices of real estate are too high, which in turn suggests a governance deficit. Turkey has the potential not just because prices are low, but because successful attempts to create industry outside of the Ankara-Istanbul-Izmir corridor suggest state capacity of a high order. Some states get inclusion just right: to create a productive workforce that can participate in the modern economy. Others like Brazil, South Africa and potentially India get a "premature welfare state" where welfare commitments don't empower, but cause a fiscal drag.

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