BOOK REVIEWS: BREAKOUT
NATIONS: PHILIPPINES TO BE A TIGER ECONOMY
MANILA, JULY
3, 2012 (SUN STAR ONLINE) A NEW
book tracking the progress of developing countries sees the Philippines joining
an elite group of "tiger economies" in the world as a result of reforms and
strong leadership of President Benigno Aquino III, Malacanang said on Saturday.
The book "Breakout Nations: In Pursuit of the Next Economic Miracles,"
written by Ruchir Sharma, assessed the Philippines as one of the strongest
emerging economies in the future where enhanced economic activities are to take
place.
"Now at long last, the Philippines looks poised to resume a period of strong
growth. The new President, Benigno 'Noynoy' Aquino III, probably has enough
support, and looks likely to generate just enough reform momentum, to get the
job done. The Aquino name is still virtually synonymous with the promise of
change," Sharma wrote.
Sharma, one of the world's largest investors in emerging markets for Morgan
Stanley, said Filipinos saw Aquino as an honest figure who could deliver on the
Aquino mandate for change and that the public was desperate after nine years of
drift and decay under former President Gloria Macapagal-Arroyo.
Aquino won the presidency at a time when it seemed that the whole country was
in disrepair, he said, adding the President is delegating power to competent
technocrats and seems to understand what needs to be done to get the country
move forward.
In a recent Wall Street Journal report, the publication sees the Philippines
having clear signs of being seen as one of the most resilient economies in a
troubled global economy particularly as a result of the European crisis.
In a supplement entitled "Asia's Euro Risk: How Asia Will Fare if Europe
Cracks?," the Wall Street Journal said only four economies were projected to
have the strength to weather a European economic and financial crisis, namely
Australia, China, Indonesia and the Philippines.
While other countries bear the brunt of the European fall out, these
countries have deep government pockets that provide a buffer to economic shocks,
the publication said.
"The Philippines is better prepared than in the past to withstand a downturn
with a stronger government balance sheet and a robust domestic economy. Foreign
reserves are high enough to fight capital flight," according to WSJ's brief
assessment of the Philippines.
Singapore, Malaysia, Thailand and Vietnam are among the Southeast Asian
countries affected by a euro meltdown because of their high dependencies on
European trade and greater exposure to European banks, WSJ said.
The Philippines had the second highest per capita income in Asia during the
1960s, next only to Japan. In the 1970s, South Korea and Taiwan overtook the
Philippines in terms of per capita income. Other Asian neighbors like Malaysia,
Thailand, China and Indonesia followed during the succeeding decades. (SDR/Sunnex)
BLOG WATCH: BOOK REVIEW OF BREAKOUT
NATIONS
Breakout Nations by Ruchir Sharma
(photo) is based on two strong arguments:
1. The era of easy money and easy growth is over.
2. The rapid growth of emerging countries is not going to continue.
As the head of emerging market equities and global macro at Morgan Stanley
Investment Management, Ruchir seems to be the best person to lay out these
contrarian arguments. Ruchir does not take the garb of a clairvoyant, but
carefully builds up the case with sufficient data and experiences. Any forecast
about global growth de-alienating India and China should be carefully thought
out to appear credible. This is exactly where Ruchir scores.
Ruchir has adopted an interesting way to make his statements convincing to
the reader. He relies on certain sets of data (like the current per-capita
income, demographics etc), a set of observations (like overspending by people,
traffic situation in the cities etc) and calibrates them with commonsense to
make some sound judgments. The book leverages his day job as an investor looking
closely at various nations.
Ruchir is used to spending a week per month in the countries under discussion
to get the pulse. He relies heavily on his travels mostly by road in these
places, his interactions with locals and underlines the importance of these to
see beyond the Excel spreadsheets.
Breakout Nations says that there is no magic formula or potion that
guarantees growth. However, free market flow of goods, money, people, visionary
and committed leadership, banks channeling money to enhance productivity, better
roads, and better schools among others serve as essential ingredients to
continued success. It is also essential to understand the interplay of economic
and political forces. In the same breath, he says that it is fallacy that a
particular type of government (democracy, communist, authoritarian etc) can
ensure sustained economic progress. It is the leadership which matters.
Ruchir's explanations are very lucid and logical. Analytical data is
presented to substantiate his statements. Examples are reeled out to further
elaborate points. Ruchir does comparisons with various parameters with a keen
eye to make the context clear to the reader. The Breakout Nations as per him are
Czech Republic, Turkey, South Korea, Nigeria, Indonesia and the nations in East
Africa. He dives deep to give his readers, the on the ground account of these
countries. He compares and contrasts these countries amongst their peer
countries and the economists' favorites – India, China, Brazil etc.
The author very elegantly handles this otherwise pedantic topic. Hence, the
book appeals to the layman and to the economic analyst alike. He carefully
dethrones several myths we have, thanks to various media who do not bother to go
beyond the surface. He clearly deduces facts based on which he identifies the
star nations of tomorrow, than singing paeans to the media hyped emerging
nations of the world. Very convincingly, he explains why there exists
exorbitantly high room rates and high affinity to luxurious lifestyle by the
rich in Russia, ratio of billionaires to millionaires in countries, share of
manufacturing in GDP of a country, are pointers to their future. In short, he
provides the readers with a keen eye to detail when we want to decide where to
invest.
Ruchir also revels in some beautiful prose. Innovative use of words (eg.
efficient corruption, creative destruction), titles of chapters, proverbs, and
quotes all help to keep you riveted to the book. It was not like reading
research findings. As another reviewer pointed out, this book is a business
travelogue.
Ruchir ends the book strongly with a Latin proverb, "If there is no wind,
row". In his own words "No nation can hope to grow as a free rider on the
tailwinds of fortuitous global circumstance, as so many have in last decade.
They will have to propel their own weight…."
In short, Breakout Nations defies conventional wisdom and the author does not
follow the beaten path. He finds healthy economics behind the dull architecture
in Poland and believes a leader who gets economy right can get away with almost
anything in politics.
This book is for those who love to find aesthetics in numbers, for those who
don't get enticed by just the bust-waist-hip numbers as they don't guarantee
fertility.
Chief News Editor: Sol Jose Vanzi
© Copyright, 2012 by PHILIPPINE HEADLINE NEWS ONLINE
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rights reserved
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HEADLINE NEWS ONLINE [PHNO] WEBSITE
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