Breakout Nations by Ruchir Sharma; Penguin Books; Price: Rs.599; 292 pp
Why are some societies and nations just, egalitarian and prosperous while the majority aren’t? In a world awash with money yet paradoxically afflicted with poverty, injustice, inequality and inhumanity, India-born New York-based Ruchir Sharma, manager of the emerging markets and equities portfolio of the global investment banking corporate Morgan Stanley, addresses this anomaly and related questions with engaging clarity and insight. The outcome is this lucidly recounted investigation into the development prospects of nations written almost like a detective novel. Little wonder Breakout Nations is riding high on The New York Times and other bestsellers lists worldwide.
Contrary to popular belief, the socio-economic phenomenon known as globalisation which has transformed the old world — separated by impervious borders — and reshaped it into a new integrated global economy, didn’t drop out of the sky one fine day. This phenomenon has its origins in the new technologies boom in Silicon Valley, USA following which huge fortunes were made by daring entrepreneurs such as Bill Gates, Larry Ellison and other information technology (IT) pioneers.
The unprecedented success of Silicon Valley entrepreneurs prompted the rise of a new tribe of venture capitalists and investment bankers who were, and still are, ready to bankroll and invest in young IT — and later other business — entrepreneurs not only in the US and OECD countries, but around the world. The huge fortunes made by IT entrepreneurs and venture capitalists inspired American banks flush with funds to break out of their traditional role of lending working capital to industry and transform into multipurpose financial enterprises and investment banks, investing for profit in promising firms, businesses and companies, especially in high-potential emerging (formerly under-developed) nations. Thus was born the hazily defined phenomenon now known as globalisation.
Breakout Nations was conceptualised after the author had a casual encounter with the heir- apparent of a typical post-liberalisation nouveau riche Indian business family, who after learning that Sharma was a New York-based investment banker looking for investment oppor-tunities, remarked, “Well of course. Where else will the money go?” But given the patchy record of emerging nations in harnessing the $1 trillion (Rs.5000,000 crore) per year flowing into them, and emerging markets beginning to be regarded as “the problem children of the financial world” as early as the mid 1990s, the answer wasn’t as obvious as the young man believed. So the author hit the road (“for the last 15 years I have typically spent one week every month in a particular emerging market”), to investigate and predict which will be the nations of the future to break through the 7 percent GDP growth ceiling which had cabined, cribbed and confined developing nations during the 20th century.
The outcome of his peregrinations which begins with an overview of the much hyped BRIC (Brazil, Russia, India, China) nations is a fascinating melange of travelogue, politics, economics and sociology interspersed with revealing personal encounters and anecdotes which provide telling insights into how and why some nations prosper and others fall by the wayside. In all, the socio-economic development prospects of 12 countries (BRIC, Mexico, Poland, Czech Republic, Turkey, Indonesia, Vietnam, South Korea and South Africa) and their chances of being able to attract and harness foreign (and domestic) investment to emerge as the new breakout nations of the 21st century, are assessed and evaluated.
Unsurprisingly, India which until very recently was highly fancied as a breakout nation, is given detailed attention in this book. One great favour Sharma has rendered the Indian public is busting the myth that the prime factor behind the unprecedented 8-9 percent annual GDP growth recorded by India in 2003-07 was excellent management of the economy by the Congress-led UPA government. Sharma reveals that the real factor behind India logging phenomenal growth was a global boom during which the economic growth rates of all emerging nations doubled, and 114 countries recorded annual GDP growth of more than 5 percent “with the surge of easy money flowing out of the West”. But instead of putting the money to good use by constructing enabling infrastructure and improving the education and health systems to raise national productivity, the initial investment boost given to the economy was frittered away “by increasing government handouts”, persistent inflation, a rising tide of corruption and its handmaiden, crony capitalism. Sharma’s assessment: India’s chances of remaining a breakout nation for any sustainable period are at best 50/50.
Moreover Sharma reckons that the best days of the Republic of China — the original breakout nation of the past four decades — are over as rising wages, spreading corruption within the iron-fisted Communist Party and a greying population, whittle away its competitive advantage. And even as India’s myopic neta-babu kleptocracy and complicit middle class foolishly assume that high annual rates of GDP growth can be taken for granted, other unlikely nations are recording higher growth rates because of political stability and good economic husbandry. Among them: Turkey and Indonesia, emerging as models for the languishing countries of the Arab and Muslim world; Nigeria which at last has been blessed with an honest president (Goodluck Jonathan) committed to democracy and the nations of East Africa; the Czech Republic and Poland in Eastern Europe and remarkable South Korea in Asia, which because of a stable democracy, commitment to research and innovation, and heavy investment in education has emerged as the “gold medalist” breakout nation set to overtake Japan as the economic powerhouse of East Asia.
Breakout Nations is a work of deep research presented as an engaging travelogue, with informed insights into the causes of the poverty and prosperity of nations. Yet far from presenting revolutionary silver bullet prescriptions, it reaffirms that national development is not rocket science. By way of historical narratives, case histories, data presentation and individualised anecdotes, the author forcefully reminds us that what’s required are honest leaders committed to democracy, who invest public funds wisely in infrastructure development, education and healthcare to nurture productive human capital and create conducive conditions for domestic and foreign investors.
All right-thinking individuals committed to the greater good of the greatest number within national borders, should read this exceptional work of socio-economic investigation to emerge energised and fortified from the experience.
Breaking Out — An Indian Woman’s American Journey by Padma Desai; Penguin Books; Price: Rs.499; 222 pp
Bare-all confessional memoirs of subcontinentals are rare; by Indian women rarer. The only such memoir this reviewer can recall is Sasthi Brata’s wickedly funny and irreverent My God Died Young, published in the 1970s. Therefore Padma Desai’s unputdownable page-turner Breaking Out falls within the rarest of rare categories.
The narrative starts with Desai’s father, who grew up in a village near Surat, Gujarat. Strangely, throughout the book, his full name is never mentioned. He is always referred to as “Father”. Even her mother’s name is mentioned only once, right at the start, though both parents, especially Father, figure prominently in the book. Perhaps it’s the author’s way of distancing herself from them.
Clearly brilliant and studious, Father won a scholarship to study at Bombay’s then prestigious Elphinstone College, where he earned a Masters degree in English literature, leading to a teaching job at a college in Surat. His first wife died in childbirth but he quickly found a second one — the author’s mother and two sisters and brother — who was barely literate and a manic depressive.
A highly-educated father (he later went to Cambridge University, UK, and earned another degree), married to somebody who could hardly read or write, made for a dysfunctional family. In fact, the highlight of this autobiography is the unsparing description of Father as an ogre, which we are not conditioned to expect in the Indian literary tradition. Father is representative of an archetype — highly educated Hindu men, not just Gujaratis, who despite their impressive education are enslaved by a feudal tradition and mindset, which renders them schizophrenic. Father ensures he marries not only within his caste, but within his sub-caste, and expects the same of his children. “We were forbidden to wear high heels, short sleeves, bright colours, and above all, flowers in our hair,” writes Desai.
Such puritanical restrictions for the high-spirited and academically brilliant Desai were a recipe for trouble when she was admitted into the Bombay School of Economics and Sociology for postgrad study. The city turned out to be a “treacherous Eden”. She fell under the spell of a manipulative fellow student, referred to only as RB, who cavalierly seduces her in the back of his American car. Pre-marital sex was scandalous in the 1950s, and the author suffered severe familial and social disapproval. But RB happened to be of the same sub-caste, and a marriage was hastily performed. Desai imagined she was in love. She became pregnant but her husband insisted on an abortion to which she dutifully acquiesced. Following a medical examination, she discovered that RB, who had predictably been unfaithful and probably frequented prostitutes, had infected her with gonorrhea.
Then came a lucky break. In 1955 Desai won a scholarship to Radcliffe College, then the women’s wing of Harvard University, to study economics. An even luckier break was meeting the brilliant economist Jagdish Bhagwati, who fell in love with her at first sight. In sharp contrast to the villainous males — Father and RB who had dominated and ruined her youth — Bhagwati proved a steadfast and compassionate companion to the deeply wounded author. For Desai, love blossomed slowly, helped by her prolonged separation from her husband. Inevitably when she demanded a divorce, he refused. But after a quickie divorce in Mexico, she finally married Bhagwati in 1977.
The last, and the least satisfying part of the book is about her daughter Anuradha, now in her 30s, and a paean to the US and American way of life. By implication it is also a damning indictment of some aspects of Hinduism and India.
An honest narrative of introspection and courage written in intimate detail, and scathing about her parents, her own failings and disastrous choice of first husband — Desai admits to two nervous breakdowns — and finally her conversion to Christianity, followed by her made-in-heaven second marriage and decision to make the US her home, Breaking Out is bold, eloquent and uplifting.