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The Rise and Fall of Nations
THE INTERNATIONAL BESTSELLER
'Entertaining, acute and disarmingly honest' Economist
'A vital guide to the new economic order' Rana Foroohar, Time
The crisis of 2008 ended the illusion of a golden era in which many people imagined that prosperity and political calm would continue to spread indefinitely. In a world now racked by slowing growth and mounting unrest, how can we discern which nations will thrive and which will fail?
Shaped by prize-winning author Ruchir Sharma's twenty-five years travelling the world, The Rise and Fall of Nations rethinks economics as a practical art. By narrowing down the thousands of factors that can shape a country's future, it spells out ten clear rules for identifying the next big winners and losers in the global economy.
'The nub of the book is how to spot which countries are likely to succeed, and which to fail, in this impermanent world. Sharma offers a framework of 10 rules. The more of these rules countries achieve, the more they are likely to rise rather than fall ... it may just help you avoid picking losers' David Smith, Sunday Times
'Amazing ... fascinating insights ... quite simply the best guide to the global economy today' Fareed Zakaria
'Lively and informative' Martin Wolf, Financial Times
'As ambitious as it is well executed ... a mix of humble pragmatism and daring decisiveness' Reuters
'Entertaining, acute and disarmingly honest' Economist
'A vital guide to the new economic order' Rana Foroohar, Time
The crisis of 2008 ended the illusion of a golden era in which many people imagined that prosperity and political calm would continue to spread indefinitely. In a world now racked by slowing growth and mounting unrest, how can we discern which nations will thrive and which will fail?
Shaped by prize-winning author Ruchir Sharma's twenty-five years travelling the world, The Rise and Fall of Nations rethinks economics as a practical art. By narrowing down the thousands of factors that can shape a country's future, it spells out ten clear rules for identifying the next big winners and losers in the global economy.
'The nub of the book is how to spot which countries are likely to succeed, and which to fail, in this impermanent world. Sharma offers a framework of 10 rules. The more of these rules countries achieve, the more they are likely to rise rather than fall ... it may just help you avoid picking losers' David Smith, Sunday Times
'Amazing ... fascinating insights ... quite simply the best guide to the global economy today' Fareed Zakaria
'Lively and informative' Martin Wolf, Financial Times
'As ambitious as it is well executed ... a mix of humble pragmatism and daring decisiveness' Reuters
464 pages, Paperback
First published June 6, 2016
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Displaying 1 - 30 of 298 reviews
August 1, 2016
More than anything, a useful read. There are so many metrics floating around to assess an economy that it's useful to condense everything into a set of rules.
The book got slow at times with far too many numbers, I'm also realizing I'm much more attracted to concepts and theories than rules of thumb like "in 67% of cases where debt grew at 40% over 5 years, countries hit a crisis soon after". That said, I see how powerful these benchmarks are and I would pay good money to see his backup excel.
What I liked
- Fundamentally, how projecting for a 5-10 year period is so starkly different from projecting for a 20-30 year period. The book is purely about the former
- Good versus bad billionaires an interesting metric to use. I'd rather have my billionaires be from tech and manufacturing than from oil and real estate.
- How a working population affects growth and interesting fixes like baby bonuses work / don't work
- Geographic sweet spots. The geese model of South East Asia is interesting. I'd never thought about how little South Asian countries trade with each other
Some of the other rules (manufacturing led growth, cheap currency, low inflation) are standard and the rules about how a country needs a reformer leader and how media-hype typically picks up at the fag end of a growth phase seem trivial.
Net net - I'm going to keep Ruchir Sharma's list of rules on my Evernote for the next few years :)
The book got slow at times with far too many numbers, I'm also realizing I'm much more attracted to concepts and theories than rules of thumb like "in 67% of cases where debt grew at 40% over 5 years, countries hit a crisis soon after". That said, I see how powerful these benchmarks are and I would pay good money to see his backup excel.
What I liked
- Fundamentally, how projecting for a 5-10 year period is so starkly different from projecting for a 20-30 year period. The book is purely about the former
- Good versus bad billionaires an interesting metric to use. I'd rather have my billionaires be from tech and manufacturing than from oil and real estate.
- How a working population affects growth and interesting fixes like baby bonuses work / don't work
- Geographic sweet spots. The geese model of South East Asia is interesting. I'd never thought about how little South Asian countries trade with each other
Some of the other rules (manufacturing led growth, cheap currency, low inflation) are standard and the rules about how a country needs a reformer leader and how media-hype typically picks up at the fag end of a growth phase seem trivial.
Net net - I'm going to keep Ruchir Sharma's list of rules on my Evernote for the next few years :)
November 7, 2016
This is clearly one of the best books on forecasting international economic growth. The author had done lots of research by not only relying on published numbers by the governments , but also going on the ground to gather information from the locals. He had identified 10 useful questions to ask to determine economic future of a country:
1. Is the population growing?
2. Is the leader fresh and proactively pushing reform and not just trying hard to hang on power?
3. Are the billionaires rich because they provide genuine good services and not because off connections?
4. Is the state not meddling with the market too much?
5. Is the country at a geographic sweet spot?
6. Does manufacturing account for the magic 30% of GDP? Too little manufacturing makes it tough to grow rich and too much leads to overcapacity.
7. Is inflation including consumer and housing lower than GDP growth?
8. Is the currency cheap? It is however only good if there's already a good manufacturing base.
9. Is the current account balance less than -5%? However, if it's more than that but it is spent on good investment then it's fine.
10. Has the country been under the radar of hype? Unfortunately appearance on the Time magazine generally marks the turning point of whatever the current trend goes.
All poor countries grow to join the rich club by developing their manufacturing; with the rise of the robots, the author thinks that it will get more and more difficult for poor countries.
1. Is the population growing?
2. Is the leader fresh and proactively pushing reform and not just trying hard to hang on power?
3. Are the billionaires rich because they provide genuine good services and not because off connections?
4. Is the state not meddling with the market too much?
5. Is the country at a geographic sweet spot?
6. Does manufacturing account for the magic 30% of GDP? Too little manufacturing makes it tough to grow rich and too much leads to overcapacity.
7. Is inflation including consumer and housing lower than GDP growth?
8. Is the currency cheap? It is however only good if there's already a good manufacturing base.
9. Is the current account balance less than -5%? However, if it's more than that but it is spent on good investment then it's fine.
10. Has the country been under the radar of hype? Unfortunately appearance on the Time magazine generally marks the turning point of whatever the current trend goes.
All poor countries grow to join the rich club by developing their manufacturing; with the rise of the robots, the author thinks that it will get more and more difficult for poor countries.
October 30, 2022
https://delsharm.blog.ir/1401/08/08/rfns
روچیر شارما جزو معروفترین تحلیلگران اقتصادی در آمریکاست. او این کتاب را در ۱۱ فصل نوشته و ۱۰ دلیل را برای رشد و افول دولتها از جهت اقتصادی برمیشمرد. این کتاب ۴۶۶ صفحهای پر است از اطلاعات فشرده در مورد شاخصهای مختلف اقتصادی که اصلاً امکان خلاصهنویسی برایش وجود ندارد. آنقدری نویسنده با دقت مثالزدنی اطلاعات در مورد کشورهای مختلف میدهد که تا آدم میآید یکیاش را هضم کند، با بعدی مواجه میشود.
اما با خودم فکر کردم برای ایران کدام از این دلایلی که برشمرده شده است مهماند:
اولین دلیلی که برای رشد و افول برمیشمرد نیروی انسانی است. حرفی که همیشه در لفافه گفته میشود، نویسنده به صراحت میگوید: کشورهای پیشرفته میدانند که طبقهٔ متوسط به دلایل مختلف علاقهٔ زیادی به فرزندآوری ندارد و این نقیصه را با مهاجرپذیری مرتفع میکند. اما ایران، مخصوصاً پس از موج «فرزند کمتر، زندگی بهتر»، دچار فرهنگی شد که دلایل بسیاری برای آن میشود برشمرد ولی نتیجهاش بالا رفتن سن ازدواج، کم شدن فرزندآوری و خطر بزرگ پیری جمعیت است. متأسفانه اگر به خودمان نیاییم، به زودی (شاید ظرف دو دهه) با پیر شدن نسل ما دههٔ شصتیها، با پیری جمعیتی مواجه خواهیم شد که یک ورشکستی بزرگ اقتصادی را خواهیم داشت. این حتی برای مسلمانان آمریکا صدق میکند. این را از مسئول مرکز شیعهٔ سنخوزه میگویم که اولین نسل مسلمانان آمریکا متوسط ۵ فرزند داشتند اما الان ۱٫۷ است که زیر نرخ ۲٫۱ تا ۲٫۳ که نرخ جایگزینی است (در کتاب «واقعیتمداری» هم به این مسألهٔ نرخ جایگزینی اشاره شده است).
کشورهایی که اقتصادشان وابسته به منابع خام طبیعی مانند نفت است، در آنها دو نقیصهٔ اصلی وجود دارد: اولش وجود رانت و فساد پیچ در پیچ دولتی است. دومیاش آن است که این کشورها به محض بالا رفتن قیمت منابع طبیعی دچار توهم رشد اقتصادی میشوند (شبیه اواخر دورهٔ پهلوی و اوایل دورهٔ احمدینژاد که قیمت نفت خیلی بالا رفت) ولی با پایین آمدن قیمت منابع ناگهان دچار بحرانهای عجیب میشوند (مثل دورهٔ تحریم که هم نفت ارزان شد و هم فروشش بسیار دشوار). راه حل اتکا به اقتصاد مولد و تولید کالاست (شبیه چین) که نمیدانم واقعاً در این اوضاع چنین آرزویی دستیافتنی است یا خیر!
یکی دیگر از دلایلی که نویسنده برمیشمرد ضعف دولت در دو جنبه است: چاق شدن دولت که باعث میشود اکثر درآمدش خرج حقوق کارمندان شود و دومی ناتوانی در اخذ مالیات. متأسفانه این دو را هم ایران به شدت دارد. در این شرایط به جای آن که انرژی با قیمت واقعیتر فروخته شود باید در عوض زیرساختهایی مانند جاده که باعث افزایش ترانزیت و امنیت تجارت میشود (و تهش میشود آبان ۹۸ که سالها قیمت انرژی ثابت ماند؛ بعد دولت دیگر تابآوری این حجم از یارانهٔ پنهان را نداشت؛ و بعد شد آنچه شد). در چنین شرایط یکی از مشکلاتی که پیش میآید، بحران اعتماد است (اخیراً «محمد فاضلی» صحبت جالبی در مورد بحران اعتماد داشته است؛ ر.ک. پادکست دغدغهٔ ایرانیان و مصاحبهٔ فاضلی در برنامهٔ شیوه شبکه ۴).
https://castbox.fm/episode/%D8%A7%D9%...
مسألهٔ بعدی امر ژئوپولتیک ایران است. چه بخواهیم چه نخواهیم ایران بین روسیه، چین و غرب قرار گرفته است و از زمانی که استعمار شکل گرفته است، همیشه در بحران بوده (زمان قاجار) تا همین امروز که دور و بر ایران پر است از جنگ و فقر. ربط زیادی هم به سبک حکومت ندارد. هر چه باشد ما تهدیدهای ثابتی را تجربه خواهیم کرد. پیشنهاد میکنم مصاحبهٔ دوبخشیِ محمد فاضلی با مجید شاکری (رفیق و همدانشگاهی سابق) را گوش بدهید:
https://castbox.fm/episode/%D8%A7%D9%...
https://castbox.fm/episode/%D8%A7%D9%...
یکی دیگر از دلایلی که نویسنده برمیشمرد، اولویتبندی ۱) کارخانه، ۲) فناوری، و ۳) زیرساخت است که متأسفانه ما در همهاش ضعیف هستیم. صنعت دلالی البته در ایران خوب کار میکند.
نویسنده قاعدهٔ کلیای برمیشمرد: تورم بیش از ۶٪ برای کشورهای در حال توسعه باعث درجا زدن است. غیر از یک مورد استثنایی چین که به خاطر شرایط خاص چین که تولیدکنندهٔ کالا در اقتصاد صرفاً صادراتی بود، هیچ کشوری با تورم زیادی رشد نمیکند. حالا تصور کنید وضع فاجعهٔ کسری بودجهٔ مزمن در ایران را (ظاهراً افزایش نقدینگی در ایران از سال ۵۷ تا ۱۴۰۰، ۴۳۰۰۰ برابر شده است!) این مسألهٔ ما هم فقط نیست: ترکیهٔ بدون تحریم همین الان تورم ۸۳٪ را دارد تجربه میکند که میگویند واقعیاش ۱۸۶٪ است (الله اکبر!).
نکات بسیار زیادی در این کتاب برشمرده شده است که از حوصله و وقت من خارج است. پیشنهاد میکنم این کتاب را بخوانید. فقط هشدار که از زمان نشر این کتاب (۲۰۱۶) خیلی چیزها عوض شده است و برخی از اطلاعات مخصوصاً فصل آخر کتاب بهروز نیست.
روچیر شارما جزو معروفترین تحلیلگران اقتصادی در آمریکاست. او این کتاب را در ۱۱ فصل نوشته و ۱۰ دلیل را برای رشد و افول دولتها از جهت اقتصادی برمیشمرد. این کتاب ۴۶۶ صفحهای پر است از اطلاعات فشرده در مورد شاخصهای مختلف اقتصادی که اصلاً امکان خلاصهنویسی برایش وجود ندارد. آنقدری نویسنده با دقت مثالزدنی اطلاعات در مورد کشورهای مختلف میدهد که تا آدم میآید یکیاش را هضم کند، با بعدی مواجه میشود.
اما با خودم فکر کردم برای ایران کدام از این دلایلی که برشمرده شده است مهماند:
اولین دلیلی که برای رشد و افول برمیشمرد نیروی انسانی است. حرفی که همیشه در لفافه گفته میشود، نویسنده به صراحت میگوید: کشورهای پیشرفته میدانند که طبقهٔ متوسط به دلایل مختلف علاقهٔ زیادی به فرزندآوری ندارد و این نقیصه را با مهاجرپذیری مرتفع میکند. اما ایران، مخصوصاً پس از موج «فرزند کمتر، زندگی بهتر»، دچار فرهنگی شد که دلایل بسیاری برای آن میشود برشمرد ولی نتیجهاش بالا رفتن سن ازدواج، کم شدن فرزندآوری و خطر بزرگ پیری جمعیت است. متأسفانه اگر به خودمان نیاییم، به زودی (شاید ظرف دو دهه) با پیر شدن نسل ما دههٔ شصتیها، با پیری جمعیتی مواجه خواهیم شد که یک ورشکستی بزرگ اقتصادی را خواهیم داشت. این حتی برای مسلمانان آمریکا صدق میکند. این را از مسئول مرکز شیعهٔ سنخوزه میگویم که اولین نسل مسلمانان آمریکا متوسط ۵ فرزند داشتند اما الان ۱٫۷ است که زیر نرخ ۲٫۱ تا ۲٫۳ که نرخ جایگزینی است (در کتاب «واقعیتمداری» هم به این مسألهٔ نرخ جایگزینی اشاره شده است).
کشورهایی که اقتصادشان وابسته به منابع خام طبیعی مانند نفت است، در آنها دو نقیصهٔ اصلی وجود دارد: اولش وجود رانت و فساد پیچ در پیچ دولتی است. دومیاش آن است که این کشورها به محض بالا رفتن قیمت منابع طبیعی دچار توهم رشد اقتصادی میشوند (شبیه اواخر دورهٔ پهلوی و اوایل دورهٔ احمدینژاد که قیمت نفت خیلی بالا رفت) ولی با پایین آمدن قیمت منابع ناگهان دچار بحرانهای عجیب میشوند (مثل دورهٔ تحریم که هم نفت ارزان شد و هم فروشش بسیار دشوار). راه حل اتکا به اقتصاد مولد و تولید کالاست (شبیه چین) که نمیدانم واقعاً در این اوضاع چنین آرزویی دستیافتنی است یا خیر!
یکی دیگر از دلایلی که نویسنده برمیشمرد ضعف دولت در دو جنبه است: چاق شدن دولت که باعث میشود اکثر درآمدش خرج حقوق کارمندان شود و دومی ناتوانی در اخذ مالیات. متأسفانه این دو را هم ایران به شدت دارد. در این شرایط به جای آن که انرژی با قیمت واقعیتر فروخته شود باید در عوض زیرساختهایی مانند جاده که باعث افزایش ترانزیت و امنیت تجارت میشود (و تهش میشود آبان ۹۸ که سالها قیمت انرژی ثابت ماند؛ بعد دولت دیگر تابآوری این حجم از یارانهٔ پنهان را نداشت؛ و بعد شد آنچه شد). در چنین شرایط یکی از مشکلاتی که پیش میآید، بحران اعتماد است (اخیراً «محمد فاضلی» صحبت جالبی در مورد بحران اعتماد داشته است؛ ر.ک. پادکست دغدغهٔ ایرانیان و مصاحبهٔ فاضلی در برنامهٔ شیوه شبکه ۴).
https://castbox.fm/episode/%D8%A7%D9%...
مسألهٔ بعدی امر ژئوپولتیک ایران است. چه بخواهیم چه نخواهیم ایران بین روسیه، چین و غرب قرار گرفته است و از زمانی که استعمار شکل گرفته است، همیشه در بحران بوده (زمان قاجار) تا همین امروز که دور و بر ایران پر است از جنگ و فقر. ربط زیادی هم به سبک حکومت ندارد. هر چه باشد ما تهدیدهای ثابتی را تجربه خواهیم کرد. پیشنهاد میکنم مصاحبهٔ دوبخشیِ محمد فاضلی با مجید شاکری (رفیق و همدانشگاهی سابق) را گوش بدهید:
https://castbox.fm/episode/%D8%A7%D9%...
https://castbox.fm/episode/%D8%A7%D9%...
یکی دیگر از دلایلی که نویسنده برمیشمرد، اولویتبندی ۱) کارخانه، ۲) فناوری، و ۳) زیرساخت است که متأسفانه ما در همهاش ضعیف هستیم. صنعت دلالی البته در ایران خوب کار میکند.
نویسنده قاعدهٔ کلیای برمیشمرد: تورم بیش از ۶٪ برای کشورهای در حال توسعه باعث درجا زدن است. غیر از یک مورد استثنایی چین که به خاطر شرایط خاص چین که تولیدکنندهٔ کالا در اقتصاد صرفاً صادراتی بود، هیچ کشوری با تورم زیادی رشد نمیکند. حالا تصور کنید وضع فاجعهٔ کسری بودجهٔ مزمن در ایران را (ظاهراً افزایش نقدینگی در ایران از سال ۵۷ تا ۱۴۰۰، ۴۳۰۰۰ برابر شده است!) این مسألهٔ ما هم فقط نیست: ترکیهٔ بدون تحریم همین الان تورم ۸۳٪ را دارد تجربه میکند که میگویند واقعیاش ۱۸۶٪ است (الله اکبر!).
نکات بسیار زیادی در این کتاب برشمرده شده است که از حوصله و وقت من خارج است. پیشنهاد میکنم این کتاب را بخوانید. فقط هشدار که از زمان نشر این کتاب (۲۰۱۶) خیلی چیزها عوض شده است و برخی از اطلاعات مخصوصاً فصل آخر کتاب بهروز نیست.
July 9, 2020
The book suffers from all the biases of a reductive approach to predictions, but it's still an interesting read. I love books by authors with non-western centric perspectives.
December 3, 2021
If one learns macroeconomics through story of roller-coaster path of economies of different countries, then it is great book. In simple language and example author explains how to detect advent of recession or boom for a country. He describes 10 rules or sign for testing the condition of economy.
Interesting read for those who have interest in economy.
Interesting read for those who have interest in economy.
July 24, 2016
Required reading for the amateur economist seeking a nuanced understanding of what makes some countries grow and some to stagnate. What's refreshing about the book is that Ruchir Sharma always wears the pragmatic investor's hat and unlike many 'experts', doesn't shy away from admitting he doesn't know. For starters, he warns against any economic predictions exceeding a time frame of 5-10 years. Using economic data after World War II, when our current global economic paradigm was established, he throws light on what confluence of economic parameters made some countries register consistently scorching growth, countries he terms growth miracles. Doing this, he comes up with ten factors that are crucial to sustained growth rates: favourable demographics, limited inequality, stable debt-to-GDP ratios, low & stable inflation, cheap currency, and some others. Be warned though, most of this is fun post-facto analysis and his hypotheses can only be validated by the growth rates of the countries he backs as future winners: Germany, US, Mexico, India, Bangladesh, Philippines, Poland. And the ones he predicts as being on the verge of a major economic meltdown, prime candidate being China.
July 4, 2016
In 2008, the world witnessed profound economic meltdown which altered our lives (for good or bad). The events of 2008 meltdown was covered by authors, economists, financial analysts, reporters of all kind, and hundreds of books were written on the collapse and the lessons we (have to) learn, but none would match, Ruchir Sharma’s “The Rise and Fall of Nations”.
Sharma has applied his 25 years of global business and travel insight, and authored this classy book, which touches every aspects of the current global economics and arrives at 10 rules of changes in this post crisis world.
The first three chapters touches the human aspects of population (human resources), leadership and billionaires (good ones as well as the bad ones). Sharma has taken extreme care in covering all the bases in his arguments.
For example, when Sharma presents the case that a nation should produce people good enough to keep it at least above fertility replacement ratio, which makes you to wonder about countries in South Asia and Africa with over population, and how it fits Sharma’s argument, then you turn the page … voila … you would see Sharma covering the consequences of over population and underutilization of human resources as well. The book is full of such moments, and make you to appreciate Sharma and his team on taking 360 degree (perhaps 720 degree) coverage on their cases.
The next three chapters covers the state involvement (too little or too much), the geographic location (of the state), industries (manufacturing, services, and more). In these chapter as well, you would enjoy the narration, and how Sharma has taken to over 200 pages without boring you.
The next four chapters get you into the economist’s world, with inflation, markets, cost factors, debts, and many more financial parameters, injecting vital statistics (numbers) without your realization.
Then comes the final chapter of the Good, the Bad and the Ugly, providing outlook for almost all the countries for the next five years.
What after five years?
In Sharma’s perspective, which anyone with reasonable sense would agree, it would be hard to predict economic outlook beyond five years from now (even though many theories would float only to perish).
But for the next five years, you would live with this book, which covers almost all the countries, with special mentions on major (developed or developing) economies of the world.
Ruchir Sharma’s “The Rise and Fall of Nations” is recommended for anyone interested in global economics, may you be a fresh student or a retired professional or anyone in between.
Sharma has applied his 25 years of global business and travel insight, and authored this classy book, which touches every aspects of the current global economics and arrives at 10 rules of changes in this post crisis world.
The first three chapters touches the human aspects of population (human resources), leadership and billionaires (good ones as well as the bad ones). Sharma has taken extreme care in covering all the bases in his arguments.
For example, when Sharma presents the case that a nation should produce people good enough to keep it at least above fertility replacement ratio, which makes you to wonder about countries in South Asia and Africa with over population, and how it fits Sharma’s argument, then you turn the page … voila … you would see Sharma covering the consequences of over population and underutilization of human resources as well. The book is full of such moments, and make you to appreciate Sharma and his team on taking 360 degree (perhaps 720 degree) coverage on their cases.
The next three chapters covers the state involvement (too little or too much), the geographic location (of the state), industries (manufacturing, services, and more). In these chapter as well, you would enjoy the narration, and how Sharma has taken to over 200 pages without boring you.
The next four chapters get you into the economist’s world, with inflation, markets, cost factors, debts, and many more financial parameters, injecting vital statistics (numbers) without your realization.
Then comes the final chapter of the Good, the Bad and the Ugly, providing outlook for almost all the countries for the next five years.
What after five years?
In Sharma’s perspective, which anyone with reasonable sense would agree, it would be hard to predict economic outlook beyond five years from now (even though many theories would float only to perish).
But for the next five years, you would live with this book, which covers almost all the countries, with special mentions on major (developed or developing) economies of the world.
Ruchir Sharma’s “The Rise and Fall of Nations” is recommended for anyone interested in global economics, may you be a fresh student or a retired professional or anyone in between.
July 19, 2018
Mr. Sharma is obviously a supply-sider with neoliberal tendencies whose bias shines through more strenuously in the first half of the book. There is some interesting information in the latter half that has value so the read isn't a total loss. It would be interesting to have current data to see if his forecasts are playing out.
It's a lot of subject area with limited points of view. I would recommend books dedicated to a particular subject, for instance Jared Diamond's "Collapse", Naomi Kline's "No Logo", David Harvey's "Seventeen Contradictions of Capitalism...", Mehrsa Baradaran's "How the Other Half Banks" for a more in-depth look at 'why past societies collapsed', 'corporate de-investment in America', 'an alternate view of capitalism', 'alternatives to banking in the U.S.', and other topics that seemed to get only a one-sided perspective in this book.
It's a lot of subject area with limited points of view. I would recommend books dedicated to a particular subject, for instance Jared Diamond's "Collapse", Naomi Kline's "No Logo", David Harvey's "Seventeen Contradictions of Capitalism...", Mehrsa Baradaran's "How the Other Half Banks" for a more in-depth look at 'why past societies collapsed', 'corporate de-investment in America', 'an alternate view of capitalism', 'alternatives to banking in the U.S.', and other topics that seemed to get only a one-sided perspective in this book.
November 15, 2016
3.5/5 If we create a matrix (Excel spreadsheet) in which rows represent nations and columns represent rules of economics, this book is a columnar reading. One rule is discussed per chapter along with the situations in a dozen countries. BTW, his earlier book "Breakout Nations" (5/5) was a row-by-row reading with one country discussed in each chapter.
The rules were discussed in "Breakout Nations" too - crony-capitalism, cheap currency, investment, debt ratio, inflation, working population etc but it was more fun to read being based on countries.
The writing is lucid, interesting, in the right amount of detail and explained well with examples. Gets a little repetitive in the last 2-3 chapters, but worth picking up for a quick review of the global economy in 2016.
The rules were discussed in "Breakout Nations" too - crony-capitalism, cheap currency, investment, debt ratio, inflation, working population etc but it was more fun to read being based on countries.
The writing is lucid, interesting, in the right amount of detail and explained well with examples. Gets a little repetitive in the last 2-3 chapters, but worth picking up for a quick review of the global economy in 2016.
October 14, 2023
* Ще намерите линк към обобщение на книгата в края на ревюто/A link to the Summary of the book can be found at the end of this review*
Това е книга, която трябва да се учи в специалностите по икономика! Ако сте завършили или в момента учите такава, прочетете я! Ако инвестирате на световните пазари - прочетете я! Ако просто се интересувате от икономика - знаете какво да направите, нали?
"The rise and fall of nations" разглежда 10 принципа, по които човек може да оцени дадена държава, за да направи преценка дали предстои икономически възход или падение в нея. Такива принципи са например, типът човек, който в момента управлява държавата, каква политика води, какви са държавните инвестиции, кои са най-големите компании в държава и какво е нивото на инфлация. На всеки принцип има отредена глава, в която авторът обяснява подробно какво точно представлява той, как да се сдобиеш с нужната информация, след което дава множество примери и статистика, с които да обоснове защо смята съответния маркер за достатъчно важен, че да бъде включен в подобна оценка. Примерите включват държави от всички континенти и се простират понякога с десетилетия назад. Статистиката, която полза често е от световни институции, а когато е само държавна, се обръща внимание на възможността за подправяне на информацията. За мен лично беше любопитно да разбера на какво точно обръща внимание Шарма - човек с дългогодишна инвестиционна кариера, а понастоящем и председател в Rockefeller International. В края на книгата, Шарма дава оценка на по-големите държави в света на база своите 10 принципа като всеки принцип носи 1 точка. Интересното е, че няма държава, която да има пълен брой точки. Авторът споменава, че периодично обновява оценките в своя списък. За съжаление обаче, този списък не може да се намери на сайта му (което не е и толкова изненадващо всъщност). Именно тук се появява и големият недостатък на тези 10 принципа - за да направи човек оценка на база на тях, би му било нужно да вложи доста часове работа, много ровене в статистика, познание на процесите в съответната държа, разбиране на локалните политически нагласи и насоки, както и знание за икономическите процеси там поне през последното десетилетие. Шарма, разбира се, има екип от хора, чиято работа е именно това. Така на практика, "обикновения" човек не би могъл сам да си изгради въпросната оценка, но и няма как да я намери "на готово". Въпреки това, смятам, че информацията, която Шарма предоставя, е изключително полезна, тъй като той дава насоки в кои показатели да се съсредоточи човек, ако иска да направи някакъв, макар и скромен, анализ за икономическото бъдеще на една държава.
Обобщение на 10-те принципа/Summary of the 10 rules: https://nikireads.wordpress.com/2023/...
Това е книга, която трябва да се учи в специалностите по икономика! Ако сте завършили или в момента учите такава, прочетете я! Ако инвестирате на световните пазари - прочетете я! Ако просто се интересувате от икономика - знаете какво да направите, нали?
"The rise and fall of nations" разглежда 10 принципа, по които човек може да оцени дадена държава, за да направи преценка дали предстои икономически възход или падение в нея. Такива принципи са например, типът човек, който в момента управлява държавата, каква политика води, какви са държавните инвестиции, кои са най-големите компании в държава и какво е нивото на инфлация. На всеки принцип има отредена глава, в която авторът обяснява подробно какво точно представлява той, как да се сдобиеш с нужната информация, след което дава множество примери и статистика, с които да обоснове защо смята съответния маркер за достатъчно важен, че да бъде включен в подобна оценка. Примерите включват държави от всички континенти и се простират понякога с десетилетия назад. Статистиката, която полза често е от световни институции, а когато е само държавна, се обръща внимание на възможността за подправяне на информацията. За мен лично беше любопитно да разбера на какво точно обръща внимание Шарма - човек с дългогодишна инвестиционна кариера, а понастоящем и председател в Rockefeller International. В края на книгата, Шарма дава оценка на по-големите държави в света на база своите 10 принципа като всеки принцип носи 1 точка. Интересното е, че няма държава, която да има пълен брой точки. Авторът споменава, че периодично обновява оценките в своя списък. За съжаление обаче, този списък не може да се намери на сайта му (което не е и толкова изненадващо всъщност). Именно тук се появява и големият недостатък на тези 10 принципа - за да направи човек оценка на база на тях, би му било нужно да вложи доста часове работа, много ровене в статистика, познание на процесите в съответната държа, разбиране на локалните политически нагласи и насоки, както и знание за икономическите процеси там поне през последното десетилетие. Шарма, разбира се, има екип от хора, чиято работа е именно това. Така на практика, "обикновения" човек не би могъл сам да си изгради въпросната оценка, но и няма как да я намери "на готово". Въпреки това, смятам, че информацията, която Шарма предоставя, е изключително полезна, тъй като той дава насоки в кои показатели да се съсредоточи човек, ако иска да направи някакъв, макар и скромен, анализ за икономическото бъдеще на една държава.
Обобщение на 10-те принципа/Summary of the 10 rules: https://nikireads.wordpress.com/2023/...
March 15, 2020
It was a great read. Never been a fan of economic books, but this was an interesting read with examples from so many countries and leaders, laying down some strong fundamental filters to judge an economy.
I feel enriched by the experience of going through this journey through the world view of a leading economist, what more can one ask sitting in the comforts of once room.
After reading the book, I do feel a bit more pessimistic about my own heart india, but hope our uneducated politicians or their beauracrats do read this and take some bold steps to course correct.
I feel enriched by the experience of going through this journey through the world view of a leading economist, what more can one ask sitting in the comforts of once room.
After reading the book, I do feel a bit more pessimistic about my own heart india, but hope our uneducated politicians or their beauracrats do read this and take some bold steps to course correct.
May 28, 2019
A rather heavy read on how to evaluate how economies are doing and how well they might do in the future. The book is really heavy on data and comparisons, making it difficult to digest. The good thing is that the author applies those rules to various economies at various times to illustrate the rules, and provides comparisons as well. Learnt a lot about how various economies progressed over the last 50 odd years as a side-effect.
July 6, 2018
A book full of concrete rules on how to detect which countries are going to rise and which are likely to fall. It gives a good overview of important economies in the world. Would have loved to see graphs with the KPIs of each of these rules, unfortunately most of it is written in plain text.
October 12, 2016
What lies within the DNA of a successful nation? That is the question that this book tries to answer. It is pretty limited because it defines success narrowly in terms of GDP in general, and GDP growth in particular. There is little space for success defined in terms of a happy society, or a well functioning society, or a society with a great deal of social capital. It is, rather crudely, all about the money.
If we accept that premise, and there is no reason why we should, although I accept that many do accept that definition, then does the author have the recipe for a successful nation? I am not sure that he does. He lays down the 10 'rules' of success. As a digression, I found it curious that there are a round 10 rules, and not a less round number. Anyway, to accept the argument means that one accepts these rules as the determinants of success.
Some of the rules are hard to dispute. For example, a fast growing and young population is normally associated with fast economic growth. However, this 'rule' is not absolute - a young and fast growing population in North Africa has not triggered fast economic growth there. Additionally, this 'rule' may be about to change if the Singularitarians are even half right. It could be that total factor productivity growth in Europe could offset the loss of productivity ascribed to an ageing population. This is an area not really considered by the author.
Equally, some of the 'rules' are hard to accept in the first place. For example, there is a discussion about 'Good Billionaires' and 'Bad Billionaires'. The author gropes around in this issue without ever really laying his hands on the key point. According to the logic of his argument, 'Good Billionaires' put their money into productive investments, whilst 'Bad Billionaires' put their money into unproductive investments such as property or financial instruments. This seems a little narrow sighted to me because the function of an investment is to make a return, not to create employment for other people. It seems strange to me that you criticise the use of money in a certain way whilst defending the system that gave rise to the use of the money in this way.
I found some of the arguments to be muddled. I think that is partly because I found the book to be too long. In my view, it could be edited for length and lose about 50% of the word count without materially affecting the argument or its impact. I found the writing style to be un-engaging, almost to the point of being tedious in places. This made it a hard read.
All in all, the book contains an interesting premise, but falls down on delivery. It is likely to appeal only to those who are wrapped up in this topic and are willing to plough their way through the arguments. That category of person includes me. I was unconvinced by the conclusion - that in order to be successful, a nation has to be like the USA - probably because I don't define success in terms of the narrow confines of GDP and its growth.
If we accept that premise, and there is no reason why we should, although I accept that many do accept that definition, then does the author have the recipe for a successful nation? I am not sure that he does. He lays down the 10 'rules' of success. As a digression, I found it curious that there are a round 10 rules, and not a less round number. Anyway, to accept the argument means that one accepts these rules as the determinants of success.
Some of the rules are hard to dispute. For example, a fast growing and young population is normally associated with fast economic growth. However, this 'rule' is not absolute - a young and fast growing population in North Africa has not triggered fast economic growth there. Additionally, this 'rule' may be about to change if the Singularitarians are even half right. It could be that total factor productivity growth in Europe could offset the loss of productivity ascribed to an ageing population. This is an area not really considered by the author.
Equally, some of the 'rules' are hard to accept in the first place. For example, there is a discussion about 'Good Billionaires' and 'Bad Billionaires'. The author gropes around in this issue without ever really laying his hands on the key point. According to the logic of his argument, 'Good Billionaires' put their money into productive investments, whilst 'Bad Billionaires' put their money into unproductive investments such as property or financial instruments. This seems a little narrow sighted to me because the function of an investment is to make a return, not to create employment for other people. It seems strange to me that you criticise the use of money in a certain way whilst defending the system that gave rise to the use of the money in this way.
I found some of the arguments to be muddled. I think that is partly because I found the book to be too long. In my view, it could be edited for length and lose about 50% of the word count without materially affecting the argument or its impact. I found the writing style to be un-engaging, almost to the point of being tedious in places. This made it a hard read.
All in all, the book contains an interesting premise, but falls down on delivery. It is likely to appeal only to those who are wrapped up in this topic and are willing to plough their way through the arguments. That category of person includes me. I was unconvinced by the conclusion - that in order to be successful, a nation has to be like the USA - probably because I don't define success in terms of the narrow confines of GDP and its growth.
May 26, 2021
This book provides a smorgasbord of information on the key ingredients that are responsible for the rise and fall of nations across developed and developing countries. The author is an investor and fund manager who has written widely on global economics and politics. He conducted his own research rather than relying on research reports provided by the governments. He breaks his research into ten broad factors that can be used to determine the economic future of the country:
* People Matter - Is the working age population growing?
* Circle of Life - Is the leader hanging on to it's power or pushing structural reforms?
* Good Billionaires, Bad Billionaires: Are the billionaires rich because they provide genuine good services and build good businesses or because of connections and conducting business in rent seeking industries?
* Perils of the state: Does the state meddle with the markets? This is extremely relevant for a country like India.
* Geographic sweet spot: While geography is important, it is never enough to produce strong growth on its own, unless a country takes the right steps to turn its fortuitously located ports into attractive magnets.
* Factories first: This is an important concept especially for the emerging world as manufacturing should account for 30% of GDP. Furthermore, labor laws need to be friendly.
* The price of onions: How is inflationary pressure with respect to the GDP growth rate?
* Cheap is good: Having a cheap currency has its benefits as long as the strong manufacturing base can support the economy. Else there are many cases when a country ends up defaulting on its debt.
* Kiss of debt: Rising debt levels can be a sign of healthy growth, so long as debt is not growing much faster than the economy for too long.
* The Hype watch: Mainstream opinion about which nations are rising or falling typically gets the future wrong because it extrapolates recent trends and grows more enamored of a country the growth run lasts.
I found this book to be a pretty good primer for anyone trying to understand macroeconomics as well as the factors responsible to make a country successful. Even though this book was published roughly ~5 years ago after the credit crisis, it is still extremely relevant during current (post-pandemic) times as the government spending has reached enormous levels. The author does a great job of integrating historical examples, statistics, his own personal observations, and summarize his intellectual capital into an extremely well written book.
* People Matter - Is the working age population growing?
* Circle of Life - Is the leader hanging on to it's power or pushing structural reforms?
* Good Billionaires, Bad Billionaires: Are the billionaires rich because they provide genuine good services and build good businesses or because of connections and conducting business in rent seeking industries?
* Perils of the state: Does the state meddle with the markets? This is extremely relevant for a country like India.
* Geographic sweet spot: While geography is important, it is never enough to produce strong growth on its own, unless a country takes the right steps to turn its fortuitously located ports into attractive magnets.
* Factories first: This is an important concept especially for the emerging world as manufacturing should account for 30% of GDP. Furthermore, labor laws need to be friendly.
* The price of onions: How is inflationary pressure with respect to the GDP growth rate?
* Cheap is good: Having a cheap currency has its benefits as long as the strong manufacturing base can support the economy. Else there are many cases when a country ends up defaulting on its debt.
* Kiss of debt: Rising debt levels can be a sign of healthy growth, so long as debt is not growing much faster than the economy for too long.
* The Hype watch: Mainstream opinion about which nations are rising or falling typically gets the future wrong because it extrapolates recent trends and grows more enamored of a country the growth run lasts.
I found this book to be a pretty good primer for anyone trying to understand macroeconomics as well as the factors responsible to make a country successful. Even though this book was published roughly ~5 years ago after the credit crisis, it is still extremely relevant during current (post-pandemic) times as the government spending has reached enormous levels. The author does a great job of integrating historical examples, statistics, his own personal observations, and summarize his intellectual capital into an extremely well written book.
February 19, 2023
In this book, Sharma describes his quintessential "10 rules" - which he formulated while working as an investment banker for over 2 decades - and are made to assess the economic performance of a nation. The aim of these rules is to identify which countries are actually "rising" (economically) and which are just being propped up by media pundits, or perhaps the hype of which is based on completely wrong indicators of growth. An example of the latter case would be Russia and Saudi Arabia - both of which had been repeatedly asserted by the media moguls, as a just around the corner fellow going-to-be-a breakthrough economy - while neglecting the fact that these countries are commodity-rich economies, with a very high degree of politicial instability and authoritarianism.
Holistically the book feels very informative and well researched. It flows through different aspect of a nation's elements - which are core to its economic emergence - very swiftly, like its working population share, manufacturing capabilities, access to geographical sweet spots, growth of second cities, low or high debt with respect to GDP, inflation rate etc. However, there are certain sections when the repetitive nature of some points kicks in, but generally they are very minor and are tolerable.
I would highly recommend this book to anyone who is interested in the dynamics of a nation's rise, & fall and what makes a country break its current "income-trap" and become prosperous.
Krish
You can check my Twitter if you like this review.
https://twitter.com/Mukherjee_07
Holistically the book feels very informative and well researched. It flows through different aspect of a nation's elements - which are core to its economic emergence - very swiftly, like its working population share, manufacturing capabilities, access to geographical sweet spots, growth of second cities, low or high debt with respect to GDP, inflation rate etc. However, there are certain sections when the repetitive nature of some points kicks in, but generally they are very minor and are tolerable.
I would highly recommend this book to anyone who is interested in the dynamics of a nation's rise, & fall and what makes a country break its current "income-trap" and become prosperous.
Krish
You can check my Twitter if you like this review.
https://twitter.com/Mukherjee_07
October 9, 2016
A good book that attempts to forecast how well a country's economy will do based on 10 thumb-rules that have a historical basis. Good read for anyone interested in world economics and how countries can ride the wave or what makes them go astray.
Two things I felt were missed: 1. While immigration can be positive for a country, that would depend on the ability of the immigrant to integrate and contribute towards the new country. So while immigration is good, not all immigrants are equal. Especially in today's world, when along with the refugees jihadis and similar such riff-raff sneak in. 2. The environmental sustainability of a country's policies are not considered at all. As the planet sits on the cusp of climate change, I feel this should have a bearing when reading the tea leaves about a country's future prospects.
Two things I felt were missed: 1. While immigration can be positive for a country, that would depend on the ability of the immigrant to integrate and contribute towards the new country. So while immigration is good, not all immigrants are equal. Especially in today's world, when along with the refugees jihadis and similar such riff-raff sneak in. 2. The environmental sustainability of a country's policies are not considered at all. As the planet sits on the cusp of climate change, I feel this should have a bearing when reading the tea leaves about a country's future prospects.
February 7, 2017
I can talk for a whole day and still not run out of good things to say about this book. A GREAT mix of journalistic insight and scientific method. All the passages about Vietnam are spot-on.
July 24, 2020
Anecdotes, examples and simple language make it a very entertaining read.
February 23, 2021
Many interesting historical insights on the global economy and backed by data and lots of examples (see below). The book didn’t touch on Singapore other than it is an island economy driven by services, highlighted Zeti Akhtar Aziz and Korea’s Phoenix recovery without explaining why at all, called out IMF reluctance to forecast recession, Times often publish too late in the game, pg 379 called out Najib’s stupidity. 10/10 recommend for anyone to learn more about how countries handle their economy.
The book is to nudge our discussion of the world economy away from the indeterminate future to a more practical time horizon of 5-10 years. What will happen if the normal pattern holds and cycles continue to turn every 5 years or so?
Growth = sum of spending by government (consumer + investment), industry productions, hours that people work + output/hr or productivity + working robot populations
Productivity growth = sum of hard-to-quantify improvements in the skill of workers + # and power of tools + how well workers are employing those tools
I) People / Talent pool
Depopulation > shrinking economic growth > less pressure on production
Neo-Malthusians = who fear population growth will outstrip growth in food supply
Neo-Luddites = who fear that the rise of robots will make human workers obsolete
To predict a nation’s economist prospect, look at
1. Projected growth of the working age population in 5 years
2. What nations are doing to counteract slower population growth
1. Encourage women to have more babies
1. Baby Bonus: attract poor family, and their children added greatly to welfare expenses (DK, AU)
2. Womenomics: improve childcare and parental leave, cut marriage tax on second earner (JP)
3. Impose tax on 25+yo adult who is childless (ROU)
2. Attract adults to enter/stay in the labor force
1. Postpone retirement age: Bismarck pension taxes the young to pay the old (DE vs. FR)
2. Female labor force: grant women the right to open a bank account (EGY low vs. TH has >70%)
3. Attract migrants: migrants take up 10-15% population of most industrial democracies (CAN vs. JP low)
3. Robots: KOR has the highest density of robots > JP > DE
2% population pace to sustain an economic boom
except: CHL and IRE had reform and new investment to increase productivity and compensate for weak population growth
Fallacy of demographic dividend = population growth leads to rapid economic growth, only if the economic condition can attract investment and generate jobs
except: AFR, CHN and IND suffer from famines, high unemployment and civil strife
II) Circle of Life
Rule of politics: timing and direction of change
Strong political leader
* a combination of public charisma and private earnestness
* Technocrat leader should stage members of an authoritarian regime (CHN)
* Autocrat can suppress special interest lobbies, steer population’s savings toward growth industries, ignore population demands and hang on to power indefinitely
III) Billionaires
Inequality starts to threaten growth when people are suspicious of the way wealth is being created. The rich has a lower marginal propensity to consume as income rise. Total billionaire wealth is average 10% GDP. If their wealth >5pp, inequality is brewing.
Redistribution wealth needs growth, otherwise it destroys trust in local economy. (ZAF redistribute property from old white elite to the black majority who did not know how to farm)
Commodities = Mining natural resources are inelastic goods
Akubyodo = bad egalitarianism rewards seniority vs. merit and risk-taking
IV) Government
State capitalism has overindulged bureaucracy, should meddle less.
1. Change level of govt spending as a share of GDP
1. FR spends 57% GDP annually > BRA 41% > ARG > POL > SAU > RUS > TUR
2. MEX collects 14% GDP for tax and spends 0.6% on military
3. NIG spends 12% GDP and 0.5% on military > PK and EGY
2. Spending goes to productive ends
1. Average state banks control 32% of all banking assets
2. 75% IND is risky because govt does not adapt quick enough to market conditions)
3. Keynes - govt stimulus/emergency spending is to ease recession, not generate perpetual growth
4. Stimulus is motivated to protect people from the free market; reform is motivated to free people to compete in the market
5. Energy subsidies encourage waste and smuggling, discourage investment, cause shortage / fuel inflation (CAN). Every $ spends on free food/energy is a $ can’t spend in building infrastructure.
3. Misuse state companies and banks to achieve political goals
1. Public sector should be 20% all employment
2. 1980 CHN public sector hired 70% employment vs. 20% in 2010, cut 73M jobs
3. East Asia has <10%, KOR has <5%; vs. NOR, SAU, RUS has >33%
4. Allow private companies to grow
1. SWE lower corporate tax to stimulate growth, keep personal tax to fund social services
2. Good/true privatisation = sale of a majority stake to push for real change (ROU, POL copper mining and banking vs. IND airline and telecom)
3. Structural reform = efficient legal regime govern the purchase of land to build factories, lending capital to finance construction, and hiring/firing workers to staff them
Diaploki = collusive ties between the old ruling parties and prominent energy and construction business families in Greece
V) Geography
Dubai port city attracts job seeks, population grows 10% annually, open to all comers. It is the commercial hub for the world’s 60% oil reserves region. It avoids the internal battle between Iran’s Shiite and Sunni monarchy of the Gulf.
Countries trade <50% GDP might because they have large domestic market (CHN) or commodity-driven economies (NIG)
Flying geese model of development: led by JPN > KOR, TWN > THA, IDN > CHN
Landlocked countries need infrastructure to accelerate commerce. Bad roads lower productivity in Africa by 40%
Pacific Alliance promotes trade, creates regional stock exchange, privatize pension, remove visa requirements.
The population of the largest city outnumbers the next city by 3:1 (CHL 7:1, Peru 12:1 vs. MEX 2nd tier cities are growing faster than the capital due to manufacturing centers)
FRA reduced from 22 regions to 13, cut bureaucracy and consolidate power.
US only rich country with massive internal migration
To make up for geography, Asia used cheap labors to make up for shipping costs
VI) Factory First
Average country invests 25% GDP. Factory will promote investment in infrastructure.
IND fail to jump from middle class industrial to advanced factories like solar power appliances and military weapons, need high skilled workers.
DE has cheap high skilled workers, export 46% GDP
Startup defines success = how much IPO $, innovative = # patents
Dutch disease / Curse of commodity = elites secure profit rather invest > leadership becomes reliant on revenue and less inclined to listen to voters > quiet voters with subsidies > foreigners pump money in > currency appreciate > hurt local factory export (NIG vs. NOR, CAN)
<20% GDP is weak investment (RUS, BRA, ZAF)
Invest in manufacturing tech and infrastructure, not property (MY Cyberjaya, CHN ghost town)
VII) Inflation
Young economy with little supply network is vulnerable. High inflation > raise interest rate > expensive for business to expand > decrease inflation and growth.
Average inflation 6% for emerging country, 2% for developed country, >9% is hyperinflation. NZ central bank set fight inflation as 1st priority. US Fed target stable prices and max employment.
TUR high interest rate > company raise price to pay back interest on existing loan > lira depreciates. TUR had to sell or state companies
Inflation caused by (1) globalization hurts local wages; (2) foreign real estate buyers destabilize asset prices. Home price generally rise by 2% a year, if exceed annual economy rate, there’s a bubble. It happens slower than stock bubble but more volatile. Modern booms in global finance since 1870 are led by sharp rise in mortgage lending to households.
Deflation delays purchases > demand stagnant > slow growth > central bank has to pump $ to persuade public price will increase
Deflation caused by technological or institutional innovations > lower cost of producing and distributing goods > lower price. Fed should keep 0 interest rate to encourage spending.
IX) Currency
Overprice > ppl move $ out > hurt domestic growth.
Underprice > attract export, tourist > boost growth.
REER adjust currency for inflation, eg producer price, labor cost, rate of increase in per capita income.
2/3 of the world’s $11 trillion foreign exchange reserves are held in USD.
Current account = how much a nation produce compare to consume; eg trade balance = money from exports - imports, foreign income = remittance, foreign aid, interest payment to foreigners
When current account deficit rises for 4 years and hits 5% GDP > business investor lose confidence > pull out money > undermines currency > import less > current account lowers > economy slow down
So if current account is going up, increase interest rate to restrain consumer spending and prevent ppl from living beyond its mean.
Strong baht encourage spending (esp buying from CHN who devalue RMB to boost exports) > widen current account deficit to 7% > JPN stop investing >
Asian financial crisis > Asian currency depreciates and some abandon their currency > US strong economy imports more > recover
Currency contagion = investor pull $ out of one troubled country and trigger the same region, need strong savings to overcome
After 2008 crisis, US banks are required to hold more capital to weather next global crisis, so fewer loans oversea. Open trade is good, open to global capital flow is unclear. Rising global capital flow > country don’t need to save heavily > use other country’s savings to invest. Many countries spend more than they save, increasing foreign debt.
Capital flight begins with locals. CHN is the top exporter of illicit capital averaging $125B per year
Compare to Asia, EU couldn’t abandon their currency > cut wage and bloated public payroll > generate export income, reduce foreign capital > restore export competitiveness > most recover except ITA, GRE. GRE doesn’t export much and profits from tourism. POL on the other hand recovers because it had cut wages in preparation for joining EU + low inflation, and capitalize on their cheap zloty but their image was tarnished by its close proximity to the troubled EU
Cheap currency is good except for 1) country highly dependent on import basic staples > increase inflation (TUR), 2) simple goods that swing with the currency. JPN, SWZ, DE make expensive branded goods > export remain steady. QE might not have the same impact as before.
Ideal: market determined cheap currency in a stable financial environment underpinned by low inflationary expectations
X) Debt
Size matters, pace matters more. Eg subprime lenders. Stock market bubble sign: 1) price rising too fast 2) high levels of borrowing 3) overtrading by retail investors 4) exorbitant valuations
CHN pump loans into state companies to boost growth / credit binge > property boom > collateralized lending = as long as borrowers can keep getting new loans a to cover old loans. In 2013 CHN cap loans for new homes, restrain purchase of 2nd home, and control real estate price explosion.
Good news is CHN has strong savings of 50% GDP. Global average is 22%, TUR savings is the least at 15%. To balance its debt:GDP, CHN needs to slow growth by cut back investment, revive GDP like JPN bailed out troubled borrowers, or both. Recession is a necessary cleansing step.
Banks account for 80% lending (US is 50%). After 2008, US bounced back faster because homeowners can easily default their mortgage, clearing bad debt. IDN also merged or closed banks from 240 to 164.
Recession normally leads to 4-5 years of debtphobia. MEX suffers 20 years vs. KOR has Phoenix recovery = economy revive without credit growth, but how?!
Healthy credit growth + low inflation = real financial stability
Financial deepening = growing role for credit in developing economy
XI) Hype
Global media’s love is a bad sign for any economy, indifference is a good one.
Latin America lost decade due to commodity accounts for >half the exports.
Middle income trap = difficult to sustain growth in middle income level and need to develop more advanced industries
VEN retracts from rich to middle class, war torn countries fell from middle to low income class
Mainstream opinion extrapolates recent trends and grows more enamored of a country the longer the growth runs.
XII) Winner and Loser
<$5k should have 2-5% growth, $5k-$15k should have 3-4% growth, $15k-$25k should have 2-3%, >$25k should have 1.5%
US overall is doing well with TPP, technology, currency is not cheap, oil price collapse but main hurdle is the rise of angry populism.
Latin America suffers from inflation and needs strong leaders, not hyped by media yet, cheap currency but the wealthy are not withdrawing money. MEX piggy back on the US. Fav quote: Dilma Rousseff is the only world leader whose approval rating is lower than the inflation rate.
South Asia has geographic sweet spot, growing at 6%, 30% investment, big exporter, but has authoritarian government. On average, autocracy produces the same long runs of strong growth as democracy, but less steady and can experience volatile swings.
Southeast Asia has 6% high growth, stable inflation <1%, good investment with no credit manic, manufacturing powerhouse but has corrupt politicians.
East Asia: CHN has high investment, devaluation is not effective, capital flight, commodity exporters, and aging population. JPN focus on tourism from 8M to 20M ppl. AUS didn’t fair well with commodity price boom and expensive currency.
EU: DE is good, UK is average but FRA is not. DE took in millions of refugees to rejuvenate its aging workforce. UK is driven by services, foreigners pump money, expensive properties, but still attractive to economics migrants. FRA struggled to integrate the Muslims. East Europe capitalized on their proximity to DE. RUS has stagnant leader, didn’t diversify from oil economy, capital flight, no innovative growth. but cheap currency.
Middle East: TUR is commodity heavy, credit binge, weak exporter but good geography, cheap currency and work force growth. Gulf pegs their currency to USD and fall in oil price didn’t bring down their currency or help keep their budgets in balance.
Africa: high inflation, commodity dependent, corruption. Cheap currency but difficult to pay back foreign debts. Kenya gained from oil falling price, exporting more but investment is up.
The book is to nudge our discussion of the world economy away from the indeterminate future to a more practical time horizon of 5-10 years. What will happen if the normal pattern holds and cycles continue to turn every 5 years or so?
Growth = sum of spending by government (consumer + investment), industry productions, hours that people work + output/hr or productivity + working robot populations
Productivity growth = sum of hard-to-quantify improvements in the skill of workers + # and power of tools + how well workers are employing those tools
I) People / Talent pool
Depopulation > shrinking economic growth > less pressure on production
Neo-Malthusians = who fear population growth will outstrip growth in food supply
Neo-Luddites = who fear that the rise of robots will make human workers obsolete
To predict a nation’s economist prospect, look at
1. Projected growth of the working age population in 5 years
2. What nations are doing to counteract slower population growth
1. Encourage women to have more babies
1. Baby Bonus: attract poor family, and their children added greatly to welfare expenses (DK, AU)
2. Womenomics: improve childcare and parental leave, cut marriage tax on second earner (JP)
3. Impose tax on 25+yo adult who is childless (ROU)
2. Attract adults to enter/stay in the labor force
1. Postpone retirement age: Bismarck pension taxes the young to pay the old (DE vs. FR)
2. Female labor force: grant women the right to open a bank account (EGY low vs. TH has >70%)
3. Attract migrants: migrants take up 10-15% population of most industrial democracies (CAN vs. JP low)
3. Robots: KOR has the highest density of robots > JP > DE
2% population pace to sustain an economic boom
except: CHL and IRE had reform and new investment to increase productivity and compensate for weak population growth
Fallacy of demographic dividend = population growth leads to rapid economic growth, only if the economic condition can attract investment and generate jobs
except: AFR, CHN and IND suffer from famines, high unemployment and civil strife
II) Circle of Life
Rule of politics: timing and direction of change
Strong political leader
* a combination of public charisma and private earnestness
* Technocrat leader should stage members of an authoritarian regime (CHN)
* Autocrat can suppress special interest lobbies, steer population’s savings toward growth industries, ignore population demands and hang on to power indefinitely
III) Billionaires
Inequality starts to threaten growth when people are suspicious of the way wealth is being created. The rich has a lower marginal propensity to consume as income rise. Total billionaire wealth is average 10% GDP. If their wealth >5pp, inequality is brewing.
Redistribution wealth needs growth, otherwise it destroys trust in local economy. (ZAF redistribute property from old white elite to the black majority who did not know how to farm)
Commodities = Mining natural resources are inelastic goods
Akubyodo = bad egalitarianism rewards seniority vs. merit and risk-taking
IV) Government
State capitalism has overindulged bureaucracy, should meddle less.
1. Change level of govt spending as a share of GDP
1. FR spends 57% GDP annually > BRA 41% > ARG > POL > SAU > RUS > TUR
2. MEX collects 14% GDP for tax and spends 0.6% on military
3. NIG spends 12% GDP and 0.5% on military > PK and EGY
2. Spending goes to productive ends
1. Average state banks control 32% of all banking assets
2. 75% IND is risky because govt does not adapt quick enough to market conditions)
3. Keynes - govt stimulus/emergency spending is to ease recession, not generate perpetual growth
4. Stimulus is motivated to protect people from the free market; reform is motivated to free people to compete in the market
5. Energy subsidies encourage waste and smuggling, discourage investment, cause shortage / fuel inflation (CAN). Every $ spends on free food/energy is a $ can’t spend in building infrastructure.
3. Misuse state companies and banks to achieve political goals
1. Public sector should be 20% all employment
2. 1980 CHN public sector hired 70% employment vs. 20% in 2010, cut 73M jobs
3. East Asia has <10%, KOR has <5%; vs. NOR, SAU, RUS has >33%
4. Allow private companies to grow
1. SWE lower corporate tax to stimulate growth, keep personal tax to fund social services
2. Good/true privatisation = sale of a majority stake to push for real change (ROU, POL copper mining and banking vs. IND airline and telecom)
3. Structural reform = efficient legal regime govern the purchase of land to build factories, lending capital to finance construction, and hiring/firing workers to staff them
Diaploki = collusive ties between the old ruling parties and prominent energy and construction business families in Greece
V) Geography
Dubai port city attracts job seeks, population grows 10% annually, open to all comers. It is the commercial hub for the world’s 60% oil reserves region. It avoids the internal battle between Iran’s Shiite and Sunni monarchy of the Gulf.
Countries trade <50% GDP might because they have large domestic market (CHN) or commodity-driven economies (NIG)
Flying geese model of development: led by JPN > KOR, TWN > THA, IDN > CHN
Landlocked countries need infrastructure to accelerate commerce. Bad roads lower productivity in Africa by 40%
Pacific Alliance promotes trade, creates regional stock exchange, privatize pension, remove visa requirements.
The population of the largest city outnumbers the next city by 3:1 (CHL 7:1, Peru 12:1 vs. MEX 2nd tier cities are growing faster than the capital due to manufacturing centers)
FRA reduced from 22 regions to 13, cut bureaucracy and consolidate power.
US only rich country with massive internal migration
To make up for geography, Asia used cheap labors to make up for shipping costs
VI) Factory First
Average country invests 25% GDP. Factory will promote investment in infrastructure.
IND fail to jump from middle class industrial to advanced factories like solar power appliances and military weapons, need high skilled workers.
DE has cheap high skilled workers, export 46% GDP
Startup defines success = how much IPO $, innovative = # patents
Dutch disease / Curse of commodity = elites secure profit rather invest > leadership becomes reliant on revenue and less inclined to listen to voters > quiet voters with subsidies > foreigners pump money in > currency appreciate > hurt local factory export (NIG vs. NOR, CAN)
<20% GDP is weak investment (RUS, BRA, ZAF)
Invest in manufacturing tech and infrastructure, not property (MY Cyberjaya, CHN ghost town)
VII) Inflation
Young economy with little supply network is vulnerable. High inflation > raise interest rate > expensive for business to expand > decrease inflation and growth.
Average inflation 6% for emerging country, 2% for developed country, >9% is hyperinflation. NZ central bank set fight inflation as 1st priority. US Fed target stable prices and max employment.
TUR high interest rate > company raise price to pay back interest on existing loan > lira depreciates. TUR had to sell or state companies
Inflation caused by (1) globalization hurts local wages; (2) foreign real estate buyers destabilize asset prices. Home price generally rise by 2% a year, if exceed annual economy rate, there’s a bubble. It happens slower than stock bubble but more volatile. Modern booms in global finance since 1870 are led by sharp rise in mortgage lending to households.
Deflation delays purchases > demand stagnant > slow growth > central bank has to pump $ to persuade public price will increase
Deflation caused by technological or institutional innovations > lower cost of producing and distributing goods > lower price. Fed should keep 0 interest rate to encourage spending.
IX) Currency
Overprice > ppl move $ out > hurt domestic growth.
Underprice > attract export, tourist > boost growth.
REER adjust currency for inflation, eg producer price, labor cost, rate of increase in per capita income.
2/3 of the world’s $11 trillion foreign exchange reserves are held in USD.
Current account = how much a nation produce compare to consume; eg trade balance = money from exports - imports, foreign income = remittance, foreign aid, interest payment to foreigners
When current account deficit rises for 4 years and hits 5% GDP > business investor lose confidence > pull out money > undermines currency > import less > current account lowers > economy slow down
So if current account is going up, increase interest rate to restrain consumer spending and prevent ppl from living beyond its mean.
Strong baht encourage spending (esp buying from CHN who devalue RMB to boost exports) > widen current account deficit to 7% > JPN stop investing >
Asian financial crisis > Asian currency depreciates and some abandon their currency > US strong economy imports more > recover
Currency contagion = investor pull $ out of one troubled country and trigger the same region, need strong savings to overcome
After 2008 crisis, US banks are required to hold more capital to weather next global crisis, so fewer loans oversea. Open trade is good, open to global capital flow is unclear. Rising global capital flow > country don’t need to save heavily > use other country’s savings to invest. Many countries spend more than they save, increasing foreign debt.
Capital flight begins with locals. CHN is the top exporter of illicit capital averaging $125B per year
Compare to Asia, EU couldn’t abandon their currency > cut wage and bloated public payroll > generate export income, reduce foreign capital > restore export competitiveness > most recover except ITA, GRE. GRE doesn’t export much and profits from tourism. POL on the other hand recovers because it had cut wages in preparation for joining EU + low inflation, and capitalize on their cheap zloty but their image was tarnished by its close proximity to the troubled EU
Cheap currency is good except for 1) country highly dependent on import basic staples > increase inflation (TUR), 2) simple goods that swing with the currency. JPN, SWZ, DE make expensive branded goods > export remain steady. QE might not have the same impact as before.
Ideal: market determined cheap currency in a stable financial environment underpinned by low inflationary expectations
X) Debt
Size matters, pace matters more. Eg subprime lenders. Stock market bubble sign: 1) price rising too fast 2) high levels of borrowing 3) overtrading by retail investors 4) exorbitant valuations
CHN pump loans into state companies to boost growth / credit binge > property boom > collateralized lending = as long as borrowers can keep getting new loans a to cover old loans. In 2013 CHN cap loans for new homes, restrain purchase of 2nd home, and control real estate price explosion.
Good news is CHN has strong savings of 50% GDP. Global average is 22%, TUR savings is the least at 15%. To balance its debt:GDP, CHN needs to slow growth by cut back investment, revive GDP like JPN bailed out troubled borrowers, or both. Recession is a necessary cleansing step.
Banks account for 80% lending (US is 50%). After 2008, US bounced back faster because homeowners can easily default their mortgage, clearing bad debt. IDN also merged or closed banks from 240 to 164.
Recession normally leads to 4-5 years of debtphobia. MEX suffers 20 years vs. KOR has Phoenix recovery = economy revive without credit growth, but how?!
Healthy credit growth + low inflation = real financial stability
Financial deepening = growing role for credit in developing economy
XI) Hype
Global media’s love is a bad sign for any economy, indifference is a good one.
Latin America lost decade due to commodity accounts for >half the exports.
Middle income trap = difficult to sustain growth in middle income level and need to develop more advanced industries
VEN retracts from rich to middle class, war torn countries fell from middle to low income class
Mainstream opinion extrapolates recent trends and grows more enamored of a country the longer the growth runs.
XII) Winner and Loser
<$5k should have 2-5% growth, $5k-$15k should have 3-4% growth, $15k-$25k should have 2-3%, >$25k should have 1.5%
US overall is doing well with TPP, technology, currency is not cheap, oil price collapse but main hurdle is the rise of angry populism.
Latin America suffers from inflation and needs strong leaders, not hyped by media yet, cheap currency but the wealthy are not withdrawing money. MEX piggy back on the US. Fav quote: Dilma Rousseff is the only world leader whose approval rating is lower than the inflation rate.
South Asia has geographic sweet spot, growing at 6%, 30% investment, big exporter, but has authoritarian government. On average, autocracy produces the same long runs of strong growth as democracy, but less steady and can experience volatile swings.
Southeast Asia has 6% high growth, stable inflation <1%, good investment with no credit manic, manufacturing powerhouse but has corrupt politicians.
East Asia: CHN has high investment, devaluation is not effective, capital flight, commodity exporters, and aging population. JPN focus on tourism from 8M to 20M ppl. AUS didn’t fair well with commodity price boom and expensive currency.
EU: DE is good, UK is average but FRA is not. DE took in millions of refugees to rejuvenate its aging workforce. UK is driven by services, foreigners pump money, expensive properties, but still attractive to economics migrants. FRA struggled to integrate the Muslims. East Europe capitalized on their proximity to DE. RUS has stagnant leader, didn’t diversify from oil economy, capital flight, no innovative growth. but cheap currency.
Middle East: TUR is commodity heavy, credit binge, weak exporter but good geography, cheap currency and work force growth. Gulf pegs their currency to USD and fall in oil price didn’t bring down their currency or help keep their budgets in balance.
Africa: high inflation, commodity dependent, corruption. Cheap currency but difficult to pay back foreign debts. Kenya gained from oil falling price, exporting more but investment is up.
This entire review has been hidden because of spoilers.
October 5, 2017
Two years is a long time in the present milieu. The hopes and fears expressed in this book have aged and become outdated more meaningfully than last year's iPhone. Hopes around TPP coming into existence, for instance. And the word Brexit isn't mentioned once.
The author belongs to the right side of the economic spectrum and cites reforms under Pinochet's Chile and the Chicago boys as worthy of emulation. Pinochet's Chile and the Chicago boys episode is coincidentally where Naomi Klein's Shock Doctrine takes off from. And you can bet, she has nothing good to say about that.
The book isn't a page-turner and the author's intention is for you to pay attention to the metrics he's using to judge countries by. Those sound fair enough and static enough.
I wasn't aware the communist regime of Romania imposed heavy taxes on adults who remained childless after the age of 25!
The author belongs to the right side of the economic spectrum and cites reforms under Pinochet's Chile and the Chicago boys as worthy of emulation. Pinochet's Chile and the Chicago boys episode is coincidentally where Naomi Klein's Shock Doctrine takes off from. And you can bet, she has nothing good to say about that.
The book isn't a page-turner and the author's intention is for you to pay attention to the metrics he's using to judge countries by. Those sound fair enough and static enough.
I wasn't aware the communist regime of Romania imposed heavy taxes on adults who remained childless after the age of 25!
February 8, 2020
The book does a great job in bringing together the actions of politicians, geography, population, media and other stakeholders and their impact in deciding whether a country' GDP will go up or down. It tells how each factor can be a sign of what's going on in the macroeconomic world and what inferences can be drawn out from them. It focuses on investments, manufacturing, exports etc and how each slice impacts the GDP pie.
A must read in my opinion. Ruchir Sharma uses data in great depth and beauty to come to all his conclusions and his rules are backed by sufficient proof.
A must read in my opinion. Ruchir Sharma uses data in great depth and beauty to come to all his conclusions and his rules are backed by sufficient proof.
June 8, 2017
Covered topics comprehendable by a reader with reasonable interest in modern economies.
I felt the book went all over the place, a bit.
Would've preferred a few tables or graphs to help grasp certain comparisons easily.
Key insights scattered throughout the book, that I really look forward to a Cliff's Notes version.
I felt the book went all over the place, a bit.
Would've preferred a few tables or graphs to help grasp certain comparisons easily.
Key insights scattered throughout the book, that I really look forward to a Cliff's Notes version.
September 7, 2017
I really enjoyed this book. Sharma's approach, in broad strokes, is simple. Use criteria and data to inform decisions. Don't be blinded by single markers. If you're investing, seek countries that are extreme outliers in metrics to have a higher accuracy in guessing based on that metric.
The book's a fun read for anyone interested in political economy. It's a thoughtful balance between academic political science and vocational guidebook. In full disclosure, the book will read at times like a textbook and I've heard from others that this is a turnoff.
The book's a fun read for anyone interested in political economy. It's a thoughtful balance between academic political science and vocational guidebook. In full disclosure, the book will read at times like a textbook and I've heard from others that this is a turnoff.
May 7, 2017
Not a light reading, but at the same time a great tutorial on how the world economics works, especially for those lacking basic knowledge on economics like myself
April 21, 2018
I assumed that would be a breezy read, more fluff than real research and a lot of trends and anecdotes put together. It’s certainly a more serious work, with lots of interesting and original thoughts. The title is misleading – it’s not about the rise and fall of nations but about their economies and while the distinction may not be too relevant, the focus of the book is really on which economies will do well and why and therefore, where I assume money / profit potential is likely to be sought. It is a decent read, while fixed in the post crisis world, has enough in it to remain relevant.
July 16, 2020
Very insightful, though it's hard to test whether the framework actually does well to predict future prosperity or fall of nations.
January 15, 2022
Predicting economic future is perilous. Strangely Ruchir Sharma gets it more right than wrong. That gives him the authority that most other macro-economists academic or otherwise, lack. In this book he distills his ten broad rules to predict how countries will perform in the next five years or so. He wrote the book in 2016, so it's interesting to review in 2021 if he got his predictions right (he mostly did). Fascinating!
November 24, 2025
Relevant rules even 10 years later
January 15, 2022
I became a fan of Ruchir Sharma's lucid explanation of macro-economics from "Breakout Nations". Rise and Fall of Nations is the second book in the series where the book attempts to bundle thousands of factors that can shape a country's economic path into ten clear rules and in the process offers nuanced understanding of how to spot a great economy poised for growth. Overall, a great read for amateur economists/investors.
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