Book review

10 Rule of successful nation

About the Author
Ruchir Sharma is the author of The 10 Rules of Successful Nations (2020). He is Chief
Global Strategist and head of Emerging Markets Equity Team at Morgan Stanley
Investment Management.
Sharma is a young man who manages $20 billion of assets, and already has two other
books out: Breakout Nations: In Pursuit of the next Economics Miracles (2012) and The
Rise and Fall of Nations: Forces of Change in a Post-Crisis World (2016)
Interviewed by Fareed Zakaria this past week, Sharma announced that when the
COVID Crisis is contained, we, the United States, will not be among the top ten
successful nations on his list or even anywhere near it.

About the Book

The premise of the book is the following: Sharma establishes 10 rules about the
economics of a country based on his investment experience. These 10 rules will tell you
in which nations economic growth is likely to rise or fall in the near future. Sharma
specifically says that you cannot forecast 30 years into the future; which makes sense.
“These rules emerged from my twenty-five years on the road, trying to understand the
forces of change both in theory and in the real world. The reason I developed rules at all
was to focus my eyes and those of my team on what matters. When we visit a country,
we gather impressions, storylines, facts, and data. While insight is imbedded in all
observations, we have to know which ones have a reliable history of telling us
something about a nation’s future.”
I don’t want to take all the content away, but here are some of the rules:
People Matter
As Time magazine called it:“Economic growth is basically demographics plus
productivity”. Falling birth rates will mean falling nations because there is no economic
growth.
Good Billionaires, Bad Billionaires
Good billionaires are those who create jobs and products, thus supporting future
economic growth examples include the founders of Alibaba, Baidu and Tencent in
China and the Silicon Valley moguls in the US. By contrast, bad billionaires are those
who have made their fortunes through political connections and corruption, obtaining
licences to natural resources or real estate.
The Geographic Sweet Spot
I’ve enjoyed this chapter. Sharma’s theory is that there mustn’t be too big a gap
between the biggest and second biggest city in a country or else capital and other
resources will be captured in a bubble and the rest of the country will be left behind.
Factories First
Manufacturing is (still) where it’s at. If you have manufacturing, you have economic
growth. Or the other way round, but basically you’ll be good with manufacturing.
The Price of Onions
Inflation shown in the price of onions is the indicator to watch.
Cheap is Good
A cheap currency is good for exports, which is good for you guessed it economic
growth. If a country “feels” cheap, that’s good.
The Kiss of Debt
Don’t have too much of it, naturally, so that you can keep watch over it.
The Good, the Average, and the Ugly
Sharma uses the last chapter to fly across the continents dipping into and out of a
couple of countries giving us his assessment of the Good, the Average and the Ugly
among nations; and shares his underlying principle: nothing is permanent. There’s hope
for the Ugly then.

Conclusion
First and foremost, I’m not sure about the exact goal for the book because whilst it isn’t
for the private investor who dabbels in the stock market, it is not an economic textbook
either. The Rise and Fall of Nations sits somewhere in between an interesting read for
staff at the Ministry of Economics and a conversation starter among geeks; it is not a
beach read and whilst it is interesting, I’m not sure of any practical application I can take
away.