The new wave of Emerging Markets- 1.0


English: Map of Emerging Markets

English: Map of Emerging Markets (Photo credit: Wikipedia)

On a friend’s suggestion, I have started reading this book the recent economic bestseller ‘Breakout Nations’ by Ruchir Sharma, who is the head of Emerging Market Equities and Global Macro at Morgan Stanley. It is one of the must reads for any who is interested in knowing how the emerging market economies run and insights on different sociological, demographical, political and industrial parameters required to judge the nation’s growth curve, or like he mentions a nation which can standout in the future of economic parade, the growth survivor Breakout Nation.

As we know, BRICS are more or less the most overhyped term used in the Emerging Market perspectives for businesses and nations. With the dominant force of the US in the world economy diminishing after the 2008 financial crises, there is an optimistic wave among investors and companies to reach out or expand or invest into these economies of the future who are turning out to be major players in the world market.

China: With China fueling over a double-digit growth over few years and dependent on exports, it runs on a constant urge to grow and become the world’s next superpower. Though, its communist political party which has been in power since a long time and has carried a legacy of their ‘its glorious to be rich’ leader Deng Xioping, it still has to keep up with the upcoming investment trends and demographical misfits which they are likely to face after 2014 read [the number of young people joining the workforce is going decrease over the next decade] and the businesses have overshot their manufacturing capacities in terms of labor and capital. The businesses in China run over exports and cheap labor, that might turn against them in the coming decade. With the center Beijing becoming a political powerhouse, the real estate market is on a high and has become unaffordable to the middle class chinese family. The first condition of girls in China for their marriage partners is that the latter should own a house. Though the per capita income is on rise, almost around $4000 and inflation at around 5.5 %, the future of the Chinese economy is not going to be based on the type of government in the center but on the kind of leadership that takes China forward. Owing to the popularity of chinese proverbs, one which their leader in Communist Party of China, Deng Xioping quoted ‘No matter if it is a white cat or a black cat; as long as it can catch mice, it is a good cat’. They have been good cats in the last three decades, surviving as a cat is going to be important for them in the coming overturns and times.

India: As India’s great hope trick continues to pervade over the minds in the west, it is anticipated to grow in building conscience over its complexity of the Coalition government, State politics, diverse Stock markets (0ver 5000 listed companies in all types of sectors from Energy to Automobile to Pharmacy) and Sadhus of the himalayas. Coming from the crony past of License Raj, a red tape-driven bureaucracy in which licenses were given to only who could manufacture goods but also determining at how much and at what price, to the liberal economy from 1991, it has come a long way in reforms and policies mostly in favor of the nation’s capitalists. As Ruchir Sharma describes India as a high context society that believes deeply in tradition, history, favoring the in-group and hence more vulnerable to corruption. The country has deepened its roots in the world economy and has got a seat in the center-stage of developmental economics. Though the per capita income is around $1400, owing largely to its 1.2 Billion population, the country has witnessed a growth boom between 2003 and 2007, nearly 9% per year. With a large savings environment inherited from its ancestors and a large workforce, the domestic consumption in India is growing every year on year basis. Though, environment of doing business in India is largely dependent on your political connections, there is a lot of divestment from the large companies now ‘outward facing’ who are in-turn expanding their businesses to other emerging markets. Investment by Indian businesses has declined from over 17% of GDP in 2008 to 13% now and overseas operations now accounts to more than 10% of overall corporate profits compared with 2% five years ago. This leads to a spike in inflation. With inflation is around 7-7.5 % and the growth rate in GDP is around 5%, the Indian crony capitalism is at its peak leading to various scams in the past 5 years. With more number of Entrepreneurs and young people joining the workforce, the reforms of the government will help small businesses measure its true value. The Congress led UPA government has disappointed in its second term, but the bucks are on the mighty of the west in the upcoming 2014 elections. Democracy can always overturn and is sociologically unpredictable. As E.M Forster remarked about India, But nothing in India is identifiable, the mere asking of the question causes it to disappear or to merge in something else. If we are able to identify our core roots, we can be an economically sound nation in decades to come, if not a superpower. Definitely, a chance to become a breakout nation.

Will write about Brazil, Russia and other emerging markets in the coming posts.

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India-Superpower in 2048?


Recently, came across this enthralling TED video based on statistics. Do we envision a hope here?

I am optimistic if there is good leadership at the center of Indian Politics.

Gun Control, Really!


Saddened by the news of death of children in the US, there is an instinct in me which can relate the unfortunate event of the west with the old issues in the east. The twitter is trending with Gun Control as a measure to control the misuse of arms by few socio-paths existing in the world. But, is this issue really an obstructive one? And how is it related to the east? Well, several nations need some effective regulations in Gun politics as the measure to eliminate this misuse. There are several mishappenings around the world over these issues and how terrorism is reaping the fruits. Human mind is that complex web that can work the worst things out in the best possible way. Will this destructive human mind ever be cured? I am sure there are issues that are known and by awareness can be cured.

While there are so called entrepreneurs who have businesses in selling and exchanging these weapons to private license holders, there are also numerous ways that these dealings take a different approach. One of that is the dealing of weapons under government scrutinizing body. Why can’t it be possible that these private license holders not just take a permit from the government but also from an investigative body that carries out the due diligence over these licensed permit gun holders and keep a track on them. Moreover, the influx of these weapons should be through a structured approach even if they imported from different countries. There must be certain rules and regulations passed to protect this. Many more parameters can be included in the approach and make it more effective over different Arms Act or policies brooding over it and not preventing it. A good government can always solve this problem of Gun Politics. And this should not do anything with the defense sector of the nation. That is a nation’s right over security and control. But, the small businesses over weapon trading and manufacturing should be solved with tight protection and should have a justifiable reason to carry it.

This is not just a problem of one nation but many. Simple governance methodologies can solve this problem and it won’t give space to one in becoming a weaponizing socio-path and break the law. The law can change it. Strict laws can control the network of terrorism which is a huge act and castigate them. Civilized can be controlled, freaks can be prevented in becoming mass murderers and a man can be saved in becoming someone treacherous over religion.

Check this link out to know more about Gun Control: http://www.justfacts.com/guncontrol.asp

 

The White Leopard (Not Snow)


So this has been a long break from writing and I suddenly feel an urge of starting it all over again. But a lot has happened all this while in countries, businesses and people. There are elections coming in the US, the internal conflicts in India has been rising over corruptions and scandals, the Chinese businesses are leading their way in producing cheaper consumer products, the world is turning to renewable energies, Apple is making amazing products, Samsung is jealous and climate change, we realize, is not a hoax. But, in between all of these the best thing that I did my dream internship at Indian Institute of Management, Ahmedabad and then went to Berlin to visit a friend and then Falera, Switzerland (Breathtaking village between the swiss alps and 2 hours ride from Zurich) for an International Summer University in Energy. The urge to travel from a long time finally got fulfilled, and trust me friends travelling alone is the best thing you can ever do to yourself.

Soon after my stint from the Summer program, I am finally back to my place and nothing is as beautiful as your home and the of course food with spices you get in India (which was badly missing in Europe). Just when I was sorting out my library (with sole intention to dust it), I got my hands on a book called The White Tiger by Aravind Adiga, which won the booker prize in 2008. I completed that book in one go and I liked the way the author described the rave India with a lot of intended pun addressing the story to the Chinese Premier Wen Jiabao. This book is a story of a poor young boy from Rural India on how he gets corrupt and transform himself in the process of becoming an Entrepreneur. I realized that’s true with most of the people in India who actually don’t earn their Cheeseburger in a day, and there are millions of them. From the rich tradition to ravanous politics, this is the story of India. The India of all small things, we’ll talk about god later.

We talk our Indian Premier, who is known as the Silent man of India, the prime minister. He recently introduced FDI in retail, hiked diesel prices etc to give a boost to the Indian Economy despite of failed attempts to stop corruption in his own team. There were protests meanwhile from various personalities and all of them are tired and quiet now. The opposing government tries to pinpoint the government on policy changes and various other issues in the states or elsewhere. This is how the coalition government works and in democracy, there will always been someone losing in the whole process, that is the Common man. Just as described in the book The White Tiger, the boy who understands the system, gets into it and become successful from misdoings ( there are a lot of ‘success stories’ like that) and then become the Entrepreneur of principles for the people of his own company. And he was called the White Tiger. We need someone like that to run our country. The one who adapts to the system, gets into it and has one vision in his/her mind, to grow urban India as well the rural India and nor his team or him has accounts in Swiss banks. Then, he will be known as the White Leopard among the Black bulls. I believe there is some white leopard in the making. The Leader of leaders.

Ah, I love Swiss chocolates!

Chanakya and Classical Economics.


Twenty three hundred years ago, there was a learned Acharya (Scholar) named Chanak in the Kingdom of Magadha of the ancient India, formerly called BHARAT which aboded as a cultural heritage and a rich nation. Bharat was divided into kingdoms like Gandhar, Kashi, Avanti, Assaka, Kalinga, Magadha, Kuru, Mallayrajya and so on.

There was King named Dhanananda who was ruling Magadha, who was adamant, wine-loathed and women laden man. He had a cabinet of ministers, which was headed by a wise prime minister named Shaktar. He was the King’s advisor and a learned man. One day in the assembly, he announced to the king, that women in their kingdom are raped and murdered, and no one seem to care about it. The king got furious, by Shaktar’s comment and sent him to Nanda’s hell, which was a torture cell in the underground reigns of the kingdom. Acharya Chanak, was Shaktar’s close friend, was found propagating to the people of Magadha about the king’s misconducts and deeds. Soon as King Dhanananda got acquainted of it, he ordered his soldiers to cut of the Acharya’s head, which eventually happened. Vishnugupta, was the son of Acharya Chanak, which later known to become Chanakya was helped by one of the ministers in the King’s cabinet named Katyayan, cremated his father’s dead body and was sent to Takshila University (which is the oldest university in the world) with a letter to the dean.

The University comprised of with princes and children of the kings and governors in the world. Young Chanakya, being interviewed by the admissions head of the university, was being probed and asked ” What are the possible means by which a king can settle political disputes?”, the witty and knowledgeable Chanakya replied ” There are four possible methods. Sama- Gentle persuasion and praise; Daama- Monetary incentives; Danda- Punishment or War and Bheda-Intelligence, Propaganda and Disinformation. Amazed by his knowledge and wit, the dean let Chanakya to study in the university and later on he went on to become a professor in Political Science at the university. He, then became the Guru of Chandragupta Maurya, who invaded Magadha and set the kingdom out from the ruins of King Dhanananda, later found the Mauryan Empire.

Chanakya or Kautilya, is known for his undisputed works such as Arthashastra and Neetishastra, which discussed monetary and fiscal policies, international relations and war strategies. The remains of the manuscript was lost near the end of Gupta Dynasty in 5 BC, and which was not rediscovered until 1915. Today, these works are recognized by nations and being implemented as wise thoughts in dealings with economics and international relations. His works are identified as the precursor to Classical economics.

The Modern classical economics developers include Adam Smith, David Ricardo, Thomas Malthus, John Stuart Mill etc, did not get the privilege to go through the works of Chanakya. Adam Smith’s The Wealth of Nations in 1776 is usually considered to mark the beginning of classical economics, but instead Chanakya’s Arthashastra was the true beginning of classical economics.

More on the views of Chanakya’s works and Arthashastra has been researched and being identified as the birth mark of Classical Economics: ArthaShastra Research Report.

As soon as the fear approaches near, attack and destroy it. – Chanakya. 

 

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