The author is the Chief Global Strategist at Morgan Stanley Investment Management and contributing opinion writer at The New York Times. He was named one of Foreign Policy's Top Global Thinkers in 2012 and one of Bloomberg Market's 50 most influential people in 2015. This book summarizes his earlier book 'The Rise and Fall of Nations : Forces of Change in Post-Crisis World' (2016) which is written based on post-war economic data and travelling experience around the world.
Mr Sharma outlines the 10 rules as follows :
1. Population - successful nations fight demographic decline. Nations should battle the global slowdown in working-age population growth by recruiting women, immigrants, the elderly, and even robots into labour force. If labour force is stagnating or shrinking, the economy probably will too.
2. Politics - successful nations rally behind a reformer. They choose political leaders who are willing to push tough economic reform, listen to experts, but are rarely technocrat themselves, and are usually new to office. Ideally, they are democracies and pick their leaders in fair elections, autocrats can force rapid growth but it tends to be erratic and prone to collapse.
3. Inequality - successful nations produce good billionaires. The total wealth of their billionaires is generally neither too far above the average for large countries (10% of GDP) nor too below. Healthy economies should generate good billionaires in productive and popular industries such as consumer goods rather than concentrating in the hands of tycoons of unproductive and corruption-prone industries like real estate and commodities.
4. State Power - successful nations have the right sized governments. They are able to provide the basics of commercial life - police, schools, roads, telephone networks. The government spending is not excessively high or low, compared to other nations in their income class.
5. Geography - successful nations make the most of their location. They invest heavily in roads, ports and communication networks to connect themselves to global and regional markets. The nation's capital needs to ensure investments will bring its second cities into global commercial mainstream.
6. Investment - successful nations invest heavily and wisely in technology and manufacturing. They invest at a healthy rate, roughly in the range 25-35% of GDP, and funnel money into projects that fuel growth in future such as new technology, new roads and ports, and especially new factories.
7. Inflation - successful nations control the real inflation threats. They build supply networks that can meet demand when the economy accelerates. Inflation should not exceed 2% in developed and 4% in emerging economies.
8. Currency - successful nations feel cheap, particularly to foreigners. Their currencies are inexpensive, making local prices attractive to international tourists and investors. However cheap and unstable currencies may trigger financial crisis.
9. Debt - successful nations avoid debt mania (and phobia). Research shows that if private debt increases by more than 40% points as a share of GDP over 5 years, an economic downturn has always followed. However debtophobia paralyzes the economy, and hampers recovery for many years following severe crises.
10. Hype - successful nations rise outside spotlight. The next economic stars often emerge from among countries that have fallen off the media radar, after the crisis has passed. They start to recover their momentum and after they record several years of strong growth that the media rediscover them.
This is my 50th book for the year 2020.
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