Sunday, April 22, 2012

'Fareed Zakaria GPS' Transcript (4-22-12)

Full transcript. Excerpt Below:

ZAKARIA: All right. The Billionaires Index, you look at the number of billionaires in a country, but you look at also the total net worth as a percentage of GDP, and what do you do -- what do you find and what are you trying to get at?

SHARMA: You want new wealth to be created, and you don't want too much wealth to be concentrated in a few hands, because that sort of leads to the perception that reforms or opening up the economy is only benefiting a few people, and it leads to a backlash, in fact, against economic reforms.

And if you look at the economic success stories of Korea, Taiwan, one thing that you find, which is very noticeable about them, is that the number of billionaires they have as a share of the total sort of economy is sort of fairly reasonable.

But if you -- but the problem I find in places such as Russia is exactly the opposite, which is the number of billionaires you have, the highest number of billionaires in the world, even though their economy is nowhere near the size of a U.S. or even China, and the more disturbing point about Russia I find is that if you look at the number of millionaires, Russia doesn't even feature in the top 15 in the world. So when it comes to billionaires, top two. When it comes to millionaires, not even the top 15 in the world.

ZAKARIA: So the title of your book is "Breakout Nations." So there is good news here, because you're saying that the old emerging markets, the leader is Brazil, Russia, China, India are perhaps going to slow down. So what are the new ones and why are they thriving?

SHARMA: Well, I think that the most important point here is about expectations. That you have got to have reasonable expectations about countries. And the second thing is to do with per capita income.

Now, if a country like Korea, which I identify as still a break- out nation -- Korea is a remarkable economic success story along with Taiwan. It's the only economy in the world to have grown at 5 percent or more for five decades in a row.

ZAKARIA: Five decades.

SHARMA: Five decades in a row. Only two did in the world grew at more than 5 percent on average each decade. The other country where I think that expectations can be surpassed versus what the consensus is are Indonesia, Turkey, Philippines. I think even Thailand has a chance of doing so. Then a bunch of frontier markets such as Nigeria, Sri Lanka. I think all these countries have a chance of surpassing expectations.

ZAKARIA: And you're bullish on Poland as I remember in the book.

SHARMA: Yes. Eastern Europe. I think that Europe today gets a lot of flack for the fact that you talk about Europe today, and you only think about debt crises and boom-bust cycles, and yet you've got countries such as Poland with very good macroeconomic finances, and a pretty stable growth rate, solid institutions, and some very good companies.

And I think Czech is also in a similar league, even though its economy tends to be a bit more cyclical, because of its exports exposure.

So I think there are a whole bunch of countries out there which can be break-out nations, which can be the countries that emerge as the new economic stars.

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