Book recommendation : The Growth Map, Jim O'neill

There are three pressing issues the world confronts right now : High trade imbalances among countries, crippling indebtedness in the west, and low growth. If anybody on this site was struggling to find a solution to these, it is worth reading this thought-provoking book.

The author, who first coined the BRIC term, argues that high trade imbalances will be solved once the BRIC countries’ domestic markets grow in a rapid rate. In fact, many BRIC countries’ aim is to be less dependent on external consumers, and instead utilize their favorable demographics to fully enjoy their enormous opportunities within their market. As per capita income accelerates in these countries, the author insists that it will be the developed world that will eventually benefit from the rise in these markets. Therefore, the author thinks that backlash against these countries, which is fashionable in political circles these days, is overblown at best.

How can the west benefit from the rise in these countries? The answer is already shown in many international companies’ cases. The author especially considers German companies as a great model to follow. Companies like Volkswagen, Bosch, Siemens, Audi, etc are putting in a great deal of efforts to tap into the Chinese markets, and their recent rise in exports, although some might believe that the weaker Euro had much to do with it, is a clear path to follow for any country who wants to share the growth story. If this can apply to the US, which now seems to have a chronic trade deficits problem and embraces printing its way out of the debt as the only solution, then the US might be able to solve these major issues and contain many of the mounting problems emanating from this (unemployment issue comes in my mind first).

Low growth, which is believed to be a curse among developed nations, can actually reverse. Yes, the US may not be able to grow 5% annually, but sectors that are highly exposed to the BRICs can grow enormously, and investors can indirectly benefit from these businesses.

There are many other issues the author touches on other than above, and the book was especially helpful for me to grasp the changing economic climate and draw a bigger picture.

I recommend this book to anybody who wants to share the new growth paradigm of this century.