The South’s new power

Outside in, future back

The author posits that an ‘outside-in, future-back’ assessment almost always suggests the markets in the South. He points out that many well-known brands have been in the South for many years, such as Nestlé Unilever, Coca-Cola and Colgate: 3M and Delphi are among the business-to-business companies that have committed to markets ahead of growth. However, here we hit upon what might be considered by some as a fatal flaw in this book’s thesis. For, since this book was written (published in March of this year), Charan’s argument of an irreversible global tilt might appear less certain.

Whether it is a correction or a crisis, as one financial writer commentated, what is currently occupying the minds of many investors, corporate and institutional, is the emerging markets’ sell-off of recent months.

Nor have the currencies of the emerging and frontier markets been doing particularly well. The South African rand, the Indian rupee, the Indonesian rupiah and the Brazilian real have all come under pressure (although some currencies such as the Nigerian naira have remained stable).

Yet the MSCI’s Emerging Markets Index (MSCI is a leading provider of investment analysis and support tools to more than 6,000 clients worldwide ranging from large pension funds to boutique hedge funds) is down by around a sixth in the last five months.

Similarly, the joint venture index created by the UK’s Financial Times newspaper and the London Stock Exchange, the FTSE Emerging Markets index, slumped by almost 12% in the same period.

But it would be churlish to suggest that the ‘global tilt’ has been only a wobble – and idiotic and dismal to think that the economic growth witnessed in the South is somehow reversible. Rather, bearish sentiments regarding global emerging markets are not based on the South’s economic fundamentals, they are heavily influenced by the monetary policies of the economies of the North.

And there is a growing realisation in the South that the mistakes made by the North, in not ensuring that economic growth translates into a more equitable distribution of wealth, can be avoided. It is, as Donald Kaberuka, the president of the African Development Bank, has acknowledged, absolutely crucial that economic growth leads to a economic transformation – not simply a greater concentration of wealth in the hands of an elite.

Indeed, in this book’s closing chapter, Charan asks: “How can you deny the world’s unstoppable trends and the inevitability of economic growth in the South? The more you learn about the South, the more you’ll appreciate that you’ll have to operate differently to succeed … the pace and timing of the global tilt may be uncertain, but the direction is clear.”

Stephen Williams

Global Tilt
Leading your Business through the Great Economic Power Shift
By Ram Charan
£18.99 RH Business Books
ISBN 9781847941060