Export your way to prosperity? Nations like India taking the digitisation route to drive growth: Morgan Stanley’s Ruchir Sharma

The growing push for a digital economy is now propelling the growth of many emerging nations, including India, said global investor and author Ruchir Sharma.

“Emerging nations, like India, are now able to use digitisation as a new driver of economic growth, whereas the classic model of economic growth was exporting your way to prosperity,” he said at the India Internet Day organised by TiE, Delhi-NCR.

Sharma, the head of emerging markets (EMs) and chief global strategist at Morgan Stanley Investment Management, said digitisation could be the revolutionary new engine for emerging markets with large domestic economies. “The surest way to prosperity is when emerging markets are able to export their way to prosperity, when exports are very strong. That is what typically lifts the growth of many developing economies. That is how so many economies, from China to Korea to Taiwan, were able to grow very rapidly.”

The global investor said the previous decade was the worst decade for EMs, including India. “However, there is a twist in the tale here, and for the better, I think, is that we are in an era of unprecedented digitisation. The entire global economy is getting much more digitised and the stage of the cycle we are currently in, is particularly beneficial for emerging markets such as India.”

The digital economy was now growing faster in emerging markets than in developed markets and India’s growth rate was higher than the average growth rate across EMs, he said.
China led the way in the digital revolution but it was now spreading to other countries as well, with India being at the forefront, added the author of bestsellers such as “Breakout Nations” in 2012 and “The Rise and Fall of Nations” in 2016.

“India is today one of the fastest growing digital economies whether one look at broadband, mobile subscription, digital revenue, crypto adoption, tech firms or fintech financing deals. In terms of the evolution of the digital economy in various countries, the country ranks fourth in the world, behind only China, Azerbaijan and Indonesia,” he said.

According to Sharma, the digital action that is now shifting to India was partly because of the recent tech crackdown in China. That way, issues in China have come to the advantage of India as global tech players are now looking for the next big growth market, he argued.

“The big risk, however, is that if India goes down the China path — prematurely cracking down on digital industries — this could cut short, this digital revolution. So, hoping that India doesn’t learn the wrong lessons [from China’s clampdown on tech industry],” he added.