Sharma points out that it is a mistake to take the rapid growth rates from the past decade and assume that they can be projected into the future.
The data supports the notion that the last decade was an outlier and fails to support the assumption that a convergence between developed and developed countries has been taking place.
The BRICs were to be the countries in line to overtake the western economies.
This source provides the most recent data on GDP growth: China 7.4%, India 5.5%, Russia 2.9%, and Brazil 0.5%.
Historically, high rates of growth have been difficult to maintain.
Sharma concludes that it is foolish to project more than two business cycles into the future (five years per cycle). That allows him to make some of his own predictions.
Finally, there is this somewhat gloomy conclusion.
The OECD is one organization that is prone to making the projections that Sharma was warning us about. It has produced a report that projects economic growth out to the year 2060. It has assumed that in the 2011-2030 period the BRIC countries will have the following GDP (PPP (purchasing power parity)) growth rates: China 6.6%, India 6.7%, Russia 3.0%, Brazil 4.1%. These are numbers that Sharma would find puzzling. Growth rates drop off considerably in the 2030-2060 interval with the rate of drop off seemingly dependent on the working-age demographics in each country.
An article in The Economist provided an interesting synthesis of the conclusions in the report. It produced a plot of per capita GDP (PPP) for a range of countries as a fraction of US per capita GDP. Data was provided for 2011 and the projected numbers for 2060.
It is perhaps not too surprising that there is little relative change predicted for the developed countries because the same economic and demographic models probably apply closely to all. What is a bit surprising is the lack of progress that the developing countries make over the 50 year period, given the rather optimistic growth assumptions.
Perhaps 50 years is just a small period in terms of economic growth. Growth will have phases and transitions that must occur in order to get to the next phase. These steps can be difficult and require the development of new technical and social infrastructure to support them.
The developed countries had centuries to reach their current status so a little patience may be required.
RUCHIR SHARMA is head of Emerging Markets and Global Macro at Morgan Stanley Investment Management and the author of Breakout Nations: In Pursuit of the Next Economic Miracles.