'Breakdown nations' like Canada have a lesson for the world
financialpost.comBy Ruchir Sharma
At a time when two big economies, the United States and India, are attracting a lot of hype for their enduring strength, it is worth looking at nations that not too long ago were billed as star performers, but are now breaking down.
All are among the world’s 50 largest economies and, so far this decade, have suffered both a sharp decline in real per-capita income growth, and a fall in their share of global gross domestic product.
Led by Canada, Chile, Germany, South Africa and Thailand, these “breakdown nations” carry a lesson. Growth is hard, sustaining it is even harder, so the stars of today are not necessarily the stars of tomorrow.
Take Canada first. Widely admired for how it weathered the global financial crisis of 2008, it missed the boat when the world moved on, driven by Big Tech instead of commodities. Canada’s per-capita gross domestic product has been shrinking 0.4 per cent a year since 2020 — the worst rate for any developed economy in the top 50. New investment and job growth are being driven mainly by the government.
Private-sector action is confined largely to the property market, which does little for productivity and prosperity. Many young people can’t afford to buy in one of the world’s most expensive housing markets. Pressed to name a digital success, Canadians cite Shopify Inc., but the online store is the only tech name among the country’s 10 largest companies, and its shares are trading at half their 2021 peak.
Then there’s Chile. Hailed in the 1990s as a model of deft, East-Asian-style government in Latin America, its halo has since vanished. The country now makes headlines for political strife over its constitution. Anemic tax collection has gutted public services, triggering
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