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Op-Ed: Decouple Yourself in the New Third World


You may be surprised to find that you are happier and more successful in the New Third World than you can hope to be now in the US or Europe.

I am a citizen of the United States of America and still very proud to be one. Likewise, I am of European heritage of many generations past, but very fond of Europe and my friends there. I spent nearly all my adult professional life as an advisor to nations of the old Third World, more than 40 of them. Two fundamentals of my work were to stress the importance of financial responsibility and managerial competency, the positive benefits of both clearly demonstrated by the North Atlantic "First World" system I represented.

Today, the tables have turned and these so-called "advanced economies" are now excellent examples of financial irresponsibility and managerial incompetency with regard to their own affairs. The New First World is "first" in all the wrong ways. If I wanted to waste my time (and I have done that more than once in recent years), I would agonize over this situation and allow it to block my own personal and professional growth, but enough is enough. That is over.

The New Second World has nothing to do with the old Soviet Union. It is made up of the BRICs and perhaps the CIVETs and other acronyms that are in use to group nations with relative large domestic markets, whose financial markets are large enough to attract money from the New First World, who have above-average growth rates, but who also have one potentially fatal problem. They may be too intimately associated with the New First World. They have a real challenge. They need to decouple from the North Atlantic's crisis without causing their own crisis, but it's tough when you are so tightly bound to the New First World's investment community, as well as its commercial markets. Their problem is that they are the center of too much attention from the very nations that are in the greatest trouble. Theirs is a "co-dependency" problem and dealing with it successfully is not going to be easy. They need to decouple partially without decoupling too much. If they can pull it off, they will teach us all a lesson in managerial competency.

The New Third World is where I live and work. These nations are also tied to the rest of the global community, but not to the extent of the New Second World, in great part because they are often ignored or dismissed by the very people with problems with money and management. They are too small for blessings like program trading or hedge funds or derivatives. Many are experiencing dramatic growth of their own and visiting one after an absence of even five years can be a real surprise. Ten years later and it can easily be a shock to see how much has changed.

They have risks, but so do the other two Worlds, to put it mildly. But they have great opportunities too. As I look through the list of nations and their real GDP growth rates in 2011, I find those whose claim to such fame is associated with growth from a tiny base and very likely due to a short-term situation, but there are many others too. Three that I focus on are Mongolia (ranked second), Ghana (fourth), and Panama (sixth), where I live. There are plenty of others too, sometimes referred to as "frontier markets" (thank you, Mark Mobius) to differentiate them from "emerging markets", our friends in the New Second World.

These nations can be very, very different and they each have to be looked at separately. It is foolish to generalize in most respects. But they do have one thing in common that makes them much more fun to live in than the other two Worlds. People in these nations do not look to the future with outright fear (the New First World) or anxiety (the New Second World), but with enthusiasm. These are not "one-year growth wonders." You can tear any nation down (look what we're doing to our own home nations), but if you look at them carefully, you see a pattern of growth over several years and good reasons for it.
No positions in stocks mentioned.
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