During the financial crisis I found that mugging up on economic history, particularly from emerging markets, was often more helpful than talking to conventional policy makers hooked on their fair-weather economic models. The rise of economic nationalism and the threat to globalisation means I find myself using emerging-market parallels again. I cannot help wondering if investing in Western markets may become more like investing in emerging markets. Emerging markets require an intense focus on country risks and political economy. Investors in the West have long been able to ignore political risk and focus on sectors’ or individual companies’ prospects. But the prospect of a new independence referendum in Scotland is only the latest in a series of shocks to the institutional fabric of Western countries. Careful monitoring of the strength of political institutions and corporate governance issues are central to successful emerging-market investing and can have a profound effect on valua...

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