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| The new global middle class in the 21st century |
The
New Global Middle Class
Since
the beginning of the 21st century there has been a massive expansion of the new global middle
class. This has not occurred in a vacuum. The BRICS and second tier
countries such as Brazil and Turkey have made the headlines for their rise in
income and high annual GDP growth but this is only part of the story,
with increasing wealth has also come a massive rise in development.
According to the OECD, Brazil's middle class has risen from 29pc of
the population in the 1980s to 52pc in 2009 almost doubling. In
Turkey's case, income per capita nearly tripled between 2002 and 2011
bringing more and more people into a growing middle class and increasinging
the ranks of the global middle class.
According
to the Brookings Institution, there are now 700 million more
people with $US10-100 per day to spend than there were in 2003.
Moreover, what they call the global middle class is expected to grow
by another 1.3 billion over the next ten years. This new phase of
creating a global middle class brings major benefits for the global
economy. Instead of the somewhat one-sided trade pattern of the last
two decades, it means greater well-being for households in
“developing countries” and opportunities for more producers in
the advanced economies.There
has also been a massive re-alignment of world trade between what has been
tradionally called South-South countries. Trade between South-South
countries currently stands at around 30pc.
As
a result there have been tectonic shifts in the rebalancing of the
world in development terms. It is no longer clear which countries are
“developed” and which are still “developing”. This
re-alignment has in turn brought a massive expansion of human
capabilities and provided choices to people entering the new global
middle class that they clearly did not have in the 20th
century. This point is well illustrated in the 2013 UN Human
Development Report 2013. The Report highlights the fact that progress
on human development has accelerated in the last decade and all of
the 40 countries analysed in the Report are doing better than
expected.
Why
have some countries done better than others?
Interestingly
several factors have influenced the overall outcomes of accerlating
people's accession into the global middle class when comparing the
different experiences of countries on a global level.
In
countries where the State has taken a long term perspective on
development, people have been accelerated in to the middle class. In
some countries the state has actively promoted job creation, this has
also helped to sustain the creation of the middle class. Where the
state has enhanced investment in health and education – these
policies have greatly helped to assist people to move into middle
class. In Turkey, for example, the Government decided to provide
healthcare for all and target the poor. In Brazil, the Government
managed to expand education by matching the funds available across
regions and municipalities. In México, the state provided cash
transfers for social policy interventions.
Some
countries have also taken an active role in nurturing the industrial
capacities and by actively investing in people which has allowed them
to make the most of trade opportunities in global markets.
What
is the flipside?
Interestingly
a new global middle class made up of educated, inter-connected youth
will increasingly demand far greater accountability. This point has already been
illustrated by large-scale demonstrations in Brazil and Turkey which
are a direct result of the creation of an enhanced middle class and
both countries' economic success over the last decade.
Growing
middle classes are far less tolerant when it comes to governments
performing inadequately. Delivery of services, such as education and
health, is poor in both Brazil and Turkey. In its last scorecard on
educational attainment referred to as the Program for International
Student Assessment (PISA), the OECD found that Turkey and Brazil
ranked especially poorly in maths and science. In maths, Turkey
ranked 41st out of 62 countries, while Brazil was in 55th place. In
science, Turkey was 40th and Brazil 50th. In the UNDP's 2013 Human
Development Index, Brazil ranked 85th and Turkey 90th out of 186
countries. It is not clear what the implications of the current
protests will be for these two countries.
Much
will depend on how the democratically elected leaders of Turkey,
Prime Minister Erdogan and the President of Brazil, Dilma Rousseff
react to these challenges. The aspirations of the middle class are
colliding with the current capacity of these countries to deliver.
Conclusion
In
order for the new global middle class to be sustainable it has been
shown that countries with less inequality do better and improve far
more as more people are added to the middle class. Furthermore
educating women to adulthood has been shown to be key to reducing
fertility rates. Another key point is that in order to reap the
benefits of youth bulge that exists in so many emerging economies,
job creation for the young is also key.
Finally
participation and inclusion is essential to stability and social
cohesion – this in itself is what will ultimately sustain the new
global middle class.
