Fast lane for world’s middle class

last updated 8 January 2015

Shimelse Ali and Uri Dadush

ForeignPolicy.com

For a true sense of how quickly the global middle class is growing, said Shimelse Ali and Uri Dadush, just look at car sales. They’re booming, a clear sign that “there are many more affluent people in developing countries” than more conventional measures of wealth suggest. In the developing world, “buying a car is virtually synonymous with entry into the middle class.” It signals a household’s ability to pay for a long-term, big-ticket item, a far better gauge of wealth than average daily earnings. By counting cars in circulation, we number the middle class in developing G-20 countries at between 550 million and 600 million people—about 50 percent higher than conventional estimates. Countries like Brazil, India, Indonesia, and Mexico have far larger middle classes than previously believed, and if recent growth in car ownership is any indication, they will continue to grow rapidly. This rising affluence matters enormously for businesses everywhere. As earnings and populations in advanced countries stagnate, the developing world’s middle classes will not only be driving more cars, they’ll also be driving world growth.