Middle class growing rapidly in developing nations

Published: March 15, 2013 

The U.N says the speed and scale of this change will require 'an epochal global rebalancing.'

MEXICO CITY - According to a United Nations study released Thursday, 1 billion households will be earning more than $20,000 a year by 2025. Three-fifths of those will be in countries that today are better known for their poverty than for their wealth.

Among the countries are Rwanda, Brazil, Chile, Tunisia, Turkey, Ghana, Mauritius and about 30 other similar nations.

"History has never seen something like this," said Khalid Malik, lead author of the United Nations Development Program report titled "The Rise of the South."

"A very significant number of developing countries have transitioned themselves into dynamic, emerging economies with growing geopolitical influence," said Helen Clark, a former prime minister of New Zealand who is the administrator of the U.N. Development Program and was in Mexico to unveil the report.

While Europe and North America have been stuck in outright recession or tepid growth, many developing countries have been trading heavily with one another, investing in education and social services, and watching their middle class expand, Malik said.

Both the scale and the speed of the changes surpass what happened during the Industrial Revolution, which began in Britain in the late 18th century and spread over the next decades to Western Europe and the United States, he said.

In 1990, Malik said, the global middle class - defined as earning from $10 to $100 a day - comprised 1.8 billion people, with a clear majority living in Europe and North America. By 2020, projections say the global middle class will have expanded to 3.2 billion people, with more than half living in the Asia and Pacific regions.

By 2030, the U.N. report says, the middle class is likely to comprise 4.9 billion people, with two-thirds in Asia, not only in populous India and China but also in Mongolia, Laos and Bangladesh, among other nations.

At that point, 80 percent of the world's middle class will live in what is now considered the developing world.

Not only are citizens there growing better off, their governments have amassed ever-greater financial reserves, Malik said. Some $6.8 trillion in reserves are now in the hands of developing nations, compared with $3.5 trillion in the central banks of developed countries.

Social policies that empower women, and provide more equitable health care and better education are key to the expansion of the middle class, the study found. But technology also has been a huge contributor.

"Farmers in India or in Africa can use their telephones, get prices for their crops but also know what happens in the U.S. elections," he said.

In Ghana, 61 percent of cocoa farmers now own mobile phones, the report says.

According to the U.N. report, by the end of the decade, the combined output of three leading developing countries - Brazil, China and India - will surpass the combined economic output of the United States, Germany, the United Kingdom, France, Italy and Canada.

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