Middle Class Growth in the Global South

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The middle class represents a key consumer segment to companies all over the world, and the strong growth of many companies has been supported by the middle classes of developed countries or the Global South.

However, a United Nations report indicates that middle classes are becoming predominant in the developing world as well. The 2013 Human Development Report states that by 2030, developing nations will have the vast majority of the world’s middle classes and account for 70% of total consumer spending.

The report also states that there has been a strong middle class growth in the global south, where the share of people in the middle class has expanded from 26% to 58% over the past 20 years.

This increase in the size of the middle class represents millions of people being lifted out of poverty and is especially salient in Latin America, particularly Mexico, Brazil and Chile. These three countries have been pioneers in driving development through more proactive governmental development policies, integration with global markets and social policy innovations.

Gradual integration with global markets has helped the economies in these countries grow. For example, Brazilian companies have been encouraged to export and compete globally, resulting in success stories such as Embraer, which is now the world’s largest producer of mid-size aircraft. Chile, on the other hand, drove its development by strategically investing in sectors where it has advantages, such as wine, fish farming and wood products.

This economic growth has been supported by the implementation of innovative social programs, such as Brazil’s Bolsa Familia and Mexico’s Oportunidades campaign. These programs have been particularly effective at reducing poverty and inequality. They also served as a safety net during the recent global financial and economic crisis, helping ease the economic impact felt by Brazil and Mexico.

These examples show that the integration of sound economic and social policies can generate substantial growth and help raise millions of people out of poverty, thereby creating tremendous growth in consumer classes that could support the success of companies from all over the world.

– Caroline Poterio Martinez

Source: Washington Post
Photo: Noorimagesr

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