A colleague from the Asian Development Bank visited the other day to talk about a study he is doing on Asia’s middle class. Yet this is not an area we have focused on in the World Bank’s East Asia region – perhaps at our cost. I quickly googled the topic and discovered a rapidly growing literature, including a paper each by Martin Ravallion and Nancy Birdsall just this year.
Why this attention to the middle class? Empirical evidence shows that growth of the middle class is associated with better governance, pro-growth reforms, even better infrastructure.
It appears that as people gain middle class status, accumulate savings, and acquire secondary and tertiary education, they are likely to use their greater political clout to press for accountable government. This includes the rule of law, property rights they now have more to protect!, and greater public goods supportive of growth including better infrastructure, education, fewer trade restrictions, and economic stability. Interestingly, the larger the middle class a country has, the more likely it is to reduce poverty faster. Ergo – if we are interested in growth and poverty reduction – we better start paying attention to the middle class.But who are the middle class? Alas, this is where the economics profession lives up to its billing “ask ten economists a question and you get eleven answers”.