The (Indispensable) Middle Class in Developing Countries; or, the Rich and the Rest, Not the Poor and the Rest

EQUITY IN A GLOBALIZING WORLD, Ravi Kanbur and Michael Spence, eds., World Bank, Forthcoming

Center for Global Development Working Paper No. 207

38 Pages Posted: 19 Oct 2010

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Date Written: March 26, 2010

Abstract

Inclusive growth is widely embraced as the central economic goal for developing countries, but the concept is not well defined in the development economics literature. Since the early 1990s, the focus has been primarily on pro-poor growth, with the “poor” being people living on less than one dollar a day, or in some regions two dollars a day. The idea of pro-poor growth emerged in the early 1990s as a counterpoint to a concern with growth alone (measured in per-capita income) and is generally defined as growth which benefits the poor as much or more than the rest of the population. Examples include conditional cash transfers, which target the poor while minimizing the fiscal burden on the public sector, and donors’ emphasizing primary over higher education as an assured way to benefit the poor while investing in long-term growth through increases in human capital. Yet these pro-poor, inclusive policies are not necessarily without tradeoffs in fostering long-run growth. In this paper I argue that the concept of inclusive growth should go beyond the traditional emphasis on the poor (and the rest) and take into account changes in the size and economic command of the group conventionally defined as neither poor nor rich, i.e., the middle class.

Keywords: Economic Development, Poverty

Suggested Citation

Birdsall, Nancy, The (Indispensable) Middle Class in Developing Countries; or, the Rich and the Rest, Not the Poor and the Rest (March 26, 2010). EQUITY IN A GLOBALIZING WORLD, Ravi Kanbur and Michael Spence, eds., World Bank, Forthcoming; Center for Global Development Working Paper No. 207. Available at SSRN: https://ssrn.com/abstract=1693899

Nancy Birdsall (Contact Author)

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