NCPA - National Center for Policy Analysis


March 21, 2008

The middle class in poor countries is the fastest-growing segment of the world's population.  While the total population of the planet will increase by about 1 billion people in the next 12 years, the ranks of the middle class will swell by as many as 1.8 billion.  Homi Kharas, a researcher at the Brookings Institution, estimates that by 2020 the world's middle class will grow to include a staggering 52 percent of the global population, up from 30 percent now.

While this is good news, it also means humanity will have to adjust to unprecedented pressures.  The rise of a new global middle class is already having repercussions, says Kharas:

  • Last January, 10,000 people took to the streets in Jakarta to protest skyrocketing soybean prices.
  • Indonesians were not the only people angry about the rising cost of food. In 2007, higher pasta prices sparked street protests in Milan.
  • Mexicans marched against the price of tortillas.
  • Senegalese protested the price of rice, and Indians took up banners against the price of onions.
  • Many governments, including those in Argentina, China, Egypt and Russia, have imposed controls on food prices in an attempt to contain a public backlash.

The impact of a fast-growing middle class will soon be felt in the price of other resources.  After all, members of the middle class not only consume more meat and grains, but they also buy more clothes, refrigerators, toys, medicines and, eventually, cars and homes:

  • China and India, with 40 percent of the world's population, most of it still very poor, already consume more than half of the global supply of coal, iron ore, and steel.
  • Not surprisingly, in the past two years, the world price of tin, nickel, and zinc have roughly doubled, while aluminum is up 39 percent and plywood is now 27 percent more expensive.

Source:  Moisés Naím, "Can the World afford A Middle Class?," Foreign Policy, March/April 2008.

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