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Is a Global Middle Class Possible?
The first 15 years of the 21st century saw 700 million people lifted out of extreme poverty. As people moved from poverty to low-income levels, many economists started coining the term “global middle class;” a class that will form the backbone of democratic governments and economic stability across the world.

A global middle class that composes the majority of the planet’s population is currently just an idea. To make it a reality, poverty rates need to fall while the number of people living in the subsequent income brackets need to continue their ascent.

Economists faced an issue when trying to characterize a global middle class. The most advanced nations have much higher living standards than developing nations, so characterizing a “global middle class” would reveal discrepancies in living standards. For example, a citizen of Brazil living on $16 per day will be classified as “middle income” but would straddle the poverty line in America.

Economists eventually concluded that living on $10 a day constitutes the beginning of the global middle class (and continues up to $20). When an individual reaches this threshold, he or she becomes more economically secure, and his or her chances of falling back into poverty drop significantly.

Currently, the global middle class encompasses 13 percent of the earth’s population. It has increased by roughly 385 million since the Millennium Development Goals were instituted in 2000.

Reuters magazine projects that this class will grow from two billion to almost five billion by 2030, making it the biggest class in the world.

But, today, almost 60 percent of the world population is still considered “low income,” living on $2 to $10 per day. This number must continue to lower so that millions can reach the global middle class.

A study by the McKinney Global Institute in 2012 found that people living on $10 a day or more become “consumers.” They study titled this bracket of people the “global consumer class.” This class can influence purchasing power and drive demand for products, creating markets in regions that traditionally have not had them.

The consumer class can also have positive impacts politically. A study by the PEW Research Center found that when citizens with more economic security strive for social change, that will further benefit the middle and poor classes. The study also linked a country’s income and education levels to the quality of government it has.

Although the global middle class is still in its infancy, it has come a long way since 2000. Millions will continue to climb the economic ladder into the middle class.

This class will make the world a better place, politically and economically. That’s why the continued implementation of the Millennial Development Goals and other methods of foreign aid are so important.

Kevin Meyers

Sources: OECD Observer, McKinsey, PEW Global, Reuters
Photo: Flickr