The New Global Middle Class: Potentially Profitable — but Also Unpredictable

July 13, 2008 in Global Economy
Tags: World

A new global middle class is rising up from poverty in emerging economies around the world, providing competition for labor and resources, but also enormous promise for multinationals that tailor products and services to the burgeoning ranks of first-time consumers, according to Wharton faculty and analysts.

Coca-Cola’s newly appointed chief executive Muhtar Kent sees this market as critical to his company’s future and describes the scale of the opportunity as equivalent to adding a city the size of New York to the world every three months. The World Bank estimates that the global middle class is likely to grow from 430 million in 2000 to 1.15 billion in 2030. The bank defines the middle class as earners making between $10 and $20 a day — adjusted for local prices — which is roughly the range of average incomes between Brazil ($10) and Italy ($20).

A look at the geographic distribution is striking. In 2000, developing countries were home to 56% of the global middle class, but by 2030 that figure is expected to reach 93%. China and India alone will account for two-thirds of the expansion, with China contributing 52% of the increase and India 12%, World Bank research shows.

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