Globalization is under attack in the West. The debate among pundits is no longer about whether globalization is to blame or not. It is about why globalization is now the bugaboo it has become. A common thread are changes, for the worse, in the economic and social standing of the Western middle class.
The Millennium Challenge Corporation (MCC) was established to provide large-scale grant funding to poor, well-governed countries to support their efforts to reduce poverty and generate economic growth. However, the statutory definition of which countries are “poor” for the purposes of MCC candidacy is inadequate. Based solely on GNI per capita with a rigid graduation threshold, it does not portray a clear picture of broad-based well-being in a country. Using a new, comprehensive country-level dataset of median consumption/income, the authors explore the merits and limitations of such a measure and suggest how it might be applied as an additional determinant of MCC candidacy.
The two economic developments that have garnered the most attention in recent years are the concentration of massive wealth in the richest one percent of the world’s population and the tremendous, growth-driven decline in extreme poverty in the developing world, especially in China. But just as important has been the emergence of large middle classes in developing countries around the planet. This phenomenon—the result of more than two decades of nearly continuous fast-paced global economic growth—has been good not only for economies but also for governance. After all, history suggests that a large and secure middle class is a solid foundation on which to build and sustain an effective, democratic state. Middle classes not only have the wherewithal to finance vital services such as roads and public education through taxes; they also demand regulations, the fair enforcement of contracts, and the rule of law more generally—public goods that create a level social and economic playing field on which all can prosper.
The United States has been at the forefront of providing several development-related global public goods, including peace and security via its contributions to international peacekeeping, the monitoring of international sea trade routes, its engagement in forums such as the Financial Action Task Force to stem flows of funding to terrorist organizations, and more. Yet it has not fully capitalized on its comparative advantage in research and development at home that matters especially for the world’s poor, or on its opportunities for globally transformative investments abroad in such areas as clean power and disease surveillance. We propose two areas where the United States should lead on providing even more transformative global public goods.
Updated May 19, 2015
Global public goods (GPGs) provide benefits to people in both rich and poor countries. They play a crucial role in safeguarding the social, economic, and political progress of the past century. They are fundamental to managing global risks such as climate change, infectious diseases, and financial crises that can harm developing countries disproportionately; and in exploiting opportunities, such as new vaccines, that can benefit them especially. Yet very little is known about how much governments spend on GPGs that matter for developing countries.
The current size of the income-secure middle class and its likely future growth, suggest that optimism is indeed warranted for many of today’s middle-income countries. But it is not warranted for all of them, and especially not for most of the low-income countries of South Asia and sub-Saharan Africa — even if they continue to grow at the relatively healthy rates they have enjoyed in the last decade and more.
The Median Is the Message: A Good-Enough Measure of Material Well-Being and Shared Development Progress - Working Paper 351
We argue that survey-based median household consumption expenditure (or income) per capita be incorporated into standard development indicators, as a simple, robust, and durable indicator of typical individual material well-being in a country.
In this paper we identify a group of people in Latin America and other developing countries that are not poor but not middle class either. We define them as the vulnerable “strugglers”, people living in households with daily income per capita between $4 and $10 (at constant 2005 PPP dollar). They are well above the international poverty line, but still vulnerable to falling back into poverty and hence not part of the secure middle class. In a first step, we use long-term growth projections to show that in Latin America about 200 million people will likely be in the struggler group in 2030, accounting for about a third of the total population.
In this note, CGD senior policy analyst Alexis Sowa outlines three recommendations for US development assistance to Pakistan: name the leader of US development efforts, clarify the mission, and finance what is already working.
Reliance on natural resource revenues, particularly oil, is often associated with bad governance, corruption, and poverty. Worried about the effect of oil on Alaska, Governor Jay Hammond had a simple yet revolutionary idea: let citizens have a direct stake. Thirty years later, Hammond’s vision is still influencing oil policies throughout the world.
In this speech delivered to the UN General Assembly, Nancy Birdsall argues that in the absence of an activist global political entity to address these issues, global citizens should press their own governments to adopt policies that address these problems, domestically and internationally.
This course introduces students to the relations among growth, inequality and globalization of economic markets, with a focus on implications for the developing world.
This is the data set underlying Policy Paper 009, “A Commitment to Vaccination Index: Measuring Government Progress toward Global Immunization.”
In this paper, Nancy Birdsall sets out basic information on the growing middle class in Latin America and the Caribbean and provides grounds for optimism that such expansion might reinforce the inclusive politics that sustain broadly shared growth.
In this working paper, the authors investigate the relation between class (measured by the position in the income distribution), values, and political orientations using comparable values surveys for six Latin American countries.
New research shows that inequality in Latin America is falling. In this paper, the authors summarize recent findings, analyze the affect of different regimes, and investigate the relationship between inequality and changes in the size of the middle class in the region. They conclude with some questions about whether and how changes in income distribution and in middle-class economic power will affect the politics of distribution in the future.
Nancy Birdsall, Augusto de la Torre, and Felipe Valencia Caicedo analyze the Washington Consensus, from its early beginnings to failure as a reform agenda.
The (Indispensable) Middle Class in Developing Countries; or, The Rich and the Rest, Not the Poor and the Rest - Working Paper 207
Nancy Birdsall argues 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, that is, the middle class.