Putting numbers to the story of the emerging global middle classes

By | October 28, 2012

The top 1% of the global income distribution has seen its real income (adjusted for inflation) rise by more than 60% over those two decades.

What is far less known is that an even greater increase in incomes was realized by those parts of the global income distribution that now lie around the median. They achieved an 80% real increase in incomes.

It is there — between the 50th and 60th percentile of global income distribution, which in 2008 included people with annual after-tax per capita incomes between 1,200 and 1,800 international dollars — that we find some 200 million Chinese and 90 million Indians, as well as about 30 million each in Indonesia, Brazil, Egypt and Mexico. These 400 million people are among the biggest gainers in the global income distribution.

The real surprise is that those in the bottom third of the global income distribution have also made significant gains, with real incomes rising between more than 40% and almost 70%. (The only exception is the poorest 5% of the population, whose real incomes have remained about the same.)

It is precisely this income increase in the bottom of the global pyramid that has allowed the proportion of what the World Bank calls the absolute poor (people whose per capita income is less than 1.25 PPP dollars per day) to decrease from 44% to 23% over approximately the same 20 years. ~ Branko Milanovic 2012

How does your “BoP” market strategy change given the very real changes in income generation thus opportunities and aspirations? Will they really be willing to “make do” with small solar lantern if they can strive to electrify their house, at least with solar power?

You can say that only a percentage have emerged above the poverty line, and with seasonal variations in their cash flow, who knows what income means, but one thing is clear and that is enough people have been visibily upwardly mobile to offer a taste of it to everyone around them. The mindset is changing, but how will the crafting of consumer culture help challenges of scarce resources and irregular cash flow of unpredictable amounts? 

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