The not-so-discreet rise of the developing world’s bourgeoisie

The U.N.D.P.’s annual Human Development Report was released this morning. There’s obviously a lot to chew on in over 200 pages, but the section I found most compelling was on the growth of the Middle Class in the global South:

The middle class in the South is growing rapidly in size, income and expectations. Between 1990 and 2010, the South’s share of the global middle class population expanded from 26% to 58%. By 2030, more than 80% of the world’s middle class is projected to be residing in the South and to account for 70% of total consumption expenditure.13 The Asia- Pacific Region will host about two-thirds of the world’s middle class by 2030, Central and South America about 10% and Sub-Saharan Africa 2% (figure 4). Within Asia, China and India will account for more than 75% of the middle class as well as its share of total consumption.

Another estimate is that by 2025, annual consumption in emerging market economies will rise to $30 trillion, from $12 trillion in 2010, with the South home to three-fifths of the 1 billion households earning more than $20,000 a year.14 The continued expansion of the middle class is certain to have a profound impact on the world economy

The "Rise of the South" is the overall theme of the report, which also calls for changes to the governance structure of global political and financial institutions to reflect the reordering of economic power:

By 2020, according to projections developed for this Report, the combined economic output of three leading developing countries alone-Brazil, China and India-will surpass the aggregate production of Canada, France, Germany, Italy, the United Kingdom and the United States.

During a conference call earlier this week, I asked the UNDR’s Communications Chief William Orme whether "global south" was still a useful term. Economies like Brazil, China, India, Turkey, Indonesia, etc. may not be "developed" countries yet, but surely the challenges they face are different enough from other "southern" countries that the label is of limited usefulness.

He replied:

We’d be welcome to suggestions. The key is getting them to catch on. We have OECD members – Turkey, Chile, and Mexico – which we’re counting as part of the "south" for the purposes of this study….

It’s something we’ve had a lot of internal debate. The "theology" we have in the Human Development Report is that we use these as similes or metaphors because they’re commonly used terms. We define countries by human development performance, in our index we have it divided into four categories – very high HDI, high HDI, medium, and low – but even that covers up a huge number of differences in the categories.

HDI index is the best known feature of the report, a ranking of the world’s countries from 1^st place Norway to 186^th place Niger according to their level of human development, an alternative measure to GDP that incorporates factors like health, education, and income. The United States ranks third, though it drops 13 places on an alternative measure of HDI which factors in income inequality.

Big chances in the rankings this year include Portugal, which fell three spots between 2011 and 2012 and Libya, which bizarrely jumped up 23 spots due to newly available GDP data. On the conference call, the HDR’s chief statistician Milorad Kovacevic warned against reading too much into year-to-year changes which often have more to do with revisions of available data than changes in development levels.