Reflections on the Macro Foundations of the Middle Class in the Developing World

Nancy Birdsall

No 130, Working Papers from Center for Global Development

Abstract: In this working paper I define inclusive growth as growth conducive to increasing the size and economic command of the middle class. I suggest a definition of the middle class based on absolute and relative measures of country-based income distributions, and present evidence of change in the size of the “middle class” for selected developing countries. I then review how macroeconomic policies shape the environment and incentives for inclusive growth, focusing on three areas: fiscal discipline, the more rule-based the better; a fair tax and redistribution system; and a business friendly exchange rate. The adoption of macro policies that favor the middle class lays the foundation for more economically and politically sustainable development. While on the whole sound macro policy that is good for the middle class is also likely to be pro-poor, tradeoffs may exist with respect to tax, expenditure and transfer programs and responses to economic shocks. Governments should consider the weighted welfare outcomes of alternative approaches to macro policy, rather than un-weighted growth or overly weighted poverty outcomes.

Keywords: macroeconomics; sustainable development; middle class (search for similar items in EconPapers)
Pages: 22 pages
Date: 2007-10
New Economics Papers: this item is included in nep-dev and nep-mac
References: Add references at CitEc
Citations: View citations in EconPapers (26)

Downloads: (external link)
http://www.cgdev.org/content/publications/detail/14696
Our link check indicates that this URL is bad, the error code is: 403 Forbidden (http://www.cgdev.org/content/publications/detail/14696 [301 Moved Permanently]--> https://www.cgdev.org/content/publications/detail/14696)

Related works:
Working Paper: Reflections on the Macro Foundations of the Middle Class in the Developing World (2007)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cgd:wpaper:130

Access Statistics for this paper

More papers in Working Papers from Center for Global Development Contact information at EDIRC.
Bibliographic data for series maintained by Publications Manager ().