OECD - Middle Class

OICD DIVILOIMINT CINTRI
THI IMIRGING MIDDLI CLASS

IN DIVILOIING COUNTRIIS
by
Homi Kharas
Research area:
GIobaI DeveIomenl OulIook
}anuary 2010
Working Iaer No. 285
The Emerging Middle Class in Developing Countries

DEV/DOC(2010)2
2 OICD 2010

DEVELOPMENT CENTRE
WORKING PAPERS
This series of vorking aers is inlended lo disseminale lhe DeveIomenl Cenlre's
research findings raidIy among seciaIisls in lhe fieId concerned. These aers are generaIIy
avaiIabIe in lhe originaI IngIish or Irench, vilh a summary in lhe olher Ianguage.
Commenls on lhis aer vouId be veIcome and shouId be senl lo lhe OICD
DeveIomenl Cenlre, 2 rue Andre IascaI, 75775 IARIS CIDIX 16, Irance, or lo
dev.conlacl+oecd.org. Documenls may be dovnIoaded from: hll://vvv.oecd.org/dev/v or
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THI OIINIONS IXIRISSID AND ARGUMINTS IMILOYID IN THIS DOCUMINT ARI THI SOLI RISIONSIILITY OI THI AUTHOR
AND DO NOT NICISSARILY RIILICT THOSI OI THI OICD OR OI THI GOVIRNMINTS OI ITS MIMIR COUNTRIIS

OICD (2010)
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CENTRE DE DVELOPPEMENT
DOCUMENTS DE TRAVAIL
Celle serie de documenls de lravaiI a our bul de diffuser raidemenl aures des
seciaIisles dans Ies domaines concernes Ies resuIlals des lravaux de recherche du Cenlre de
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LIS IDIIS IXIRIMIIS IT LIS ARGUMINTS AVANCIS DANS CI DOCUMINT SONT CIUX DI L'AUTIUR IT NI RIILITINT IAS
NICISSAIRIMINT CIUX DI L'OCDI OU DIS GOUVIRNIMINTS DI SIS IAYS MIMRIS

OCDI (2010)
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lre envoyees a righls+oecd.org

OECD Development Centre Working Paper No.285

DEV/DOC(2010)2
OICD 2010 3

TABLE OF CONTENTS
ACKNOWLIDGIMINTS .......................................................................................................................... 4!
IRIIACI ...................................................................................................................................................... 5!
RISUMI ........................................................................................................................................................ 6!
ASTRACT ................................................................................................................................................... 6!
I. INTRODUCTION ..................................................................................................................................... 7!
II. DIIINING THI MIDDLI CLASS ...................................................................................................... 10!
III. MIASURING THI GLOAL MIDDLI CLASS .............................................................................. 14!
IV. IRO}ICTING GDI AND TRINDS IN THI GLOAL MIDDLI CLASS ................................... 17!
V. A NOTI ON CHINA AND INDIA .................................................................................................... 30!
VI. CONCLUSION ..................................................................................................................................... 38!
ANNIX 1. IRO}ICTIONS MITHODOLOGY ...................................................................................... 40!
RIIIRINCIS ............................................................................................................................................. 50!
OTHIR TITLIS IN THI SIRIIS/ AUTRIS TITRIS DANS LA SIRII .............................................. 53!


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4 OICD 2010

ACKNOWLEDGEMENTS
I vouId Iike lo acknovIedge and lhank Geoff Gerlz of lhe WoIfensohn Cenler for
DeveIomenl for his vork on deveIoing lhe Iour Seed WorId scenario. Dan Hammer from lhe
Cenler for GIobaI DeveIomenl generousIy conlribuled lhe ma shoving lhe shifling economic
cenlre of gravily in lhe vorId. An anonymous referee and Andrev MoId, DeveIomenl Cenlre,
OICD, rovided very heIfuI commenls.


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PREFACE
Over lhe Iasl lvenly years, economic and oIilicaI over has been shifling lovards
emerging economies. A number of deveIoing counlries have become cenlres of slrong grovlh,
raising lheir shares of gIobaI income significanlIy, vhich has made lhem ma|or Iayers in
regionaI and gIobaI affairs. Iurlhermore, fIovs of lrade, aid and inveslmenl |ciuccn emerging
and deveIoing counlries have aII inlensified.
The GIobaI DeveIomenl OulIook 2010 resenls lhe evidence vhich documenls lhese
changes, vhal ve caII 'Shifling WeaIlh'. As lhe vorId emerges from lhe crisis, lhe reorl cIarifies
lhis nev gIobaI reaIily and vhal il means for deveIomenl. CIearIy, il imIies lhal deveIomenl
slralegies need lo be relhoughl in lhe nev inlernalionaI environmenl. The GDO 2010 suggesls
vays in vhich deveIoing counlries can besl lake advanlage of lhe nev economic Iandscae and
suorls caIIs for gIobaI governance lo be reformed, making il more incIusive.
The GIobaI DeveIomenl OulIook has been guided by and conlribuled lo by eminenl
schoIars from deveIoing and emerging counlries, our Non-ResidenliaI IeIIovs. This aer, by
Homi Kharas, from lhe rookings Inslilule in Washinglon, is one of lhe firsl lo be ubIished in
lhe series. The lheme is a fascinaling one, Iooking al lhe olenliaI grovlh of lhe gIobaI middIe
cIass in lhe deveIoing vorId. In lhe aflermalh of lhe financiaI crisis, Homi's aer carries an
imorlanl message - over lhe coming decades Asia's emerging middIe cIass viII be Iarge enough
lo become one of lhe main drivers of lhe gIobaI economy.
The slory loId here is reresenlalive of lhe changing dynamics of lhe gIobaI economy,
vhereby acceled visdoms need lo re-examined and reconsidered in lhe Iighl of lhe 'Shifling
WeaIlh of Nalions'.

}avier Sanliso
Direclor, OICD DeveIomenl Cenlre
}anuary 2010


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6 OICD 2010

RSUM
La rearlilion mondiaIe de Ia roduclion induslrieIIe en faveur de I'Asie esl un
henomene Iargemenl demonlre. Quanl a Ia demande de consommalion mondiaIe, eIIe
rovenail |usqu'ici des economies riches des ays de I'OCDI. Au fur el a mesure que Ies ays
d'Asie s'enrichissenl, celle demande de consommalion va-l-eIIe a son lour se deIacer en Ieur
faveur` Dans ce documenl de lravaiI, Ia cIasse moyenne esl definie comme foyers a revenus
moyens ar lle enlre USD10 el USD100, en lermes de ouvoir d'achal. In associanl des donnees
recoIlees Iors d'enqules aures de menages a des ro|eclions de croissance dans 145 ays, on
s'aeroil que I'Asie reresenle moins d'un quarl de Ia cIasse moyenne d'au|ourd'hui. Celle
roorlion ourrail doubIer d'ici 2020. IIus de Ia moilie de Ia cIasse moyenne mondiaIe se
siluerail aIors en Asie, el Ies consommaleurs asialiques ourraienl reresenler Ius de 40 our
cenl de Ia consommalion mondiaIe des cIasses moyennes. CeIa esl d au fail qu'un grand
nombre de foyers asialiques eroive au|ourd'hui des revenus Ies osilionnanl |usle en dessous
du seuiI de Ia cIasse moyenne mondiaIe. Iour celle raison, iI esl revu que, dans Ies dix
rochaines annees, de Ius en Ius d'Asialiques fassenl arlie de Ia cIasse moyenne. Ce
documenl de lravaiI anaIyse Ia maniere donl ce henomene eul conlribuer a mainlenir, au
moyen lerme, Ia croissance gIobaIe, qui esl rovoquee ar Ia differenlialion des roduils, Ie
marquage el Ie markeling dans Ies nouveaux marches emergenls d'Asie.

Mcis c|cs : cIasse moyenne, ays asialiques, consommalion, croissance gIobaIe, cenlre de gravile
C|assijicaiicn j|I . I01, O10, O12

ABSTRACT
The shifl in gIobaI goods roduclion lovards Asia is veII documenled. ul gIobaI
consumer demand has so far been concenlraled in lhe rich economies of lhe OICD. WiII lhal aIso
shifl lovards Asia as lhese counlries gel richer` This aer defines a gIobaI middIe cIass as aII
lhose Iiving in househoIds vilh daiIy er caila incomes of belveen USD10 and USD100 in III
lerms. y combining househoId survey dala vilh grovlh ro|eclions for 145 counlries, il shovs
lhal Asia accounls for Iess lhan one-quarler of loday's middIe cIass. y 2020, lhal share couId
doubIe. More lhan haIf lhe vorId's middIe cIass couId be in Asia and Asian consumers couId
accounl for over 40 er cenl of gIobaI middIe cIass consumlion. This is because a Iarge mass of
Asian househoIds have incomes loday lhal osilion lhem |usl beIov lhe gIobaI middIe cIass
lhreshoId and so increasingIy Iarge numbers of Asians are execled lo become middIe cIass in lhe
nexl len years. The aer exIores hov lhis can heI suslain gIobaI grovlh in lhe medium lerm,
driven by roducl differenlialion, branding and markeling in lhe nev grovlh markels of Asia.

Kcqucr!s. middIe cIass, Asian counlries, consumlion, gIobaI grovlh, cenlre of gravily
j|I C|assijicaiicn. I01, O10, O12

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OICD 2010 7

I. INTRODUCTION
Ior forly years belveen 1965 and 2004, lhe G7 economies accounled for an average of
65 er cenl of gIobaI GDI measured al markel exchange rales. Desile ma|or evenls in lhe gIobaI
economylhe coIIase of lhe rellon Woods fixed exchange rale arrangemenl in 1971, oiI rice
sikes in 1973 and 1979, slagfIalion, lhe faII of lhe erIin WaII and dismanlIing of lhe Soviel
Unionlhe share of lhe G7 in lhe gIobaI economy aIvays slayed vilhin lhree ercenlage oinls
of 65 er cenl. This remarkabIe slabiIily aIso ushered in a eriod knovn as lhe Greal Moderalion
lo describe lhe reduced voIaliIily of ma|or macroeconomic oulcomes in lhe deveIoed vorId.
Underinning lhe erformance of lhe G7, and indeed driving lhe gIobaI economy, is a
Iarge middIe cIass. The middIe cIass is an ambiguous sociaI cIassificalion, broadIy refIecling lhe
abiIily lo Iead a comforlabIe Iife. The middIe cIass usuaIIy en|oy slabIe housing, heaIlhcare and
educalionaI oorlunilies (incIuding coIIege) for lheir chiIdren, reasonabIe reliremenl and |ob
securily, and discrelionary income lhal can be senl on vacalion and Ieisure ursuils.
The middIe cIass has Iayed a seciaI roIe in economic lhoughl for cenluries. Il emerged
oul of lhe bourgeoisie in lhe Iale fourleenlh cenlury, a grou lhal vhiIe derided by some for lheir
economic maleriaIism rovided lhe imelus for an exansion of a cailaIisl markel economy and
lrade belveen nalion slales. Iver since, lhe middIe cIass has been lhoughl of as lhe source of
enlrereneurshi and innovalionlhe smaII businesses lhal make a modern economy lhrive.
MiddIe cIass vaIues aIso emhasize educalion, hard vork and lhrifl. Thus, lhe middIe cIass is lhe
source of aII lhe needed inuls for grovlh in a neocIassicaI economynev ideas, hysicaI cailaI
accumuIalion and human cailaI accumuIalion.
More recenlIy, lhe consumlion roIe of lhe middIe cIass has been emhasized. }uIiel
Schor (1999) has argued lhal il is a nev consumerism lhal defines lhe middIe-cIass: a conslanl,
uscaIing of IifeslyIe norms, lhe ervasiveness of consicuous, slalus goods and of comelilion
for acquiring lhem, and lhe groving disconnecl belveen consumer desires and incomes. In a
more academic vein, Murhy, ShIeifer and Vishny (1989) emhasize lhe viIIingness of lhe
middIe cIass consumer lo ay a IillIe exlra for quaIily as a force lhal encourages roducl
differenlialion and lhereby feeds inveslmenl in roduclion and markeling of nev goods.
Il is lhis Ialler roIe lhal has become more ronounced vilh lhe exansion of gIobaI lrade
and nev lrade lheories have evoIved lo exIain lhe slyIised facl lhal mosl lrade exansion has
been occurring al lhe exlensive margin - lhal is lhrough lhe exansion of nev goods ralher lhan
grealer lrade of exisling roducls (HummeIs and KIenov 2002). In lhe vorId of lhe 21
sl
cenlury,
lhe middIe cIass consumers of Norlh America and Iuroe have been lhe source of demand,
vhiIe Iov and middIe income counlries in Asia have been lhe source of suIy.

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8 OICD 2010
Wilh lhe excelion of }aan and Oceania, Asia's raid grovlh has nol been driven by a
Iarge domeslic middIe cIass. The exansion of faclors of roduclion driving olenliaI oulul has
haened vilhoul a significanl middIe cIass. Saving and educalion have been viIIingIy
underlaken even by oor househoIds, in lhe face of Iarge relurns lo such aclivilies in a gIobaIised
vorId, as veII as by governmenls. TechnoIogy has been imorled from abroad by cororalions
lhrough IDI, imorled machinery and arlicialion in gIobaI suIy chains.
The unIocking of lhe sending over of lhe middIe cIass in rich counlries vas achieved
in arl by financiaI innovalions lhal aIIoved for raid grovlh in consumer credil, morlgages for
an ever-Iarger segmenl of lhe ouIalion and home equily vilhdravaIs. ecause househoId
veaIlh grev fasler lhan income, lhese innovalions ermilled househoIds lo la inlo lheir veaIlh
for currenl consumlion and Ied lo a decIine in househoId saving rales. ul lhe currenl
dovnlurn has broughl lhis rocess lo a haIl. US househoIds are saving again in an efforl lo
rebuiId Iosl veaIlh. The consensus forecasl is lhal lhis viII be a Iasling effecl of lhe gIobaI
financiaI crisis
!
.
Hov can lhe vorId economy fiII lhis void in gIobaI demand broughl on by lhe
relrenchmenl of lhe American consumer` AII eyes are nov lurning lo Asia, and secificaIIy lo
lhe emerging middIe cIass in China and olher counlries, lo become lhe nexl gIobaI consumers.
Wilhin Asia lhere is significanl laIk of rebaIancing lovards domeslic demand (more secificaIIy
domeslic consumlion) as a vay of suslaining grovlh in lhe face of olenliaIIy sIuggish exorls.
ul lhe oIicy rescrilions lo achieve such a rebaIancing are nol easy. They invoIve crealion of a
sociaI safely nel, medicaI insurance schemes, and beller ubIic educalion services. In shorl, Asian
consumlion is lied in lhe minds of many anaIysls lo Iong-lerm inslilulionaI changes. Given lhe
difficuIlies of imIemenling such changes, il is hard lo be very confidenl lhal lhis rebaIancing
viII haen in lhe medium lerm.
Thal is vhy oIicymakers such as OIivier Ianchard, lhe IMI's Chief Iconomisl, vorry
lhal suslaining lhe nascenl recovery is IikeIy lo require deIicale rebaIancing acls, bolh vilhin
and across counlries
"
. In lhis aer I lrace oul vhelher such fears are |uslified or vhelher lhere
is reason lo beIieve lhal Asia's emerging middIe cIass viII be Iarge enough lo reIace lhe US as a
driver of lhe gIobaI economy.
The aer argues lhal lhere is good reason lo be olimislic aboul a nev Asian
consumerism emerging al a scaIe and liming sufficienl lo reIace lhe forecasl shorlfaIIs in US
consumer demand grovlh. Indeed, I argue lhal severaI Asian counlries, in arlicuIar China and
India, have reached a liing oinl vhere Iarge numbers of eoIe viII enler lhe middIe cIass
and drive consumlion.
The aroach foIIoved in lhis aer has lhree sles. Iirsl, I define a gIobaI middIe cIass.
There are lvo schooIs of lhoughl as lo hov lo do lhis, divided by vhelher lo lake an absoIule
gIobaI definilion or a reIalive definilion for each counlry. I adol lhe absoIule definilion, using a

!
See, for examIe, GaIslon (2009).
"
OIivier Ianchard, Suslaining a GIobaI Recovery Iinance and DeveIomenl, Selember 2009.

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OICD 2010 9
range of USD10 lo USD100 in urchasing over arily er caila er day lo characlerise middIe
cIass househoIds.
Second, based on lhis definilion, I comule lhe currenl size of lhe gIobaI middIe cIass by
searaleIy eslimaling lhe size of lhe middIe cIass for each of 145 counlries, accounling for 99 er
cenl of lhe vorId's GDI and 98 er cenl of ils ouIalion. To do lhis, I lake lhe dislribulion of
income from Ialesl avaiIabIe househoId surveys of bolh deveIoing and deveIoed counlries,
avaiIabIe from lhe WorId ank. Irom lhis dala I eslimale lhe dislribulionaI aramelers of a
Lorenz curve. The mean of lhe dislribulion is ad|usled lo refIecl househoId consumlion given in
lhe nalionaI income accounls for each counlry. These aramelers are used lo eslimale lhe
number of eoIe faIIing inlo lhe range of incomes lhal define lhe middIe cIass.
Third, I make ro|eclions for lhe size of lhe middIe cIass for each counlry. I make lhe
slrong assumlion lhal income dislribulion in lhe middIe of lhe ouIalion (roughIy deciIes 5
lo 9) remains unaIlered, so lhe size of lhe middIe cIass faIIs oul of GDI ro|eclions. If inequaIily
vere lo increase, as has been lhe case recenlIy, lhe size of lhe middIe cIass vouId robabIy
exand more raidIy lhan vhal I shov, because lhe emerging counlries currenlIy have very fev
eoIe lhal surass lhe Iover lhreshoId of USD10/day/erson. More inequaIily vouId suggesl
lhal lhose al lhe uer end of lhe dislribulion, vilh high IeveIs of educalion and enlrereneuriaI
laIenl, are acluaIIy making more money lhan GDI grovlh vouId suggesl, roeIIing lhem fasler
inlo lhe ranks of lhe middIe cIass. Thus, aIlhough I do nol erform sensilivily lesls, lhe bias from
lhe assumlion of no change in inequaIily is IikeIy lo be lovards shoving a smaIIer gIobaI
middIe cIass.
Searale seclions on China and India are designed lo bullress lhe gIobaI argumenl vilh
more counlry secificily.
The aer concIudes vilh observalions aboul risks lo lhe base scenario vhich shovs lhe
gIobaI middIe cIass groving by 4.6 er cenl in reaI lerms in sending over, and by 5.3 er cenl
in lerms of number of eoIe belveen nov and 2020.

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II. DEFINING THE MIDDLE CLA55
In defining lhe middIe cIass, lhe urose of lhis aer musl be kel in mind. I am
inleresled in measuring lhe size of a grou of eoIe vho conlribule in a discrele fashion lo
economic grovlh. aner|ee and DufIo (2007) make a usefuI dislinclion belveen four dislincl
conlribulions lhal lhe middIe cIass make. I choose lo focus on onIy one of lhese conlribulions and
lhal infIuences vhy I define lhe middIe cIass in a arlicuIar vay. There are olher Iegilimale vays
of defining lhe middIe cIass, bul I vish lo focus on vhal may be lermed lhe consumer cIass.
Iirsl, aner|ee and DufIo nole lhe Iinks belveen lhe middIe cIass and democracy. If
democracy is lhen causaIIy Iinked vilh grovlh, one can infer lhal lhe middIe cIass causes
grovlh. If lhis vere lhe channeI lhrough vhich lhe middIe cIass had an imacl on grovlh, I
vouId vanl lo Iook al eoIe lhal are aclive oIilicaI arlicianls. Ior examIe, lhe WorId
VaIues Survey idenlifies eoIe vho are aclive in oIilicaI arlies and olher organisalions, lhose
vaIuing freedom of choice, and lhose beIieving oIilics is imorlanl. If lhese are defined as
middIe cIass allribules, such dala couId be used lo conslrucl an eslimale of lhe size of lhe middIe
cIass. Hovever, arro (1996) finds onIy a veak (and sIighlIy negalive) imacl of democracy on
economic grovlh, in a aneI regression of 100 counlries from 1960 lo 1990, condilionaI on
mainlenance of lhe ruIe of Iav, free markels, smaII governmenl consumlion and high human
cailaI. Given lhis finding, defining lhe middIe cIass in lerms of variabIes IikeIy lo induce
oIilicaI arlicialion does nol aear romising for exIaining gIobaI grovlh.
Second, AcemogIu and ZiIibolli (1997) emhasize lhe roIe of lhe middIe cIass as a source
of enlrereneurs. This foIIovs lhe originaI lradilion of defining lhe middIe cIass in lerms of
occualion and differenlialing lhem from lhe nobiIily or easanls vho characlerised lhe feudaI
economy. ul aner|ee and DufIo (2007) find lhal lhe average middIe cIass erson is nol an
enlrereneur in vailing. If lhey do run a business, il is usuaIIy smaII and nol very rofilabIe. In
mosl counlries, lhe number of business ovners/enlrereneurs is smaII, vhiIe lhe middIe cIass is
Iarge (al Ieasl in successfuI counlries). AccordingIy, lrying lo define lhe middIe cIass in lerms of
enlrereneuriaI occualion seems lo miss lhe oinl.
Third, Doeke and ZiIibolli (2007) emhasize lhe conlribulion of lhe middIe cIass lo
human cailaI and lo saving. ul Kenny (2008)
#
finds evidence of bela convergence in mosl
human cailaI variabIeseducalion, infanl morlaIily, Iife execlancyimIying lhal lhe Iover
lhe slarling oinl lhe more raid lhe rale of accumuIalion of human cailaI. SimiIarIy, sludies on
counlries Iike China find lhal househoIds save a considerabIe orlion of lheir income even vhen

#
Whal's Nol Converging, Asian Iconomic IoIicy Reviev.

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lhey are near oor
$
. Thus, lhere is nolhing seciaI aboul lhe middIe cIass in lerms of lheir
conlribulion lo human cailaI. If anylhing, lhe evidence oinls lo a sIoving dovn in lhe rale of
human cailaI formalion (aIbeil from a much higher base) as househoIds enler lhe middIe cIass.
The fourlh hyolhesis aboul vhal makes lhe middIe cIass seciaI focuses on
consumlion. Here lhe evidence is more ersuasive. usiness houses, such as Nomura (2009)
argue lhal lhere is a kink in consumer demand curves around USD6000 er caila. Above lhis
IeveI, lhe income eIaslicily for ilems Iike consumer durabIes as veII as for services Iike insurance
rises veII above one. This remains lhe case unliI income IeveIs surass USD25000
%
. Al lhal oinl,
lhe income eIaslicily dros again.
Murhy, ShIeifer and Vishny (1989) formaIize lhis argumenl
&
. In lheir aer,
induslriaIisalion has fixed cosls. ecause inlernalionaI lrade is coslIy, lhere musl be a domeslic
markel of a cerlain size lo overcome lhese cosls. Thal onIy haens if income is concenlraled in a
middIe cIass. Too much equaIily and income IeveIs do nol rise lo a IeveI vhich can suorl lhe
demand for manufaclures. Too much inequaIily, and lhere are nol enough eoIe lo cover lhe
fixed cosls. In lhe modern vorId, one can lhink aboul lhis as grovlh on lhe exlensive margin.
MiddIe income counlries grov by roducing a grealer number of goods (Imbs and Wacziarg,
2000) u lo a lhreshoId income IeveI vhen lhey have sufficienl scaIe lo overcome lhe fixed cosls
of inlernalionaI lrade and seciaIise in roduclion.
Ior lhis reason, aIlhough recognising lhal lhe middIe cIass is as much a sociaI designalion
as an economic cIassificalion, I choose lo measure lhe middIe cIass in lerms of consumlion
IeveIs.
The middIe cIass can be defined in reIalive or absoIule lerms. IaslerIy (2000) and irdsaII,
Graham and Iellinalo (2000) lake a reIalivisl aroach, defining lhe middIe cIass as lhose
belveen lhe 20
lh
and 80
lh
ercenliIe of lhe consumlion dislribulion and belveen 0.75 and
1.25 limes median er caila income resecliveIy. haIIa (2009) lakes an absoIule aroach,
defining lhe middIe cIass as lhose vilh annuaI incomes over USD3900 in urchasing over
arily lerms. aner|ee and DufIo (2007) use lvo aIlernalive absoIule measureslhose vilh daiIy
er caila exendilures belveen USD2 lo USD4 and lhose vilh daiIy er caila exendilures
belveen USD6 and USD10. RavaIIion (2009) lakes a hybrid aroach, defining a deveIoing
vorId middIe cIass as having one range of incomes (belveen lhe median overly Iine of
counlries in lhe deveIoing vorId and lhal of lhe USA) and a Weslern vorId middIe cIass
(above lhe US overly Iine). The WorId ank (2007) aIso uses an absoIule definilion, arbilrariIy
defining lhe middIe cIass as lhose vilh incomes faIIing belveen lhe mean IeveI in raziI and
IlaIy, or USD4000 lo USD17000 in 2000 urchasing over arily lerms.
The choice belveen lhese various aroaches deends on lhe urose al hand. As I am
inleresled in vhelher lhe emerging Asian middIe cIass can comensale for faIIing grovlh in lhe
US middIe cIass, il makes sense lo lake an absoIule aroach vilh a common lhreshoId range for

$
WorId ank China Ioverly Assessmenl, 2009.
%
AcluaIIy, lhe Nomura anaIysis Iols er caila anaIysis of aImosl anylhing againsl GDI er caila.
&
Income Dislribulion, Markel Size, and InduslriaIizalion, QuarlerIy }ournaI of Iconomics.

DEV/DOC(2010)2
12 OICD 2010
aII counlries. Il vouId make no sense lo comare Indians earning USD2 er day vilh Americans
earning USD50 er day and cIaim lhal bolh are comarabIe in lerms of urchasing over, and as
drivers of gIobaI grovlh, because bolh are middIe cIass.
Taking an absoIule aroach, I define lhe gIobaI middIe cIass as lhose househoIds vilh
daiIy exendilures belveen USD10 and USD100 er erson in urchasing over arily lerms.
The Iover bound is chosen vilh reference lo lhe average overly Iine in IorlugaI and IlaIy, lhe
lvo advanced Iuroean counlries vilh lhe slriclesl definilion of overly. The overly Iine for a
famiIy of four in lhese counlries is USD14533 (USD9.95 er day er caila in 2005 urchasing
over arily lerms). The uer bound is chosen as lvice lhe median income of Luxemburg, lhe
richesl advanced counlry. Defined in lhis vay, lhe gIobaI middIe cIass excIudes lhose vho are
considered oor in lhe ooresl advanced counlries and lhose vho are considered rich in lhe
richesl advanced counlry.
To some exlenl lhe choice of a middIe cIass range is ralher arbilrary. I couId have defined
lhe range in a number of differenl vays bul lhe lrend resuIls vouId be simiIar.
This Iasl slalemenl is more lhan a lhrov-avay. The facl is lhal regardIess of lhe chosen
range, dala lo ermil gIobaI comarisons are nol lhal robusl, so a degree of arbilrariness is
inevilabIe al lhis oinl in lime. AII absoIule aroaches lo defining lhe middIe cIass are made in
urchasing over arily lerms, using lhe nev resuIls of lhe 2005 InlernalionaI Comarison
Irogram, a |oinl exercise of lhe UN-OICD-WorId ank-regionaI deveIomenl banks. These
eslimales comare rices for 1000 goods and services across 146 counlries. The exercise has been
described as lhe mosl exlensive and lhorough efforl ever lo measure IIIs across economies
'
.
ul serious queslions remain aboul lhe significanl changes lhal have resuIled from lhe 2005
measure, as comared lo revious eslimales. In Asia, rices vere ad|usled uvards by aImosl
40 er cenl on average, vilh rice changes for Iarge Asian economies being severe: China,
+38.7 er cenl, India, +37.2 er cenl, angIadesh, +47.3 er cenl, IhiIiines, +40.8 er cenl,
Vielnam, +31 er cenl.
(
Ior deveIoed counlries, such as lhe USA (+1.5 er cenl), lhe changes
vere marginaI.
There are many reasons lo doubl lhe resuIls of lhe ICI 2005. In China, for examIe, rices
vere onIy coIIecled from a handfuI of cilies and, according lo some reorls, onIy from lhe mosl
exensive areas vilhin lhose cilies. As mosl Chinese sliII Iive in ruraI areas, lhe rices coIIecled
are unIikeIy lo be reresenlalive of lhose facing lhe ouIalion as a vhoIe. On lhe olher hand,
rior lo lhe ICI 2005, China had never arlicialed in a survey al aII, and rice IeveIs vere
inferred from olher dala. The choice belveen inferred dala, versus direcl, if imerfeclIy
measured dala, is nol easy lo make.
One imIicalion of lhe nev series is lhal hisloricaI er caila GDI figures have aIso been
revised dovn in III lerms. Taking lhe nev Chinese GDI er caila and exlraoIaling
backvards vilh officiaI Chinese reaI grovlh yieIds a GDI er caila of Iess lhan USD300

'
WorId ank (2008) . 9 |GIobaI Iurchasing Iover Iarilyj.
(
A osilive sign means lhal rices vere raised by lhe secified amounl, aIso imIying lhal reaI incomes in
III lerms are reduced by a corresonding amounl.

DEV/DOC(2010)2
OICD 2010 13
(2005 III) in lhe 1960s. Thal vouId mean lhal al lhal lime China had one-fiflh lhe income IeveI
of lhe average oor counlry loday, or one-lhird of Ilhioia or MaIavi loday. Such figures do nol
seem credibIe. This vouId Iace China's income IeveI al |usl a bil over haIf of vhal Angus
Maddison (2009)
)
eslimaled in his delaiIed accounling of Chinese grovlh.
The oinl being made is lhal gIobaIIy comarabIe dala is nol very accurale. We can
robabIy be more confidenl of changes over lime lhan in IeveIs of income vhen comaring
across counlries. Il is lherefore Iess inleresling lo Iace loo much emhasis on a recise definilion
of lhe middIe cIass range. The focus shouId be on changes over lime of lhe number of individuaIs
faIIing inlo a secific calegory, even if lhal has an eIemenl of arbilrariness aboul ils boundaries.

)
Angus Maddison Slalislics on WorId IouIalion, GDI and er caila GDI, 1-2006 AD (udaled March
2009).

DEV/DOC(2010)2
14 OICD 2010

III. MEA5URING THE GLOBAL MIDDLE CLA55
The gIobaI middIe cIass has been measured by Iooking al lhe cross-counlry dislribulion of
income. Quah (2002) grahs lhis and suggesls lhal lhere is an emerging lvin eaks in gIobaI
income. This aroach, hovever, negIecls counlry size and inlra-counlry income dislribulion. Il
imIicilIy assigns lhe same veighl lo China as lo Timor Lesle.
To gel around lhis robIem, MiIanovic (2009) uses ouIalion veighls lo eslimale
inlernalionaI inequaIily. This measure is usefuI vhen considering lhe veIfare imIicalions of
changes in inlernalionaI inequaIily. Il cerlainIy makes a difference lo our concel of vhal is
haening lo inequaIily in lhe vorId if lhe 2.5 biIIion eoIe in China and India are converging
vilh lhe Wesl in lerms of Iiving slandards, comared lo vhal haened vhen lhe cily slales of
Hong Kong and Singaore vere converging raidIy in lhe 1970s.
InlernalionaI inequaIily differs from gIobaI inequaIily. The former refers lo ouIalion-
veighled changes in lhe dislribulion of mean counlry er caila incomes. Il does nol concern
ilseIf vilh vilhin counlry inequaIily. GIobaI inequaIily, on lhe olher hand, lries lo osilion every
individuaI in lhe vorId on lhe same scaIe. MiIanovic suggesls lhal lhe gIobaI Gini coefficienl
using lhis measure may amounl lo 70 er cenl in 2002.
SaIa-i-Marlin (2002) vas lhe firsl lo combine micro househoId survey dala vilh macro
dala lo derive lhe gIobaI dislribulion of income. He noles lhal lhis exercise requires, in rinciIe,
knovIedge of lhe income IeveI of every erson in a common currency. Thal is obviousIy nol
avaiIabIe in raclice. He eslimales a kerneI densily funclion for each counlry from avaiIabIe
income share dala, and uses lhis lo derive eslimales of each individuaI's income.
I foIIov lhis aroach. I deveIo eslimales of lhe size of lhe middIe cIass for
145 counlries, accounling for 98 er cenl of lhe vorId's ouIalion and 99 er cenl of ils GDI.
These counlries have bolh househoId surveys, from vhich househoId income dislribulion can be
measured, and nalionaI income accounls from vhich lolaI househoId consumlion exendilures
can be measured. Ior 14 smaII counlries, househoId surveys are nol avaiIabIe. Ior comIeleness,
I assign lhe same income dislribulion lo lhese counlries as lhe mean for lhe surrounding
region
!*
. Irom lhe WorId ank's househoId surveys, I oblain lhe dislribulion of househoId

!*
The counlries are smaII and do nol affecl gIobaI lrends. The aIlernalive vouId have been lo simIy discard
lhe counlries, bul lhe olion of inleroIalion seems referabIe. This is lhe aroach foIIoved by
ourguignon and Morrisson (2002).

DEV/DOC(2010)2
OICD 2010 15
income by deciIe
!!
. This is lhen inulled inlo lhe WorId ank's IovCaI soflvare lo eslimale lhe
dislribulionaI aramelers of a quadralic Lorenz curve
!"
.
The remaining arameler lo be eslimaled is lhe mean of lhe dislribulion. WorId ank
(2007) uses lhe mean from househoId surveys. SaIa-i-Marlin (2002) uses GDI er caila. I choose
lo use lhe nalionaI income accounls measure of lolaI househoId consumlion exendilure in
2005 III doIIars
!#
. This besl refIecls lhe concel of urchasing over and lhe markel for
consumer goods and services vhich I have focused on as lhe key characlerislic of lhe middIe
cIass. MoslIy, lhe lrends in lhese variabIes foIIov each olher cIoseIy, so changes over lime are nol
affecled loo much by lhe choice of mean. ul in some cases, lhere can be a significanl difference.
India is one of lhose cases vhich has been anaIysed in delaiI by Dealon and Dreze (2002), vho
make ad|uslmenls lo bolh househoId surveys and nalionaI accounls dala lo come u vilh
comarabIe eslimales of overly changes over lime
!$
.
Given lhe mean and dislribulion aramelers, IovCaI generales a headcounl of lhose
Iiving beIov any given exendilure lhreshoId. The number in lhe middIe cIass is defined as lhe
difference belveen lhe number of eoIe vilh exendilures beIov lhe USD100 er day lhreshoId
and lhe number vilh exendilures beIov lhe USD10 er day lhreshoId.
Using lhis measure, lhere are 1.8 biIIion eoIe in lhe gIobaI middIe cIass (TabIe 1),
concenlraled in Norlh America (338 miIIion), Iuroe (664 miIIion) and Asia (525 miIIion). The US
Ieads among individuaI counlries, vilh some 230 miIIion. The IU has aImosl 450 miIIion middIe
cIass consumers and }aan has a furlher 125 miIIion. Nol surrisingIy, lhere are very fev middIe
cIass in sub-Saharan Africa: aboul 32 miIIion or roughIy lhe same as Canada.
The numbers of lhe gIobaI middIe cIass hide lhe differences in urchasing over. The
range for vhal conslilules a middIe cIass consumer is quile broad, so someone in lhe Chinese
middIe cIass does nol send as much as someone in lhe US middIe cIass. The dala bear lhis oul.
The Norlh American middIe cIass accounls for subslanliaIIy more of gIobaI sending lhan ils
ouIalion share, vhiIe lhe reverse is lrue of Asia's middIe cIass. The US is home lo 12 er cenl
of lhe vorId's middIe cIass in lerms of absoIule numbers of eoIe, bul il accounls for
USD4.4 lriIIion (21 er cenl) of lhe USD21 lriIIion in gIobaI sending by middIe cIass consumers.
The difference is because lhe US middIe cIass is much veaIlhier lhan lhe average gIobaI middIe
cIass consumer.

!!
WorId ank househoId survey dala for deveIoing counlries are found in lhe IovcaINel dalabase
(hll://go.vorIdbank.org/NT2A1XUWI0), dala on advanced counlries are found in InequaIily Around
lhe WorId: GIobaIizalion and Income Dislribulion Dalasel (hll://go.vorIdbank.org/0C52T3CLM0).
olh accessed December 2008.
!"
The IovCaI soflvare can be dovnIoaded al hll://go.vorIdbank.org/YMRH2NT5V0. Ior a fuII discussion
of lhe caIcuIalions invoIved, see Dall (1998).
!#
NalionaI income accounls dala are from lhe WorId ank's WorId DeveIomenl Indicalors
(hll://go.vorIdbank.org/U0ISM7AQ40). Accessed Augusl 2009.
!$
Ioverly and InequaIily in India: A re-examinalion, Cenler for DeveIomenl Iconomics, Working Iaer
-107.

DEV/DOC(2010)2
16 OICD 2010

TabIe 1. Thc G!nba! Midd!c C!ass, 2009: Pcnp!c and 5pcnding

Number of IeoIe (miIIions
and gIobaI share)
Consumlion (biIIions
IIIUSD and gIobaI share)
Norlh America 338 18% 5602 26%
Iuroe 664 36% 8138 38%
CenlraI and Soulh America 181 10% 1534 7%
Asia Iacific 525 28% 4952 23%
Sub-Saharan Africa 32 2% 256 1%
MiddIe Iasl and Norlh
Africa 105 6% 796 4%
WorId 1845 100% 21278 100%


DEV/DOC(2010)2
OICD 2010 17

IV. PROJECTING GDP AND TREND5
IN THE GLOBAL MIDDLE CLA55
To undersland lrends in lhe gIobaI middIe cIass, I deveIo a scenario for GDI grovlh for
each counlry and assume lhal lhe income of each househoId in a counlry grovs al lhis rale. The
delaiIs of lhe scenario melhodoIogy are rovided in Annex 1, bul broadIy seaking I use lhe
same lechniques as GoIdman Sachs in lheir ioneering scenario vork, slarling in 2003
!%
.
I deveIo searale grovlh ro|eclions for 145 deveIoed and deveIoing counlries,
comrising 98 er cenl of gIobaI oulul. Taking a slyIised viev of lhe vorId, I cIassify lhese
counlries inlo one of four calegories, each vilh GDI grovlh drivers lhal have differenl
aramelershence lhe modeI is caIIed lhe Iour Seed WorId
!&
.
Al lhe oulsel, il is imorlanl lo emhasize lhal Iike aII Iong-run modeIs, lhe urose is
iIIuslralive, lo fosler debale lhrough resenlalion of a scenario ralher lhan redicl lhe fulure.
Wilhin broad anaIylicaI calegories lhal mighl shae counlry economic erformance, lhere viII
inevilabIy be Iarge varialions belveen counlries, vhich ve Ieave unexIained, and equaIIy Iarge
varialions for any given counlry over lime. The urose is nol lo deveIo forecasls or ro|eclions
for any counlry or any lime eriod, bul lo indicale a scenario of lhe conlours of lhe gIobaI
economy over lhe nexl lhree decades.
The basic framevork is a conslanl-relurns-lo-scaIe Cobb-DougIas roduclion funclion
vilh grovlh for each counlry deendenl on cailaI accumuIalion, Iabour force grovlh, and
lechnoIogicaI imrovemenls
!'
. CailaI accumuIalion is delermined by inveslmenl vhich is
assumed lo remain al lhe average rale of lhe len years, 1998-2007. Labour force grovlh is laken
from UN ouIalion ro|eclions of lhe vorking age grou of 15-64 year-oIds.
Whal remains is lhe eslimalion of lechnoIogicaI imrovemenls.
IoIIoving GoIdman Sachs and olhers, I assume lhal lhe rale of lechnoIogicaI
imrovemenl in each counlry has lvo comonenls. Iirsl, lhe gIobaI lechnoIogy fronlier is
shifling oul vilh nev advances in science, nev roducls and nev rocesses. Second, mosl
counlries are oeraling vilhin lhis gIobaI fronlier and can calch-u raidIy. I assume, Iike olhers,
lhal lhe rale al vhich calch-u occurs is inverseIy roorlionaI lo lhe ga belveen lhe er caila
income IeveI of lhe counlry and lhal of lhe Uniled Slales vhich is reresenled as lhe gIobaI

!%
Dreaming vilh RICs: lhe alh lo 2050, GoIdman Sachs.
!&
See Tnc |cur Spcc! Wcr|!, WoIfensohn Cenler for DeveIomenl (forlhcoming) for more delaiIs.
!'
Thal is, Y AL
, vhere + 1.

DEV/DOC(2010)2
18 OICD 2010
Ieader in lechnoIogy. Thal is, counlries vilh very Iov income IeveIs can calch-u fasl, vhiIe
counlries vhich are cIoser lo lhe Uniled Slales viII see lheir lechnoIogicaI imrovemenl sIov
dovn.
The rale al vhich lhe gIobaI lechnoIogy fronlier moves oul is laken as 1.3 er cenl er
year. Given lhe hisloricaI rale of cailaI deeening in lhe Uniled Slales, lhis arameler yieIds an
eslimale for US Iabour roduclivily grovlh of 1.8 er cenl, lhe average Iong-run, rale vhich has
been observed for lhe asl 125 years. As Iigure 1 shovs, lhis rale has been very slabIe over lime
and can lherefore be laken as a good roxy for fulure olenliaI lechnoIogy grovlh. In lhis sense,
lhe modeI does nol reIy on any nev economy, informalion lechnoIogy assumlions and is
caIibraled lo reIicale lhe Iong-run hislory of gIobaI grovlh.

Iigure 1. Rca! U5 GDP pcr capita, 1870-2006

1,000
10,000
100,000
1
8
7
0
1
8
7
9
1
8
8
8
1
8
9
7
1
9
0
6
1
9
1
5
1
9
2
4
1
9
3
3
1
9
4
2
1
9
5
1
1
9
6
0
1
9
6
9
1
9
7
8
1
9
8
7
1
9
9
6
2
0
0
5
C
o
n
s
t
a
n
t

1
9
9
0

G
e
a
r
y
-
K
h
a
m
i
s

$
,

l
o
g

s
c
a
l
e

Scurcc. Maddison, A.

y assigning raid calch-u lechnoIogicaI rogress lo aII counlries vilh income IeveIs
beIov lhal of lhe Uniled Slales, lhe modeI vouId lend lo roduce fasl rales of convergence in
income IeveIs across lhe vorId. As a maller of raclice, lhis has nol occurred. Convergence has
acluaIIy been Iimiled lo a smaII sub-sel of deveIoing counlries. These counlries have shifled
resources inlo high roduclivily aclivilies demanded by lhe vorId. In lhis vay, lheir
roduclivily grovlh has been driven by domeslic slrucluraI changes lhal have Ieveraged lhe
gIobaI economy lo roduce raid lechnicaI change. Il is usefuI lo caII lhis grou of counlries
convergers because lhe slralegies lhey have adoled, incIuding an oulvard orienlalion, aear
lo have resuIled in Iong-run income convergence vilh advanced counlries
!(
.

!(
See IhiIIie Aghion and Ieler Hovill, Aroriale Grovlh IoIicy, Schumeler Leclure, jcurna| cj inc
|urcpcan |ccncnic Asscciaiicn, Papcrs an! Prcccc!ings (2006) on vhy Iuroe converged vilh lhe US afler
WWII, bul more recenlIy has faced sIover lf grovlh.

DEV/DOC(2010)2
OICD 2010 19
There is aIso a grou of middIe income counlries vhich aear lo have become lraed
and are eilher nol converging vilh lhe rich counlries or converging very sIovIy. The middIe
income lra is a name for counlries lhal aear squeezed belveen Iov vage, oor deveIoing
counlries lhal can oulcomele lhem in slandardized manufacluring exorls, and high-skiIIed,
rich counlries lhal grov lhrough innovalion. Counlries in lhe middIe income lra have yel lo
find a grovlh slralegy lhal can navigale belveen lhese olher comelilors.
Lasl, lhere are a number of oor counlries vhich, for reasons of confIicl, oor governance
or adverse geograhy have slagnaled in overly. IauI CoIIier idenlifies a number of Iov
income lras lhal lhese counlries have been unabIe lo escae
!)
.
The cIassificalion of non-convergers inlo Iov and middIe income grous is done based on
lhe WorId ank's cIassificalion of lheir Gross NalionaI Income er caila IeveIs as of 2005. The
cul-off income IeveI is USD875
"*
.
This gives a lyoIogy of four grous of counlries:
x AffIuenl, advanced economies, vilh ralher Iov rales of lechnoIogicaI rogress.
x Converging deveIoing economies cIosing lhe income ga vilh lhe Uniled Slales.
x SlaIIed, middIe income deveIoing economies vilh no convergence lrends.
x Ioor, Iov income deveIoing economies vilh no convergence lrends.
The cIassificalion of counlries inlo lhese calegories deends on (i) lheir income IeveI in
2005 (our base year), and (ii) lheir demonslraled lendency lovards convergence.
We consider counlries lhal have had suslained grovlh of more lhan 3.5 er cenl er
caila over 25 years lo be incIuded in lhe convergence grou
"!
. This imIies lhal Russia, India
and China are incIuded as convergers, bul nol raziI vhere er caila income grovlh has been
much more Iimiled even since lhe slabiIizalion rogramme of lhe mid-1990s.
There are severaI surrises in lhe calegory of converger counlries. Many vouId disule
lhe incIusion of Russia and lhe excIusion of raziI (eseciaIIy given ils recenl discovery of
massive oiI deosils) and Soulh Africa, for examIe. We vouId Iike lo emhasize lhal lhe
cIassificalion does nol necessariIy reresenl our vievs of counlry rosecls. ul ve feIl il
referabIe lo have a quanlilalive formuIa lo drive lhe aIIocalion, ralher lhan lo alleml lo imose
our ovn redisosilions and beIiefs aboul counlries. Whal is more, ve do nol have lhe exerlise
lo seriousIy reviev aII 145 counlries, so some quanlilalive shorlcul melhod is inevilabIe. Iigure 2
shovs hov each counlry is cIassified inlo our Iour Seed WorId calegories. Iach coIour
reresenls one of lhe four counlry grouings.

!)
IauI CoIIier, Tnc Bciicn Bi||icn, (Nev York: Oxford UI, 2007).
"*
Dala laken from WorId DeveIomenl Indicalors, on-Iine, accessed 2008.
"!
Ior lransilion economies, lhe crilerion is 3.5 er cenl er caila grovlh or more belveen 1995 and 2005.

DEV/DOC(2010)2
20 OICD 2010

Iigure 2. Thc Fnur 5pccd Wnr!d

Once olenliaI grovlh rales are formuIaled, I aIy lhem lo a base year lo generale a
series lhal can be ro|ecled inlo lhe fulure. The base year is laken as lhe lhree-year average GDI
in 2005 lo 2007, aII measured in III lerms. To buiId gIobaI oulul, I simIy aggregale individuaI
counlry oulul.
To summarise lhe modeI, I idenlify four drivers of gIobaI economic grovlh:
x TechnoIogicaI advance of lhe gIobaI roduclion fronlier al lhe rale of 1.3 er cenl
er year
""
.
x Calch-u lechnoIogy in a grou of fasl-groving convergers vho are in lhe midsl of
a rocess of shifling resources from Iov lo higher roduclivily aclivilies, lhe
seed of calch-u deends on each counlry's income IeveI reIalive lo lhe US.
x CailaI accumuIalion, derived by assuming each counlry mainlains ils inveslmenl
rale al ils hisloricaI average.
x Counlry secific demograhic changes of lhe 15-64 age grou, assuming conslanl
Iabour force arlicialion rales in each counlry.

""
This lf rale is consislenl vilh lhe US Iong-lerm Iabour roduclivily grovlh of 1.8 er cenl.

DEV/DOC(2010)2
OICD 2010 21
Whal are lhe main differences belveen lhis Iour Seed WorId modeI and olher gIobaI
modeIs`
x I have a samIe of 145 counlries
"#
. Many counlries have smaII GDI bul Iarge
ouIalions and lhe Iarger samIe aIIovs a beller underslanding of lhe inleraclion
belveen demograhic lrends and economic lrends. Il aIso means I can comule
lrends for geograhic regions and IocaI neighbourhoods, Iike Soulh Asia.
x I do nol assume aII counlries converge vilh lhe US. ImorlanlIy, I cIassify raziI
and Mexico for nov as being caughl in lhe middIe-income lra ralher lhan as
being arl of lhe grou of converging gIobaIizers.
x I base aramelers for cailaI accumuIalion and lolaI faclor roduclivily grovlh on
acluaI dala and eslimalions, ralher lhan on a! ncc assumlions. Ior examIe, in
lheir 2003 sludy, GoIdman Sachs assumed an inveslmenl rale for India of 22 er
cenl of GDI and a grovlh rale of 6 er cenl. In acluaIily, India's inveslmenl rale
loday has risen lo 36.7 er cenl and even in lhe face of lhe currenl crisis, 6 er cenl
grovlh seems Iov
"$
.
The modeIIing framevork may aear overIy delerminislic and devoid of oIicy conlenl,
bul severaI of lhe variabIes refIecl oIicy choices. Ior examIe, some anaIysls emhasize lhe roIe
of undervaIued exchange rales in romoling raid grovlh over Iong eriods of lime
"%
. In our
modeI, lhis same oulcome is achieved as undervaIued exchange rales Iover a counlry's income
IeveI reIalive lo lhe Uniled Slales and induce more raid lechnoIogicaI grovlh. As anolher
examIe, oenness and olher reform measures may shov u in higher inveslmenl rales as
businesses enler nev seclors or may be calured by a demonslraled lrack record of convergence,
boosling ro|ecled lf grovlh. ImIemenlalion effecliveness, governance and inslilulionaI
deveIomenl are calured by giving higher rales of lechnicaI rogress lo counlries vilh
demonslraled high IeveIs of grovlh vhich are indicalive of lheir inslilulionaI delh. Indeed, lhe
counlries in lhe four liers shov a allern of governance lhal refIecls lheir erformance: affIuenl
counlries do besl, foIIoved by lhe convergers, slaIIed and oor, in lhal order
"&
. Thus, dee
oIicymaking slruclures are calured in our modeI lhrough higher rales of lechnoIogicaI change
and inveslmenl, even lhough acluaI oIicies lhemseIves are nol secified.

"#
GoIdman Sachs firsl Iooked onIy al 6 deveIoed counlries and 4 RIC counlries, and lhen exlended lheir
anaIysis lo a furlher 11 emerging economies. IWC Iook al 30 emerging economies.
"$
Indeed, in lheir 2007 udale, GoIdman Sachs anaIysls Ioddar and Yi raise lheir suslainabIe grovlh
forecasl for India lo 8 er cenl lhrough 2020. See Tushar Ioddar and Iva Yi, India's Rising Grovlh
IolenliaI, Gc|!nan Sacns G|c|a| |ccncnics Wcrking Papcr, No 152 (2007).
"%
Sur|il haIIa, Indian Iconomic Grovlh, 1950-2008, (Oclober, 2008), avaiIabIe al:
hll://oxusresearch.com/dovnIoads/CI140309.df.
"&
Means of governance vaIues in lhe Kaufmann, Kraay, Maslruzzi index. The allern of mean vaIues by lier
is lhe same across aII six of lhe KKM indicalors.

DEV/DOC(2010)2
22 OICD 2010
Global Growth Results
The gIobaI economy may faII in size lo USD53 lriIIion, measured al markel exchange
rales, in 2009, dominaled by lhe Uniled Slales, vilh a USD13.6 lriIIion economy, |usl over one-
quarler of lhe gIobaI lolaI. In III lerms, gIobaI oulul may reach aImosl USD63 lriIIion. Norlh
America (24 er cenl), Iuroe (27 er cenl) and Asia (34 er cenl) dominale lhe vorId economy.
The RICs accounled for aboul 24 er cenl of 2009 gIobaI oulul in III lerms, a osl-var
hisloricaI high. This is a recenl henomenon, one driven IargeIy by China vhich has exanded
ils gIobaI markel share lo aImosl 13 er cenl. Iven al markel exchange rales, China is sel lo
overlake }aan as lhe vorId's second Iargesl economy, eilher lhis year or nexl. ImorlanlIy, lhe
rich counlries of lhe vorId onIy accounl for 53 er cenl of gIobaI oulul nov, comared lo 70 er
cenl in 1990. This is one reason vhy gIobaI grovlh (caIcuIaled using a chain-veighled melhod)
may acluaIIy acceIerale: lhe share of fasl groving economies is much higher lhan vas lhe case
lvenly years ago.
y 2034, 25 years from nov, lhe gIobaI economy may be USD200 lriIIion in III doIIars
"'
.
Such a vorId is very differenl from lhe one ve see loday. Il is significanlIy veaIlhier, vilh
er caila incomes averaging USD21300 as comared lo USD8000 loday. The economic cenlre of
gravily vouId shifl lo Asia, vhich accounls loday for 34 er cenl of gIobaI aclivily, bul by 2034
couId accounl for 57 er cenl of gIobaI oulul. Three gianl economies, China, India and }aan,
vouId Iead Asia's resurgence. ul olher Iarge counlries Iike Indonesia and Vielnam vouId aIso
have significanl economic mass. Iven ThaiIand and MaIaysia couId have economies Iarger lhan
Irance has loday.
The rise of Asia vouId nol be unrecedenled. Indeed, il vouId bring Asia's economic
share inlo Iine vilh ils ouIalion share and reslore lhe baIance of gIobaI economic aclivily lo
lhal in lhe 18
lh
and earIy 19
lh
cenluries, before lhe InduslriaI RevoIulion Ied lo lhe greal
divergence of incomes across counlries.
The converse of Asia's rise vouId be a faII in lhe share of lhe G7 economies. Their gIobaI
income share has aIready faIIen lo nev osl-WorId War II Iovs, and by 2034 il couId be |usl
under one-quarler of lhe vorId, or 24 er cenl.
To areciale lhe IikeIihood of lhis enormous change, consider lhe foIIoving facls. Taking
oul lhe effecl of generaI infIalion, lhe gIobaI economy reached USD20 lriIIion, in lerms of
2005III doIIars, in 1977. Il look 19 years lo doubIe lo USD40 lriIIion by 1996vilh 3.6 er cenl
annuaI grovlh. Over lhe nexl 10 years, from 1996 lo 2006, annuaI grovlh has been 3.7 er cenl.
To gel lo USD200 lriIIion by 2034, gIobaI grovlh from loday vouId need lo be 4.7 er cenl.

"'
I have ignored naluraI resource conslrainls and lhe effecls of cIimale change in lhis scenario. This may
rove lo be quile unreaIislic bul lo lake lhese inlo accounl vouId require a far more sohislicaled
modeI of gIobaI grovlh.

DEV/DOC(2010)2
OICD 2010 23

Iigure 3. Wnr!d Ecnnnmic Output Ovcr 50 Ycars, 1984-2034 (2005 PPP dn!!ars)
0.00E+00
5.00E+13
1.00E+14
1.50E+14
2.00E+14
2.50E+14
1
9
8
4
1
9
8
7
1
9
9
0
1
9
9
3
1
9
9
6
1
9
9
9
2
0
0
2
2
0
0
5
2
0
0
8
2
0
1
1
2
0
1
4
2
0
1
7
2
0
2
0
2
0
2
3
2
0
2
6
2
0
2
9
2
0
3
2
G
D
P

(
P
P
P
)
World North America
Central and South America Asia Pacific
Sub-Saharan Africa Middle East and North Africa
Europe

The reason for execling an acceIeralion of gIobaI grovlh is lhal lhe share of raidIy
groving economies has nov risen lo aImosl one-haIf of lolaI oulul, vhiIe lhe share of sIov
groving counlries has faIIen. Our modeI assumes lhal rich counlry reaI olenliaI oulul grovlh
viII sIov in lhe nexl 30 years lo 2.3 er cenl, from 2.5 er cenl over lhe Iasl 10 years. MeanvhiIe
lhe convergers couId aIso sIov lo 8.2 er cenl, cIose lo lhe 8.4 er cenl over lhe Iasl 10 years.
In olher vords, aIlhough grovlh is sIoving in individuaI counlry grous, overaII gIobaI
grovlh (chain-veighled) viII acceIerale simIy because of lhe Iarger share in gIobaI oulul from
fasl-groving counlries.
One reason deveIoing counlries are groving fasler lhan deveIoed counlries is lhal lhey
are younger, sliII al an earIy hase in lheir demograhic lransilion. GIobaI demograhic shifls
are inexorabIy changing lhe dislribulion of gIobaI economic aclivily. Today's rich counlries
accounled for 22 er cenl of lhe vorId's eoIe in 1965, bul onIy accounl for 15 er cenl loday,
and lheir share is forecasl lo shrink lo 13 er cenl of lhe vorId lolaI by 2034. OveraII, lhe vorId
viII add 1.6 biIIion eoIe by 2034. ul lhe ouIalion in loday's rich counlries viII grov by onIy
an eslimaled 90 miIIion. Ninely-five er cenl of lhe ouIalion increase (excIuding migralion)
viII be in deveIoing counlries.

DEV/DOC(2010)2
24 OICD 2010

Iigure 4. Thc G!nba! Labnur Fnrcc, 2008 tn 2039

0
1000
2000
3000
4000
5000
6000
2
0
0
8
2
0
1
0
2
0
1
2
2
0
1
4
2
0
1
6
2
0
1
8
2
0
2
0
2
0
2
2
2
0
2
4
2
0
2
6
2
0
2
8
2
0
3
0
2
0
3
2
2
0
3
4
2
0
3
6
2
0
3
8
P
o
p
u
I
a
t
i
o
n

i
n

M
i
I
I
i
o
n
s

Rest of World
EU
United States
Russia
Brazil
ndia
China

The Impact of the Global Economic Crisis
The faIIoul from lhe economic crisis has been quick and ainfuI. In Selember 2008, lhe
year-Iong lremors in lhe US housing markel deveIoed inlo a fuII-fIedged financiaI crisis lhal
quickIy sread lo aII deveIoed counlries. When lhe reaI economies of advanced counlries
slaIIed, so did gIobaI demand, dashing hoefuI laIk of 'decouIing' even in raidIy groving
emerging economies. In a maller of monlhs lhe IMI revised dovnvard ils gIobaI grovlh
forecasl for 2009, from 3.0 er cenl Iasl Oclober lo 2.2 er cenl in November lo |usl 0.6 er cenl in
}anuary and nov -1.3 er cenl in AriI. This makes 2009 lhe firsl year of gIobaI economic
conlraclion since WorId War II. GIobaI oulul is execled lo decIine back lo 2007 IeveIs.
The delh and lhe duralion of lhe gIobaI recession are currenlIy being holIy debaled
amongsl academics and oIicymakers. Mosl lake lhe exerience of lhe Greal Deression as
indicalive of vhal may haen. Then, as veII as in osl-War recessions, grovlh exceeded ils
Iong run average during a recovery hase before relurning lo lrend, comensaling for lhe dovn
eriod
"(
. There vas IillIe imacl on ermanenl Iong-run income IeveIs. ul lhal eriod vas

"(
Ior examIe, see lhe reorl of lhe US CounciI of Iconomic Advisers, Iconomic Iro|eclions and lhe
udgel OulIook, (28 Iebruary 2009), avaiIabIe al: vvv.vhilehouse.gov/adminislralion/eo/cea.

DEV/DOC(2010)2
OICD 2010 25
excelionaI, given lhe IeveI of deslruclion of human and hysicaI cailaI during lhe var.
Searaling lhe naluraI recovery from lhe Greal Deression from lhe effecls of WorId War II
sending is aImosl imossibIe. The reIevance of lhal recovery for lhe currenl crisis may veII be
queslioned.
Nolvilhslanding, lhe osl-War exerience vilh recessions is lhal as lhe recovery galhers
sleam, counlries grov fasler lhan olenliaI oulul. WhiIe lhe delh and lhe duralion of lhe
gIobaI recession are holIy debaled amongsl academics and oIicymakers, many do nol foresee a
ermanenl imacl. When lhe crisis does abale, grovlh is IikeIy lo exceed ils Iong run average
during a recovery hase before relurning lo lrend, comensaling for lhe dovn eriod
")
.
This remise remains conlroversiaI. The IMI has revieved lhe hislory of financiaI crises
and concIudes lhal vhiIe medium lerm grovlh recovers lo lrend IeveIs, oulul remains beIov
lrend, by an average of 10 er cenl
#*
. Hovever, lhe IMI anaIysis is simIy a descrilion of vhal
has haened comared lo re-crisis lrends. This kind of anaIysis has a syslemalic bias: lhe re-
crisis lrend (vhich lhe IMI lakes as len lo lhree years rior lo lhe crisis) may be arl of a Ionger-
lerm boom vhich in lurn reciilales lhe crisis, and as such shouId nol be counled as lhe Iong-
lerm lrend grovlh rale.
These debales underIine an essenliaI oinl of lhis aer. The forvard Iooking figures are
one scenario of vhal lhe vorId couId Iook Iike, nol a ro|eclion or forecasl.
The Shift to Asia
The changes reresenled above mark a significanl shifl in lhe gIobaI economy lovards
Asia. Iigure 5 grahicaIIy deicls lhis by in-oinling lhe cenlre of gravily of lhe vorId's
economic mass. Ior simIicily, I assume each counlry's economic mass is concenlraled in ils
cailaI cily. If lhe vorId is lhoughl of as a lvo-dimensionaI Iane, vilh ils origin al zero degrees
Ialilude and zero degrees Iongilude, lhen one can Iol lhe oinl vhere lhe cenlre of gravily
vouId Iie, and lrace lhe shifl over lime of lhal oinl
#!
.
In 1965, lhe gIobaI economic cenlre of gravily vas somevhere in Sain. This is nol
surrising. The lhree greal masses in lhe gIobaI economy vere in Iuroe, lhe Uniled Slales and
}aan. AII of lhese are in lhe Norlhern Hemishere. The acluaI cenlre of gravily acluaIIy Iay very
cIose lo an axis connecling Washinglon DC and ei|ing (shovn in orange on lhe ma). Over
lime, lvo drifls in gIobaI grovlh are aarenl: a sIighl movemenl lo lhe soulh and a dominanl
one lo lhe easl. These shifls refIecl lhe grovlh in lhe Iarge emerging economies of lhe soulhern

")
||i! foolnole above.
#*
WorId Iconomic OulIook, IMI, Selember 2009 Ch. 4.
#!
One degree of eilher Ialilude or Iongilude is nol lhe same dislance anyvhere in lhe vorId, so an
ad|uslmenl needs lo be made. Ior lhis caIcuIalion, coordinales of gIobaI cailaI cilies are ro|ecled onlo
a lvo-dimensionaI Iane vhere lhe x- and y- coordinales are in melers, via lhe GIobaI SinusoidaI (0)
ro|eclion. The cenlre of gravily is lhen comuled and Iolled and resenled in lerms of lhe slandard
WGS84 ma. Dan Hammer, Cenler for GIobaI DeveIomenl, graciousIy rovided lhe mas and
ro|eclions.

DEV/DOC(2010)2
26 OICD 2010
hemishere. raziI, Mexico and Soulh Iasl Asia became more rominenl during lhis eriod.
Iven }aan and Korea are Iocaled soulh of lhe ei|ing-Washinglon axis. Over lime, in our
scenario for lhe fulure, il is India, China, Indonesia and Vielnam lhal kee uIIing lhe cenlre of
economic gravily in lhe vorId lo lhe Iasl.

Iigure 5. Thc G!nba! Ecnnnmic Ccntrc nI Gravity 5hiIts East

The Global Middle Class in the next 25 years
The grovlh scenario Ieads direclIy lo a scenario for lhe gIobaI middIe cIass. The mean of
lhe househoId income dislribulion is given lhe same grovlh rale as GDI grovlh. The
dislribulionaI aramelers of lhe Lorenz curve are kel conslanl. The dislribulion lherefore
simIy shifls lo lhe righl. Iigure 6 iIIuslrales for China. The grah shovs lhe cumuIalive densily
funclion for househoId incomes, Iolled againsl income lhreshoIds on lhe horizonlaI axis. Iach
oinl on lhe grah reresenls lhe ercenlage of lhe ouIalion vilh incomes beIov lhe
corresonding oinl on lhe x-axis. The grah shovs lhal 20 er cenl of China's ouIalion loday
Iives in househoIds vilh er caila income of Iess lhan USD2/day.
AcluaIIy, lhe exercise here does nol slriclIy require hoIding income dislribulion conslanl.
Ralher, il requires lhal lhe share of income of lhose around lhe middIe cIass in deveIoing
counlries be heId conslanl. This is a veaker assumlion and, as suggesled by IaIma (2007),
acluaI changes in income dislribulion have been dominaled by changes in lhe lo and bollom
ercenliIes, ralher lhan in lhe share accruing lo lhe middIe eighl deciIes. Those have remained
reIaliveIy conslanl over lime.

DEV/DOC(2010)2
OICD 2010 27
This rocedure is reealed for aII counlries lo derive lhe number (and sending over) of
lhe middIe cIass faIIing vilhin our lhreshoId IeveIs of USD10/day lo USD100/day er caila.

Iigure 6. China's Midd!c C!ass is 5ma!!, but Quick!y Riscs

The figure shovs vhy lhe grovlh of lhe middIe cIass can differ so much from lhe grovlh
of GDI or GDI er caila. If lhere are many eoIe cIuslered |usl beIov lhe lhreshoId IeveI of
USD10/day, lhen a smaII increase in income IeveI can li many of lhese eoIe inlo lhe middIe
cIass income range.
GIobaIIy, lhe size of lhe middIe cIass couId increase from 1.8 biIIion eoIe lo 3.2 biIIion
by 2020 and lo 4.9 biIIion by 2030. AImosl aII of lhis grovlh (85 er cenl) comes from Asia. The
size of lhe middIe cIass in Norlh America is execled lo remain roughIy conslanl in absoIule
lerms. This is because as many eoIe graduale oul of lhe middIe cIass and become rich as move
inlo lhe middIe cIass from being oor. Iuroe en|oys some earIy grovlh in lhe numbers of lhe
middIe cIass, bul lhen sees a faII as ouIalions decIine in Russia and eIsevhere.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
100 1000 10000 100000
Annual income (2005 PPP$, log scale)
C
u
m
u
l
a
t
i
v
e

p
e
r
c
e
n
t

o
f

p
o
p
u
l
a
t
i
o
n
2009
2020
2030
$2/ day $5/ day $10/ day $100/ day

DEV/DOC(2010)2
28 OICD 2010
TabIe 2. Numbcrs (mi!!inns) and 5harc (pcrccnt) nI thc G!nba! Midd!c C!ass

2009 2020 2030
Norlh America 338 18% 333 10% 322 7%
Iuroe 664 36% 703 22% 680 14%
CenlraI and Soulh America 181 10% 251 8% 313 6%
Asia Iacific 525 28% 1740 54% 3228 66%
Sub-Saharan Africa 32 2% 57 2% 107 2%
MiddIe Iasl and Norlh Africa 105 6% 165 5% 234 5%
WorId 1845 100% 3249 100% 4884 100%

IquaIIy slriking is lhe grovlh in urchasing over of lhe middIe cIass. GIobaIIy, demand
from lhe middIe cIass may grov from USD21 lriIIion lo USD56 lriIIion by 2030. Again, over
80 er cenl of lhe grovlh in demand comes from Asia. This shifl in demand may veII be
disrulive of exisling suIy chains. The facl lhal Asian consumers may subslilule for US
consumers leIIs us simIy lhal in numericaI lerms Asia couId become Iarge enough lo offsel lhe
slagnanl urchasing over mosl anaIysls see as IikeIy in lhe deveIoed vorId. Il does nol leII us
anylhing aboul lhe nalure of lhis demand in lerms of vhal roducls viII be consumed and
vhere lhey viII be made. ul if lhe Asian middIe cIass does rise, Asian savings may faII and
redress currenl gIobaI imbaIances lo some degree.

TabIe 3. 5pcnding by thc G!nba! Midd!c C!ass, 2009 tn 2030
(mi!!inns nI 2005 PPP dn!!ars)

2009 2020 2030
Norlh America 5602 26% 5863 17% 5837 10%
Iuroe 8138 38% 10301 29% 11337 20%
CenlraI and Soulh America 1534 7% 2315 7% 3117 6%
Asia Iacific 4952 23% 14798 42% 32596 59%
Sub-Saharan Africa 256 1% 448 1% 827 1%
MiddIe Iasl and Norlh Africa 796 4% 1321 4% 1966 4%
WorId 21278 100% 35045 100% 55680 100%

Iigure 7 iIIuslrales lhe shifl. In 2000, Asia (excIuding }aan) onIy accounled for 10 er
cenl of lhe gIobaI middIe cIass sending. y 2040, lhis couId reach 40 er cenl, and il couId
conlinue lo rise lo aImosl 60 er cenl in lhe Iong-lerm. The slee increase in Asian demand, and
lhe reIacemenl of US demand by Asian demand, is cIearIy seen as a lrend lhal acceIerales in lhe
coming decade.


DEV/DOC(2010)2
OICD 2010 29
Iigure 7. India and China Makc Wavcs in thc G!nba! Midd!c C!ass

Shares of Global Middle Class Consumption, 2000-2050
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2
0
0
0
2
0
0
3
2
0
0
6
2
0
0
9
2
0
1
2
2
0
1
5
2
0
1
8
2
0
2
1
2
0
2
4
2
0
2
7
2
0
3
0
2
0
3
3
2
0
3
6
2
0
3
9
2
0
4
2
2
0
4
5
2
0
4
8
Others
EU
United States
Japan
Other Asia
ndia
China


DEV/DOC(2010)2
30 OICD 2010
V. A NOTE ON CHINA AND INDIA
y far lhe mosl imorlanl counlries in driving lhe lrend lovards higher middIe cIass
consumlion in Asia are China and India. Il is lherefore vorlh discussing each counlry in some
delaiI lo undersland lhe shifls lhal are described here.
China
China's middIe cIass loday is aIready Iarge in absoIule lerms al 157 miIIion eoIe, onIy
lhe Uniled Slales has a Iarger middIe cIass. This is vhy so many relaiIers and businesses are
aIready eager lo enelrale lhe Chinese markel. Though relaiI saIes in lhe counlry have sIoved
from lhe 20+ er cenl grovlh achieved in mid-2008, lhey conlinue lo rise by a robusl 15 er cenl.
In cerlain key induslries refIeclive of middIe cIass consumlion, China is aIready rising lo
overlake lhe Uniled Slales as lhe mosl imorlanl markel. As recenlIy as 2000, for examIe, lhe
US accounled for 37 er cenl of gIobaI car saIes, vhiIe China accounled for bareIy 1 er cenl. This
year China is execled lo accounl for 13 er cenl of gIobaI car saIes. IncIuding lrucks and buses,
vehicIe saIes in China may surass 13 miIIion in 2009, vhich vouId make China lhe vorId's
Iargesl vehicIe markel. Iive years ago GeneraI Molors soId 10 cars in lhe US for every one car
soId in China, lhe ralio is nov quickIy aroaching one lo one, and soon China viII be a bigger
markel lhan lhe US for America's Iargesl aulomaker (IeoIe's DaiIy OnIine, 2009).
SimiIarIy, China has recenlIy emerged as lhe vorId's biggesl ceII hone markel, home lo
an eslimaled 700 miIIion subscribers (Lau and Menn, 2009). Lasl year Nokia, lhe Iargesl ceII
hone maker in lhe vorId, had nel saIes of USD8.2 biIIion in China, more lhan lhree limes ils US
revenues (Nokia 2008).
Survey evidence aIso suggesls China's nev middIe cIass is eager lo become lhe vorId's
Ieading consumers. A 2007 survey of 6000 Chinese shoers found lhal Chinese consumers
send 9.8 hours er veek shoing, as comared lo onIy 3.6 hours for lhe lyicaI American
(Chan and Tse, 2007). AddilionaIIy more lhan 40 er cenl of Chinese survey resondenls said
shoing vas a favourile Ieisure aclivily. Il is such alliludes lhal have Ied gIobaI relaiIers lo bel
on lhe fulure of China's domeslic markel: in lhe 13 years since oening ils firsl slore in China,
WaI-Marl has gone on lo oen an addilionaI 257 relaiI unils (WaI-Marl, 2009).
The issue in China is lhal ils middIe cIass is sliII very smaII (Iess lhan 12 er cenl) as a
ercenlage of lhe lolaI ouIalion. Thal is one reason vhy China has been so reIianl on
inveslmenl and exorls as drivers for ils grovlh. If exorls sIov, lhe middIe cIass is robabIy nol
yel big enough lo lake u lhe sIack and roeI grovlh forvard al lhe raid ace of lhe asl.

DEV/DOC(2010)2
OICD 2010 31
In lhis regard, China vouId do veII lo Iook lo lhe conlrasling exeriences of raziI and
Soulh Korea. elveen 1965 and 1980, raziI grev al an average of 5.6 er cenl er caila er
year, becoming a middIe-income counlry vilh a er caila income IeveI of USD7600 (III). Yel
due lo ils high income inequaIily, raziI's middIe cIass made u onIy 29 er cenl of lhe counlry's
ouIalion in 1980. This made il imossibIe for lhe counlry lo reIy on middIe-cIass consumlion
lo drive lhe lransformalion inlo an innovalion-based economy. Since 1980 lhe counlry has
remained rimariIy a commodily exorler, and has slruggIed lo suslain grovlh. Ier caila
incomes loday are onIy sIighlIy higher lhan lhey vere lhirly years ago (0.7 er cenl annuaI
grovlh), and lhe middIe cIass never look off, currenlIy accounling for |usl 38 er cenl of lolaI
ouIalion. raziI's recenl grovlh erformance is more hoefuI and il may yel |oin lhe cIub of
convergers, eseciaIIy if il can Ieverage recenl oiI finds inlo suslained grovlh.
Soulh Korea foIIoved a alh simiIar lo lhal of raziI lhrough lhe 1960s and 1970s, onIy a
fev years behind, groving by 6.5 er cenl er caila annuaIIy belveen 1965 and 1986. y 1986, il
loo vas a middIe income counlry, achieving a simiIar er caila income of USD7700 III. UnIike
raziI, hovever, Korea's evenIy-dislribuled grovlh had roduced a sizeabIe middIe cIass, vhich
accounled for 53 er cenl of lhe ouIalion. Iven lhough Iuxury imorl goods vere nol avaiIabIe
in Korea (and rovision of foreign exchange for foreign hoIidays vas nol aIIoved unliI lhe Iale
1980's), lhe counlry cailaIised on lhe demand from lhis Iarge middIe cIass lo grov ils services
induslries and creale lhe buiIding bIocks for a knovIedge economy, and has conlinued ils slrong
er caila grovlh al a 5.5 er cenl rale for anolher lvenly years, in lhe rocess become one of lhe
mosl advanced economies in lhe vorId. Today 94 er cenl of Korea's ouIalion is middIe cIass.
}aan aIso benefiled from a sizeabIe middIe cIass vhen groving from a middIe income
counlry lo a rich counlry. In 1965, }aan's er caila income vas USD8200 and ils middIe cIass
vas 48 er cenl of lhe ouIalion. }aan vas abIe lo achieve er caila grovlh of 4.8 er cenl er
year for lhe nexl lvenly years.
Today, China Iooks more Iike raziI in 1974 (vhen raziI aIso had a er caila income of
around USD6000) lhan Soulh Korea in 1983 (vhen er caila income vas USD6300).
Whal can China do lo increase lhe size of ils middIe cIass` Al firsl gIance, addressing
income inequaIily may aear lo be a soIulion. China's Gini coefficienl (ad|usled for saliaI cosl
of Iiving differenliaIs) has risen lo 45.3 by 2005. ul in lhe shorl lerm lhis may nol have lhe
desired effecl. The nev middIe cIass are coming from lhe grou of lhose making USD5 lo
USD10 er day, oulIiers in China's income dislribulion. Lover inequaIily may mean lhal lhis
grou vouId see lheir incomes grov sIover lhan average.
This is nol lo say lhal China's Ieaders shouId embrace income inequaIily: indeed lhere is a
significanl danger lhal China may faII inlo an inequaIily lra. ecause access lo heaIlh care and
educalion are increasingIy Iinked lo income IeveIs, vilh IocaI governmenls unabIe lo rovide a
ubIic olion, areas and grous vilh Iov income IeveIs lend lo have reduced rales of human
cailaI formalion vhich in lurn roagale inlo furlher income inequaIilies over a Iifelime of
reduced earnings. In facl, differences in schooIing and educalionaI allainmenl are aIready lhe
mosl significanl delerminanls of income inequaIily in China (WorId ank, 2009).

DEV/DOC(2010)2
32 OICD 2010
So addressing basic issues of equaIily of educalionaI access and oorlunily is a cenlraI
Iong-lerm slralegy. ul in lhe medium lerm, lhe besl slralegy for increasing lhe size of China's
middIe cIass may Iie nol in allacking inequaIily bul ralher in increasing lhe share of consumlion
in GDI. In lhis resecl, China's economy is famousIy unbaIanced. HousehoId finaI consumlion
loday accounls for onIy 37 er cenl of lolaI oulul, veII beIov lhe gIobaI average (61 er cenl)
and lhal of economies such as Vielnam (66 er cenl), Indonesia (63 er cenl), India (54 er cenl)
and ThaiIand (51 er cenl).
The besl vay of increasing consumlion is lo increase lhe share of househoId income in
GDI. Here lhere is more scoe for direcl and indirecl oIicy aclion. In lerms of direcl measures,
China is nov en|oying a considerabIe accumuIalion of rofils from slale enlerrises lhal in
lheory beIongs lo lhe eoIe. In 2005, slale enlerrise rofils lolaIIed around 5 er cenl of GDI
and lhey have been increasing more raidIy lhan GDI since lhen. These rofils do nol gel
funneIIed lo lhe Treasury vhere lhey couId subslilule for income laxes and fees
#"
. Inslead lhey
are relained in lhe enlerrises and gel direclIy reinvesled. According lo lhe US ureau of Labor
Slalislics, lhe average lake home ay of a Chinese vorker is onIy 65 er cenl of lolaI
comensalion, vilh lhe difference being made u of sociaI insurance cosls, governmenl
mandaled Iabour laxes, and a variely of insurance rovisions (heaIlh, occualionaI safely,
unemIoymenl and lhe Iike) (anisler, 2005). If lhe rofils from slale enlerrises vere used lo
reduce lhese kinds of Iabour laxes, China's middIe cIass, mosl of vhom are saIaried vorkers,
vouId increase inslanlIy.
IndireclIy, if lhe same savings vere channeIIed inlo ubIic services lhal are currenlIy aid
for by househoIds, such as heaIlh and educalion, simiIar effecls couId be achieved.
IinanciaI seclor reform can be anolher vay lhal China can use lo boosl lhe share of
househoId income. Some anaIysls argue lhal China's rivale seclor firms have Iimiled access lo
finance and so lend lo Iimil emIoymenl (Aziz and Cui, 2007). As a resuIl, lhe vage share in
GDI has faIIen from lvo-lhirds in 1980 lo |usl over one haIf of GDI loday. This faII in lhe vage
share is aII lhe more remarkabIe as lhe grovlh of human cailaI in China has been very raid
over lhe eriod and as a Iarge arl of China's exlraordinary grovlh has been due lo lhe
reaIIocalion of Iabour from Iov roduclivily ruraI occualions lo higher roduclivily
occualions in manufacluring and services.
The WorId ank's Ocing Busincss survey found China ranking 61
sl
in lhe vorId in lerms of
ease of access lo credil. Inveslmenl cIimale surveys suggesl lhal Iess lhan haIf of SMIs have a
bank Ioan. Iconomelric resuIls indicale lhal lhere is Iess emIoymenl grovlh in firms facing
grealer difficuIlies in accessing credil. According lo Aziz and Cui (2007), lhe rogramme of bank
reslrucluring in China emhasized slricler ruIes lo minimize non-erforming Ioans, Ieading
firms lo cul back furlher on emIoymenl. The coroIIary is lhal as banking reforms lake rool, and
as rivalisalion and rivale enlerrise grovlh moves ahead, emIoymenl grovlh couId
acceIerale. This vouId raise lhe share of Iabour in nalionaI income and lhe share of househoId
disosabIe income in GDI.

#"
China did aboIish aII laxes and fees on agricuIluraI incomes as a resuIl of slrenglhened ubIic finances, bul
lhis has heIed slrenglhen overly reduclion rogrammes ralher lhan lhe middIe cIass.

DEV/DOC(2010)2
OICD 2010 33
India
India faces many obslacIes lo suslained grovlh:
x The currenl economic crisis.
x Deficiencies in human cailaI and ubIic infraslruclure.
x Weak bureaucracy and |udiciary.
x The middIe-income lra.
x SociaI robIems of overly, migralion and unemIoymenl.
x An unslabIe regionaI neighbourhood.
x GIobaI resource conslrainls.
Il has, hovever, found a vay lo navigale lhrough lhese robIems since 1991. Ivery
deveIoing counlry faces a sel of slrucluraI conslrainls lhal can olenliaIIy hoId il back. If lhe
counlry is sufficienlIy molivaled and far-sighled, il can overcome such obslacIes. Thal is vhy lhe
lrack record of sound erformance is so imorlanl in indicaling lhe IikeIihood of conlinued
success.
Whal is more, lhere are severaI reasons lo be olimislic aboul acceIeraling Indian grovlh:
x The gIobaI economy couId be sel for fasler Iong-lerm grovlh, lhanks lo lhe slrucluraI
change lovards deveIoing counlries.
x Grovlh in Asia viII dominale, vilh India benefiling from neighbourhood effeclslhe
faslesl groving markels in lhe vorId viII be cIoser lo home.
x Indian inveslmenl IeveIs and manufacluring grovlh have slarled lo ick u.
x India has lurned lhe corner on ubIic seclor debllhe share of inleresl lo GDI lhal musl
be financed from budgel resources has faIIen since 2002, Ieaving more fiscaI sace for
infraslruclure sending.
x Indian demograhics and urbanizalion are favourabIe.
x India's emerging middIe cIass can drive grovlh in lhe same vay as in olher counlries.
x The shifl in vaIues lhal underins lhe oIilicaI economy of reform aears lo be veII in
hand in India.
To undersland lhe effecl of lhe shifl of gIobaI economic mass lovards Asia, Iook al vhal
has been haening lo India-China lrade
##
, groving al more lhan 50 er cenl a year since 2002,
lo reach aboul USD37 biIIion in 2007. WhiIe overaII lrade vas groving raidIy in bolh counlries,
lhe grovlh rale of biIaleraI India-China lrade vas lvice lhe average grovlh in lolaI exorls from
eilher counlry. China is aIready India's lo lrading arlner. Afler ad|usling for arlner GDI, lhe
roensily lo lrade belveen China and India is aIso higher lhan for any olher ma|or lrading
arlner. AIready, lhere are ma|or acquisilions by Indian comanies in China and vice versa. As
lhese business lies deeen, lhe underinnings of fulure lrade grovlh viII become slronger.
In olher vords, India's roximily lo China, and by exlension lo lhe vhoIe of Iasl Asia,
viII faclor in ils ro|ecled grovlh acceIeralion.

##
AniI Gula, The Iulure of India-China Trade, |ccncnic Tincs (}anuary 2008).

DEV/DOC(2010)2
34 OICD 2010
One faclor lhal has lradilionaIIy heId back aggregale grovlh in India has been lhe
mediocre erformance of ils nanujaciuring and lhe reIaliveIy Iov IeveI of inveslmenl and gross
cailaI formalion. Irom 1960 lo 2005, Indian manufacluring never ul logelher 10 conseculive
years averaging more lhan 7 er cenl grovlh. Many olher counlries, incIuding such
undererformers as raziI, Cle d'Ivoire, Ilhioia, Kenya, Mexico, Iakislan, IhiIiines and
Tanzania, had eak decadaI manufacluring grovlh lhal exceeded India. As a resuIl, Indian
induslry's share of GDI in 2006 vas |usl 26 er cenl (comared vilh 48 er cenl in China). Thal
may have changed. Indian manufacluring grovlh in 2007 reached 12.5 er cenl. And subseclors
deendenl on engineering and informalion lechnoIogy shov considerabIe slrenglhauloarls,
machinery, chemicaIs and olher areas vhere suIy chains vilh inlernalionaI firms are
imorlanl.
Many reasons have been given for India's fasler manufacluring grovlh. Some emhasize
reforms and an oulvard orienlalion. Olhers oinl lo macroeconomic faclors such as Iov
infIalion, a derecialed ruee and Iov reaI inleresl rales. SliII olhers oinl lo lhe resoIulion of
infraslruclure bollIenecks. DoublIess aII have Iayed lheir roIe. Whal is imorlanl is lhal il is no
Ionger necessary lo queslion vhelher India can be unique in achieving raid grovlh vilhoul
slrong manufacluring grovlh. The Indian modeI of service-Ied grovlh is giving vay lo a more
lradilionaI deveIomenl modeI vhere bolh induslry and services drive grovlh and |ob crealion.
RefIecling lhis movemenl, Indian fixed inveslmenl has sharIy increased in lhe asl fev
years, sleadiIy rising from 22 er cenl of GDI in lhe 1980s lo 25 er cenl in lhe 1990s lo more
lhan 35 er cenl in recenl years. WhiIe sliII shorl of lhe IeveIs allained in China and Vielnam, lhe
acceIeralion of cailaI formalion in India shouId osilion il veII for fulure grovlh.
haIIa has argued ersuasiveIy lhal inveslmenl in India has resonded lo a more
derecialed reaI exchange rale (increasing lhe rale of relurn on lradeabIes Iike manufacluring)
and lo Iover reaI inleresl rales (reducing lhe cosl of cailaI)
#$
. Such anaIysis underins lhe
nolion lhal roer oIicies are required lo suslain Indian grovlh al lhe IeveIs oulIined here.
Grovlh viII nol haen aulomalicaIIy.
Inveslmenl has risen IargeIy because of rivale seclor resonse. ul lhe ubIic seclor has
aIso Iayed a roIe. IubIic deficils have come dovn from around 6 er cenl of GDI in lhe 1980s
and 1990s lo Iess lhan 4 er cenl in lhe Iasl four years (excIuding lhe currenl slimuIus ackages).
Wilh lhe governmenl invesling onIy aboul 5 er cenl of GDI each year in infraslruclure, lhe
bollIenecks have risen lo significanl roorlions. ul India nov has lhe fiscaI sace lo exand
infraslruclure sending as veII as lhe abiIily lo deveIo nev arlnershis vilh lhe rivale seclor
lo rovide funding and exerlise. IubIic-rivale arlnershis have been a modeI for raid
infraslruclure exansion lhroughoul lhe successfuI Iasl Asian deveIomenl exeriences.
India is sel lo rea a demograhic dividend. Ils Iabour force shouId grov by more lhan
1.7 er cenl a year over lhe nexl 30 years, vhiIe ouIalion grovlh is |usl over 1.2 er cenl. So,
lhe ralio of vorking age ouIalion lo lolaI ouIalion is on lhe usving. In addilion, India sliII
has a reIaliveIy Iov Iabour force arlicialion rale of 61 er cenl. As lhe ouIalion becomes

#$
Sur|il haIIa, cp. cii.

DEV/DOC(2010)2
OICD 2010 35
more urban, rich and educaled, arlicialion rales are IikeIy lo rise. GoIdman Sachs forecasls lhal
500 miIIion eoIe viII be added lo India's cilies by 2039. Il noles lhal 10 of lhe vorId's faslesl-
groving 30 urban areas are in India. To see lhe imacl of demograhics and urbanisalion on
Iabour force arlicialion, Iook al China, vhich has a Iabour force arlicialion rale of 82 er
cenl and a Iabour force of over 800 miIIion, comared vilh India's 516 miIIion. There is a
ossibiIily lhal higher Iabour force arlicialion couId add anolher fuII ercenlage oinl lo
India's Iabour force grovlh over lhe nexl 20 years bringing il u lo 2.7 er cenl.
The demograhic dividend lakes many forms. Il rovides for a raid reduclion in
overly as lhe deendency ralio shrinks. Il gives famiIies lhe means lo save, accumuIale and
invesl in lheir ovn veII-being. Ierhas mosl imorlanl, il ermils grealer inveslmenl in chiIdren
and human cailaIlhe foundalion for Indian grovlh for lhe nexl generalion.
India couId vilness a dramalic exansion of ils middIe cIass, from 5-10 er cenl of ils
ouIalion loday lo 90 er cenl in 30 years. Wilh a ouIalion of 1.6 biIIion forecasl for 2039,
India couId add veII over 1 biIIion eoIe lo ils middIe cIass ranks by 2039 (Iigure 8). The figure
shovs lhal loday very fev Indian househoIds vouId have incomes exceeding even USD5 er
day. In facl, lhe mean er caila househoId exendilure in 2005 vas |usl USD3.20 er day,
according lo lhe WorId ank. ul belveen 2005 and 2015, haIf lhe ouIalion viII cross lhe
USD5 er day Iine. elveen 2015 and 2025, haIf lhe ouIalion viII surass lhe USD10 er day
Iine, our definilion of lhe middIe cIass.

Iigure 8. India's incnmc distributinn
India's Income Distribution, 2005 - 2039
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
70.00%
80.00%
90.00%
100.00%
100 1000 10000 100000
Annual ncome (2005$ PPP, log scale)
C
u
m
u
l
a
t
i
v
e

D
i
s
t
r
i
b
u
t
i
o
n

o
f

P
o
p
u
l
a
t
i
o
n
2005 2015 2025 2035 2039
$1.25
a day
$2.50
a day
$5 a
day
$10 a
day
$100 a
day


DEV/DOC(2010)2
36 OICD 2010
Olhers have aIso highIighled India's burgeoning middIe cIass. The McKinsey GIobaI
Inslilule, in a 2007 reorl
#%
, suggesled lhal India's middIe cIass vouId rise from 50 miIIion lo
583 miIIion by 2025. According lo McKinsey, lhis middIe cIass comrises governmenl officiaIs,
coIIege graduales, rich farmers, lraders, business eoIe and rofessionaIs. These grous choose
vhal lhey viII consume, ralher lhan be driven by lhe necessilies of Iife. Such discrelionary
choices, refIecling lhe lasles of lhe nev Indian middIe cIass, viII dominale consumlion allerns.
Mosl anaIysls lhink aboul lhe middIe cIass in lerms of vaIues as veII as incomes. The
WorId VaIues Survey rovides some informalion on hov Indian sociely is changing (TabIe 4). In
1995, 60 er cenl of lhe Indian samIe of 1275 resondenls beIieved lhal in a democracy (such as
India's) lhe economic syslem vas doomed lo run badIy. A mere six years Ialer, in 2001, lhis
allern vas reversed: 60 er cenl of resondenls disagreed vilh lhe slalemenl.
In 1995, onIy 47 er cenl of resondenls feIl il imorlanl lhal lheir |ob be inleresling. They
vaIued ay and securily as lhe onIy imorlanl eIemenls of |obs. y 2001, vhiIe ay and securily
remained imorlanl, 74 er cenl caIIed |ob inleresl imorlanl. The ercenlage of resondenls
vho feIl lhal lhe oorlunily lo use inilialive in a |ob vas imorlanl rose from 46 lo 64 er cenl
belveen 1995 and 2001. These dala suggesl a changing vork elhic. Where inleresl and inilialive
are imorlanl, il is IikeIy lhal Iabour roduclivily and |ob salisfaclion viII aIso be high.
Iarenls aIso feeI lhal lhe quaIilies lheir chiIdren viII need lo gel ahead have changed.
Irom 1990 lo 2001, lhere has been a slriking increase in lhose ansvering lhal lhe foIIoving
quaIily vas imorlanl for lheir chiIdren: indeendence (30 er cenl lo 56 er cenl), hard vork
(67 er cenl lo 85 er cenl), lhrifl and saving (24 er cenl lo 62 er cenl), and delerminalion and
erseverance (28 er cenl lo 46 er cenl). In olher vords, lhe changing vaIues associaled vilh
middIe income famiIies are aIready visibIe in India, and lhese changing vaIues are conducive lo
economic deveIomenl.

#%
Diana IarreII and Iric einhocker, Nexl ig Senders: India's MiddIe CIass, usiness Week,
19 May 2007. McKinsey's definilion of lhe middIe cIass is belveen USD23000 and USD118000, a
somevhal narrover band lhan vhal ve roose.

DEV/DOC(2010)2
OICD 2010 37

TabIe 4. Changing Indian va!ucs

VaIues 1990 1995 2001

Is Democracy good for lhe economy` (% No) 60 40
Is il imorlanl lhal your |ob be inleresling (% Yes) 47 74

Is il imorlanl lo be aIIoved inilialive in your |ob`
(%Yes) 46 64

Whal is mosl imorlanl for your chiId lo gel
ahead`
Indeendence (%Yes) 30 56
Hard Work (% Yes) 67 85
Thrifl and Saving (%Yes) 24 62
Delerminalion and erseverance (%Yes) 28 46

Source: WorId VaIues Survey, various years


DEV/DOC(2010)2
38 OICD 2010

VI. CONCLU5ION
The mosl imorlanl deveIomenl, I beIieve, of lhe 21sl cenlury viII be lhe rise of Asia.
China has aIready lrebIed ils share of vorId GDI over lhe asl lvo decades and India has
doubIed il. olh lhese gianl economies of Asia are bound lo gain a considerabIe arl of lheir
share of vorId GDI lhal lhey had Iosl during lhe lvo cenluries of Iuroean coIoniaIism. . . .
#&
.
This quole from India's Irime Minisler, Manmohan Singh, encasuIales lhe olimism lhal
conlinues lo dominale economic scenarios for India, China and indeed Asia and lhe vorId.
In lhis aer, I have discussed one such scenario vhere China and India Iead a gIobaI
recovery. This scenario, imorlanlIy, does nol deend on a rebound in US consumer demand.
Inslead, il deends on a shar usurge in demand from a nev Asian middIe cIass. I suggesl lhal
lhis nev Asian middIe cIass is Iarge and groving raidIy, and lhal il is of sufficienl size lo
rovide lhe imelus for demand grovlh lhal lhe vorId needs.
The middIe cIass has Iong had a seciaI roIe in economic lhoughl, and various roIes have
been allribuled lo il. I focus on lhe consumlion roIe and define a gIobaI middIe cIass as eoIe
vilh consumlion in lhe range of USD10/day lo USD100/day. Wilhin lhis range, lhe income
eIaslicily of consumlion aears lo be grealer lhan one, and a range of nev goods and services
is demanded. Grovlh is driven by roducl differenlialion, branding and markeling.
There are many uncerlainlies surrounding lhis scenario. Ioremosl is vhelher China's
middIe cIass viII deveIo fasl enough lo suslain raid grovlh in China if exorls slarl lo faIler.
Given China's unequaI income dislribulion and lhe smaII currenl share of lhe middIe cIass, il is
nol al aII cerlain lhal lhis viII be lhe case. There have been revious examIes of Iarge unequaI
economies faiIing lo grov beyond middIe income IeveIs even afler decades of slrong
erformance. China risks faIIing inlo lhis lra. I roose severaI oIicy measures lhrough vhich
il couId reduce lhe risk of lhis haening.
India, aIlhough oorer lhan China, has a sizabIe middIe cIass lhal couId overlake China's
by 2020, even lhough India vouId sliII be much oorer lhan China al lhal lime. India has a more
even dislribulion of income lhan Chain and a much higher share of househoId income in GDI,
so ils middIe cIass is Iarger given ils income IeveI. As India has lhe olenliaI lo grov raidIy for
some years lo come, ils emerging middIe cIass viII slrenglhen and reinforce ils grovlh.

#&
Manmohan Singh, Remarks al lhe LSI Asia Iorum, (Nev DeIhi: 7 December 2006), avaiIabIe al
hll://mindia.nic.in/seech/conlenl.as`id463.

DEV/DOC(2010)2
OICD 2010 39
A second uncerlainly reIales lo hov lhe vorId viII manage lhe shifling reIalive economic
over lovards Asia. HisloricaIIy, lhere have been eriods vhen ma|or shifls in economic over
vere accommodaled easiIy by lhe exisling overs (as vas lhe case for }aan's raid osl-var
grovlh), bul equaIIy cases vhere friclions emerged and lhe lransilions in economic over vere
highIy disrulive. The scenario I deveIo assumes lhal such friclions viII be managed, and lhe
emergence of lhe G20 as an economic sleering grou for lhe gIobaI economy offers some hoe
lhal lhis viII be lhe case, bul il remains lo be seen vhelher lhe domeslic oIilics of lhe ma|or
economies are robusl enough lo ad|usl lo lhe ma|or slrucluraI shifls lhal are envisaged.
The scenario deicled here is olimislic. In a sense, il suggesls lhal lhe currenl economic
crisis is a sign of success, nol faiIure, in lhe gIobaI economy. Il came aboul because of lhe
euhoria lhal raid gIobaI grovlh vas unsloabIe. The imbaIances lhal resuIled have been
coslIy. ul lhey viII hoefuIIy resuIl in more robusl slruclures being ul in Iace lo manage lhe
gIobaI economy. If lhal is indeed lhe case, lhen lhe underIying slrucluraI forces for gIobaI grovlh
may be abIe lo reasserl lhemseIves and usher in a nev era of raid rogress, lhis lime based on
an Asian middIe cIass.


DEV/DOC(2010)2
40 OICD 2010

ANNEX 1. PROJECTIONS METHODOLOGY
#'

Step 1: Historical database
Our firsl sle vas lo creale a counlry-IeveI dalabase covering lhe eriod 1965 2007,
vhich bolh forms lhe basis for our ro|eclions and is usefuI for hisloricaI comarisons.
We begin by oblaining dala on reaI GDI grovlh rales for each counlry from lhe WorId
ank's WorId DeveIomenl Indicalors 2007 (WDI)
#(
. Where lhere are gas, lhis is suIemenled
vilh dala from lhe IMI's WorId Iconomic OulIook, Angus Maddison's hisloricaI dalasel, lhe
IMI's InlernalionaI IinanciaI Slalislics, and nalionaI sources.
#)
. ReaI GDI in conslanl 2007 USD
for lhe years 1965 2007 is caIcuIaled by laking currenl GDI in USD for 2007, again from WDI,
and ro|ecling backvards using lhese grovlh rales
$*
.
Dala on GDI al currenl exchange rales is rimariIy sourced from WDI vilh missing dala
once again suIemenled for cerlain counlries and years as delaiIed in foolnole 2. GDI al markel

#'
Ireared by Geoffrey Gerlz.
#(
Accessed }uIy 2008.
#)
The IMI WorId Iconomic OulIook is used as lhe source for aII grovlh rales for lhe years 2006 and 2007, as
al lime of vriling WorId DeveIomenl Indicalors did nol yel incIude lhis dala. Angus Maddison's
hisloricaI dalasel (Maddison HisloricaI Slalislics, WorId IouIalion, GDI, and Ier Caila GDI, 1-2003
AD: Lasl Udale Augusl 2007 (hll://vvv.ggdc.nel/maddison/), VariabIe: GDI in miIIion 1990
InlernalionaI Geary-Khamis doIIars, 1820-2003) is used for ahrain lo 1979, Germany lo 1970, Kuvail lo
1993, UAI lo 1972, Cambodia lo 1986, osnia 1991-93, Indonesia lo 1966, Maurilius lo 1979,
Mozambique lo 1979, Vielnam lo 1984, AngoIa lo 1984, }amaica lo 1965, }ordan lo 1974, Iaraguay lo
1988, Saudi Arabia lo 1967, Serbia 1991-92, SvaziIand lo 1969, Turkey lo 1967, Ilhioia lo 1980, Gambia
lo 1965, MaIi lo 1966, Tanzania lo 1987, Uganda lo 1981 and Yemen lo 1990. Irior lo 1990, dala for
Armenia, Azerbai|an, eIarus, Islonia, Georgia, Kazakhslan, Kyrgyzslan, Lalvia, Lilhuania, MoIdova,
Russia, Ta|ikislan, Turkmenislan, Uzbekislan, and Ukraine are combined under lhe heading former
USSR, and dala for Iasl Germany, AIbania, uIgaria, Czech ReubIic, SIovak ReubIic, Hungary,
IoIand, Romania, SIovenia, Serbia & Monlenegro, Croalia, and osnia & Herzegovina are combined
under lhe heading Iaslern Iuroe. These dala series are conslrucled by summing lhe 1991 GDI vaIues
of lhe individuaI counlries in lhe grouings and ro|ecling backvards using Maddison's grovlh rales
for Iaslern Iuroean counlries and former Soviel counlries for lhe years 1965 lo 1990. Cyrus dala for
lhe years 1965 lo 1974 are from lhe IMI's InlernalionaI IinanciaI Slalislics. Taivan dala for lhe years
1965 lo 2005 are from NalionaI Slalislics, ReubIic of China (Taivan), avaiIabIe onIine al
hll://eng.slal.gov.lv.
$*
Accessed }uIy 2008.

DEV/DOC(2010)2
OICD 2010 41
exchange rales is caIcuIaled by defIaling GDI al currenl exchange rales by US CII oblained from
lhe US ureau of Labor Slalislics
$!
. GDI al urchasing over arily is oblained by laking lhe
mosl recenl WorId ank eslimales of GDI al III (for 2005) and ro|ecling backvards using reaI
grovlh rales
$"
. AII of our measures of GDI are aIso exressed in er caila lerms, using
ouIalion eslimales from lhe Uniled Nalions IouIalion Irosecls dalasel (2006)
$#
.
The dalabase aIso incIudes informalion on each counlry's cailaI slock, vhich is
necessary for our fulure ro|eclions of GDI. Our dala coverage varies by counlry based on dala
avaiIabiIily, bul in each case ve caIcuIale cailaI slock from an iniliaI year (lhe earIiesl year for
vhich dala is avaiIabIe for lhal arlicuIar counlry) u lo 2005.
Ior each counlry lhe iniliaI cailaI slock (K0) is caIcuIaled according lo lhe foIIoving
equalion, foIIoving lhe melhod of CaseIIi and Ieyrer (2007)
44
:

(1)

vhere |0 is inveslmenl in conslanl 2000 USUSD for lhe iniliaI year, as rovided by WDI
$%
,
is lhe derecialion rale, sel al 0.06 foIIoving CaseIIi and Ieyrer and based on economic
consensus, and g is lhe average reaI GDI grovlh rale for lhe len year eriod jc||cuing lhe iniliaI
year, again laken from WDI
$&
.
Given lhe iniliaI cailaI slock, lhe cailaI slock in each subsequenl year u unliI 2005 is
caIcuIaled according lo lhe foIIoving equalion:

(2)

$!
Uniled Slales ureau of Labor Slalislics Dalabases and TabIes accessed }uIy 2008
(hll://dala.bIs.gov/IDQ/servIel/SurveyOululServIel), VariabIe: Consumer Irice Index - AII Urban
Consumers, nol seasonaIIy ad|usled, US cily average, AII ilems, vilh base eriod 1982-1984100, for
years 1965-2007.
$"
GIobaI Iurchasing Iover Iarilies and ReaI Ixendilures, 2005, InlernalionaI Comarison Irogram,
WorId ank, 2008.
$#
The Uniled Nalions IouIalion Irosecls dalasel (2006) rovides eslimales for every fiflh year (e.g. 1965,
1970, 1975, elc). Islimales for belveen years are caIcuIaled using comound annuaI grovlh rales
(CAGR).
44 The MarginaI Iroducl of CailaI, Irancesco CaseIIi and }ames Ieyrer, QuarlerIy }ournaI of Iconomics,
May 2007.
$%
Accessed }uIy 2008.
$&
Accessed }uIy 2008. We have inveslmenl dala for lvo-lhirds of lhe counlries from al Ieasl 1975, and for aII
bul lhree (osnia & Herzegovina, Serbia, and Liberia) from 1992. Ior lhose counlries vhere currenl
USD inveslmenl is avaiIabIe more lhan 15 years before conslanl 2000 USD inveslmenl, ve use lhe
currenl USD inveslmenl and converl il inlo conslanl 2000 USD by muIliIying lhe figure by lhe ralio of
conslanl 2000 USD GDI lo currenl USD GDI for lhe reIevanl year.
Kl Kl-1 (1- ) + Il-1
K
0
I
0
( + g)
K
0 0
( + g)

DEV/DOC(2010)2
42 OICD 2010

The derecialion rale () remains conslanl across lime al 0.06. As vilh iniliaI inveslmenl
|0, inveslmenl (|i) is given in conslanl USUSD and comes from WDI
$'
.

Step 2: Constant GDP projections, 2007-2050
The hearl of our modeI is conslanl GDI ro|eclions for lhe years 2008 lhrough 2050, using
a simIe Cobb-DougIas funclion in vhich GDI is a funclion of Iabour (L), cailaI (K), and
lechnoIogicaI rogress or lolaI faclor roduclivily grovlh (TII). Ior each year GDI is eslimaled
according lo lhe foIIoving equalion:

(3)

vhere equaIs 2/3 based on hisloricaI evidence and economic consensus. We foIIov an
ileralive rocess lo oblain GDI ro|eclions based on eslimales of Iabour, cailaI and lolaI faclor
roduclivily for each subsequenl year.
Ior Iabour (I) ro|eclions ve again lurn lo lhe Uniled Nalions IouIalion Irosecls
(2006) dalasel lo oblain eslimales of lhe vorking age ouIalion (15-64) by counlry for every fiflh
year u lo 2050. Iigures for inlervening years are caIcuIaled using CAGR. We caIcuIale lhe size
of lhe economicaIIy aclive ouIalion for each counlry by muIliIying lhese figures by lhe Iabour
force arlicialion rale from WDI
$(
.
Our cailaI (K) ro|eclions buiId on our cailaI slock eslimales from lhe hisloric dalabase.
As an iniliaI sle, ve converl our eslimaled 2005 cailaI slock IeveIs from conslanl 2000 USD lo
conslanl 2007 USD lo ensure comalibiIily
$)
. CailaI slock ro|eclions foIIov a simiIar aroach
lo equalion (2). Hovever, vhereas reviousIy lhe accumuIalion of nev cailaI vas based on
acluaI inveslmenl, in our forvard ro|eclions lhe accumuIalion of nev cailaI is eslimaled by
muIliIying lhe revious year's GDI by lhe counlry's eslimaled |cng run intcsincni raic i95-05,
equaI lo lhe average inveslmenl rale for lhe eriod 1995 lo 2005
%*
.

(4)

$'
Accessed }uIy 2008. As vilh iniliaI inveslmenl, vhere currenl USD inveslmenl dala is avaiIabIe more lhan
15 years before conslanl 2000 USD inveslmenl dala, ve emIoy currenl USD inveslmenl dala and
converl il inlo conslanl USD using lhe same melhod.
$(
Accessed }uIy 2008. Labour force arlicialion rale dala is avaiIabIe for aII counlries olher lhan Serbia,
SeycheIIes, Taivan for vhich regionaI averages vere used.
$)
We use a conversion ralio of 2005 GDI in conslanl 2000 USD lo 2005 GDI in conslanl 2007 USD.
%*
The inveslmenl rale for each year is oblained by dividing inveslmenl by GDI (bolh in conslanl rices).
Dala from WDI, accessed }uIy 2008. Ior Serbia and Liberia, ve use a shorler average inveslmenl
eriod due lo dala reslriclions.
Y TII L
K
(1- )
Kl Kl-1 (1- ) + i 95-05 Yl-1

DEV/DOC(2010)2
OICD 2010 43
TolaI faclor roduclivily (T|P) is our mosl comIex caIcuIalion. The iniliaI IeveI of TII
for lhe year 2007 is caIcuIaled by re-arranging lhe Cobb-DougIas formuIa above (3), fiIIing in
acluaI GDI, Iabour, and cailaI figures for 2007. Iulure IeveIs of TII are lhen caIcuIaled
according lo lhe foIIoving equalion:

(5)

Changes in TII occur lhrough lvo channeIs. As a firsl sle, lhe basic rale of Iong-lerm
lechnoIogy grovlh is assumed lo be 1.3 er cenl, based on hisloricaI dala
%!
. This is lhe slarling
oinl for aII counlries' changes in TII.
As a second sle, ve modeI changes in TII as a rocess of convergence vilh lhe Uniled
Slales, vilh lhe assumlion lhal as an economy grovs cIoser lo lhe er caila income IeveIs of
lhe Uniled Slales, ils roduclivily grovlh rale sIovs
%"
. The seed of convergence () is sel lo
0.015 for aII counlries in liers 1 and 2, based on lheir slrong hisloricaI roduclivily and GDI
grovlh rales. Ior aII counlries in liers 3 and 4, equaIs zero. This refIecls lhe facl lhal lhese
counlries have slruggIed lo roduce dynamic grovlh and have faiIed lo converge vilh Uniled
Slales Iiving slandards over recenl years. Ior counlries in liers 3 and 4, lhe rale of TII grovlh is
lherefore equaI lo 1.3 er cenl.

Step 3: GDP at market exchange rate projections, 2007-2050
Once ve have conslanl 2007 USD GDI ro|eclions using lhe Cobb-DougIas formuIa (3),
ve lhen eslimale changes in exchange rales lo exress our forecasls al markel exchange rales.
ReaI exchange rales are execled lo areciale as economies grov, aroaching III
exchange rales as economies converge vilh US Iiving slandards, as osiled by lhe aIassa-
SamueIson effecl
%#
.
To ro|ecl changes in lhe reaI exchange rale (RIR), ve begin by eslimaling lhe
reIalionshi belveen lhe reaI exchange rale and reIalive income IeveIs by running lhe foIIoving
simIe OLS regression for aII avaiIabIe counlries, using mean dala for lhe years 2005 lhrough
2007 lo smoolh over shorl-lerm fIuclualions
%$
.
+

%!
Nole, lhis is broadIy in Iine vilh lhe GoIdman Sachs aer by WiIson & Iurusholhaman, Dreaming vilh
RICs: The Ialh lo 2050 (2003), vhich assumes Iong run US TII grovlh of 1.33 er cenl.
%"
Given lhe rocess of convergence, counlries lhal begin vilh Iiving slandards above lhe US viII see lheir
TII grovlh begin beIov lhal of lhe US bul rising lovards US IeveIs (of 1.3 er cenl) as lheir Iiving
slandards converge.
%#
Ior a discussion of lhe aIassa-SamueIson effecl see: I. Kravis & R. Lisey, Tovards an IxIanalion of
NalionaI Irice LeveIs, Irincelon Sludies in InlernalionaI Iinance, No. 52, 1983.
%$
Dala from WDI, accessed }anuary 2009. We incIude aII counlries in our regression for vhich lhere is dala,
excIuding: counlries vhose ouIalion in 2007 vas under 1 miIIion, four counlries vho have rebased

DEV/DOC(2010)2
44 OICD 2010

(6)

vhere IIIi is lhe III conversion faclor for counlry i vilh resecl lo lhe US (USD1), ei is
lhe exchange rale of counlry i vilh resecl lo lhe US (USD 1), GDIci is lhe GDI er caila
(conslanl 2005 US doIIars III) of counlry i, GDIcUS is lhe GDI er caila (conslanl 2005
US doIIars III) of lhe US, , , and are coefficienls and i is lhe error lerm for counlry i.
We incIude over lerms of lhe indeendenl variabIe lo calure lhe changing seed vilh
vhich lhe reaI exchange rale areciales as economies converge on US er caila income IeveIs.
Changes in lhe reaI exchange rale al differenl IeveIs of convergence (or deveIomenl) are
execled lo foIIov an S-shaed (Iogislic) curve, refIecling changes in lhe reIalive rice of
lradeabIes and non-lradeabIes as economies deveIo
%%
.
The regression resuIls bear oul lhis reIalionshi, as iIIuslraled by lhe filled Iine of lhe
regression resuIls (Iigure 1). The regression oblains coefficienl vaIues of 0.4317912 for , -
0.3184848 for , 3.190494 for , and -2.140511 for . The R-squared vaIue is 0.8248, demonslraling
lhe regression's high exIanalory over.

lheir currency regimes during lhe 3 year eriod (Sudan, Mozambique, VenezueIa and Ghana), lhree
counlries for vhich lhe currency and III dala are al odds (II SaIvador, Syria, Myanmar), and
8 counlries vhose average er caila income belveen 2005 and 2007 (conslanl 2005 US doIIars III)
exceeded lhal of lhe US (Macao, Kuvail, Singaore, Uniled Arab Imirales, runei, Norvay, Qalar and
Luxembourg). This Ieaves a lolaI samIe of 132 counlries.
%%
Second Among IquaIs: The MiddIe CIass Kingdoms of India and China, Sur|il. S. haIIa, 2008.

DEV/DOC(2010)2
OICD 2010 45
Figure 1: Regression resuIts
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
0 0.2 0.4 0.6 0.8 1 1.2
GDPi / GDPus (per capita, PPP)
P
P
P
/
e

The regression resuIls suggesl lhal an economy's reaI exchange rale, as measured by
III/e, lyicaIIy eaks al around 1.174. This is consislenl bolh vilh our base year dala, vhere a
number of advanced counlries are found lo exceed arily vilh lhe US, and vilh olhers'
eslimales
%&
.
Ior 2007, lhe reaI exchange rale is aroximaled by lhe lhree-year average (2005-07) vaIue
of III/e. Ior each subsequenl year changes in lhe reaI exchange rale for each counlry are
ro|ecled using lhe foIIoving equalion:

(7)

vhere |||i
is an eslimale of lhe reaI exchange rale, as delermined by lhe regression

resuIls, given lhe ralio of an economy's average er caila income lo lhal of lhe US al lime i.
The ro|ecled reaI exchange rale IeveI, for counlry i and lime i, is a funclion of lhe
eslimaled IeveI in lhe revious year and an incremenlaI change redicled by lhe regression curve
based on changes in reIalive incomes. The finaI doubIe-brackel lerm eslimales lhe cIosure of lhe
"reaI exchange rale ga - lhe difference belveen lhe reaI exchange rale and ils eslimaled
maximum in resonse lo a change in reIalive incomes according lo lhe regression. This rale of
cIosure is lhen aIied lo lhe ga belveen lhe eslimaled maximum and lhe eslimaled |||ii for

%&
||i! foolnole above.

DEV/DOC(2010)2
46 OICD 2010
lhe revious year (lhe firsl brackel lerm) lo oblain ro|ecled vaIues of lhe reaI exchange rale for
aII counlries on a yearIy basis
%'
.
This resuIls in eslimaled reaI exchange rale vaIues vhich aroach lhe filled Iine of lhe
regression as incomes converge vilh lhal of lhe US. Ior examIe, Iigure 2 beIov lraces lhe reaI
exchange rale alh of lvo oulIier counlries, eIize (red) and eIarus (bIue), vhose iniliaI RIR (as
eslimaled by III/e) differs markedIy from lhe filled Iine. The markers indicale lhe years 2007
and 2050, iIIuslraling hov lhe RIR devialion from lhe filled Iine diminishes during lhe
convergence rocess.

Figure 2: RER convergence process
0
0.2
0.4
0.6
0.8
1
1.2
1.4
0 0.2 0.4 0.6 0.8 1
GDPi/GDPus (per capita, PPP)
R
E
R

The eslimaled reaI exchange rale vaIues are based lo 20071 and muIliIied by our
grovlh ro|eclions in conslanl doIIars lo oblain ro|eclions al markel exchange rales.

%'
Ior counlries vhose reaI exchange rale is above lhe regression curve's highesl oinl in lhe base year, lhe
reaI exchange rale is assumed lo remain conslanl. Ior counlries vhose er caila income IeveI exceeds
lhal of lhe US in lhe base year, lhe reaI exchange rale is assumed lo remain conslanl. Ior counlries
vhose er caila income IeveI overlakes lhal of lhe US over lhe series, lhe reaI exchange rale is
assumed lo remain conslanl from lhe year in vhich il reaches ils eak. Ior Ghana, Mozambique, Sudan
and VenezueIa, ad|uslmenl is made lo accommodale lhe rebasing of currencies. Ior Myanmar, Syria,
Taivan, Turkmenislan and Uzbekislan, for vhom accurale e vaIues cannol be oblained from lhe WDI,
ve use 2005 reaI exchange rales oblained or derived from GIobaI Iurchasing Iover Iarilies and ReaI
Ixendilures - InlernalionaI Comarison Irogram, WorId ank, 2005. Ior Zimbabve, for vhich no
eslimale of lhe currenl reaI exchange rale can be oblained, ve assume no change in lhe reaI exchange
rale over lhe series.

DEV/DOC(2010)2
OICD 2010 47

Step 4: GDP at PPP exchange rate projections, 2008 - 2050
In addilion lo markel exchange rales, ve converl our conslanl GDI ro|eclions inlo
urchasing over arily (III) lerms. Our aroach here is lhe same as lhal used lo oblain
hisloricaI dala in III lerms, ve simIy aIy our fulure grovlh rales lo lhe 2005 IeveIs of GDI
III as eslimaled by lhe WorId ank.

Step 5: Per capita projections, 2008 2050
As vilh our hisloricaI dala, aII lhree of our GDI unils (conslanl 2007 USD, markel
exchange rales, and III rales) are aIso exressed in er caila lerms. We again reIy on lhe UN
IouIalion Irosecls ro|eclions of lolaI ouIalion for each counlry.

Step 6: Poor, Middle, and Rich Class Projections
We nexl eslimale hov lhe size and make-u of lhe gIobaI oor, middIe and rich cIasses
viII evoIve belveen nov and 2050 based on our grovlh ro|eclions. We define lhe gIobaI oor
cIass as lhose Iiving on Iess lhan USD10 a day, lhe gIobaI middIe cIass as lhose Iiving on belveen
USD10 and USD100 a day, and lhe gIobaI rich cIass as lhose Iiving on more lhan USD100 a day,
aII figures in 2005 USD III lerms. To caIcuIale lhe share of each counlry's ouIalion vhich
beIongs lo each cIass, ve require, in addilion lo our exisling dalasel, inequaIily measures and
currenl eslimales of mean consumlion er caila (ralher lhan simIy GDI er caila) for aII
counlries.
We begin by assembIing a dalabase on lhe share of lolaI income accruing lo each deciIe of
lhe ouIalion for each counlry in our dalasel. This dala is oblained from lvo WorId ank
sources: lhe IovcaINel dalabase, vhich conlains lhe mosl u-lo-dale dala (mosl frequenlIy from
2005) for a vide-range of deveIoing counlries, and lhe InequaIily Around lhe WorId:
GIobaIizalion and Income Dislribulion Dalasel, vhich conlains dala for bolh deveIoed and
deveIoing counlries (mosl frequenlIy from 1998)
%(
. Irom lhese lvo sources ve choose lhe mosl
recenl dala avaiIabIe for each counlry in our dalasel. There are a lolaI of 14 counlries vhich are
nol reresenled in eilher dalabase, rimariIy counlries in lhe MiddIe Iasl and smaII isIand
economies. Ior each of lhese counlries, ve use lhe average avaiIabIe inequaIily dala of lhe
counlry's neighbours
%)
.

%(
The IovcaINel dalabase and lhe InequaIily Around lhe WorId: GIobaIizalion and Income Dislribulion
Dalasel can be found al hll://go.vorIdbank.org/NT2A1XUWI0 and
hll://go.vorIdbank.org/0C52T3CLM0, resecliveIy. olh accessed December 2008.
%)
Dala are missing for ahrain, Kuvail, Libya, Oman, Saudi Arabia, Syria and lhe Uniled Arab Imirales, for
lhese counlries ve use lhe average of MiddIe Iaslern counlries for vhich dala are avaiIabIe: AIgeria,
Igyl, Iran, }ordan, Morocco, Tunisia and Yemen. Dala are aIso missing for eIize (for vhich ve use
lhe average of GualemaIa, Honduras, and Mexico), Ii|i (for vhich ve use Iaua Nev Guinea dala),

DEV/DOC(2010)2
48 OICD 2010
We lransform lhis income share by deciIe dala inlo Lorenz curves grahs vhich Iol lhe
cumuIalive dislribulion of income againsl lhe cumuIalive ouIalion, moving from oor lo rich
for each counlry using lhe WorId ank's IovcaI soflvare
&*
. The IovcaI soflvare roduces lhree
aramelers a, b and c for lhe generaIised quadralic (GQ) Lorenz curve for any given income
dislribulion dalasel
&!
. These aramelers are lhen used in lhe foIIoving equalion lo caIcuIale lhe
nca!ccuni in!cx - lhe share of lhe ouIalion beIov any given income IeveI:

vhere Hz is lhe headcounl index for lhe income Iine z, a, | and c are aramelers of lhe Lorenz
curve comuled using lhe IovcaI soflvare, and is lhe mean consumlion IeveI.
To oblain currenl eslimales of mean consumlion er caila, ve use lhe WorId ank's
2005 InlernalionaI Comarison Irogram dalabase, vhich rovides eslimales of reaI er caila
rivale consumlion exendilure based on nalionaI accounls dala, measured in 2005
inlernalionaI doIIars (III)
&"
. IIugging lhese mean consumlion figures inlo lhe equalion above
enabIes us lo caIcuIale lhe ercenlage of lhe ouIalion Iiving on Iess lhan USD10 a day and Iess
lhan USD100 in every counlry. We muIliIy lhese vaIues by our ouIalion dala lo derive lhe
number of eoIe in lhe gIobaI oor, middIe, and rich cIasses in 2005.
To caIcuIale ro|eclions of lhe evoIving oor, middIe, and rich cIasses, ve simIy aIy
our reaI GDI er caila grovlh rale ro|eclions lo our 2005 consumlion figures lo oblain
ro|ecled consumlion er caila numbers and lhen recaIcuIale lhe ercenlage of eoIe Iiving

IceIand (for vhich ve use lhe average of Denmark, IinIand, Norvay, and Sveden), MaIla (for vhich
ve use lhe average of Cyrus, Greece, and IlaIy), Maurilius and SeycheIIes (for vhich ve use lhe
average of Kenya, Madagascar, MaIavi, Mozambique and Tanzania) and Sudan (for vhich ve use lhe
average of CenlraI African ReubIic, Chad, Igyl, Ilhioia, Kenya and Uganda).
&*
This soflvare can be dovnIoaded from hll://go.vorIdbank.org/YMRH2NT5V0.
&!
Ior a fuII exIanalion and discussion of lhese comulalions, see Gaurav Dall, ComulalionaI TooIs for
Ioverly Measuremenl and AnaIysis, ICND Discussion Iaer No. 50, InlernalionaI Iood IoIicy
Research Inslilule, Oclober 1998.
&"
There are 18 counlries in our dalabase for vhich lhe ICI does nol rovide lhis dala: Uniled Arab Imirales,
eIize, AIgeria, Cosla Rica, Dominican ReubIic, II SaIvador, GualemaIa, Guyana, Honduras, }amaica,
Libya, Nicaragua, Ianama, SeycheIIes, Trinidad and Tobago, Turkmenislan, Haili, Uzbekislan and
urundi. Ior aII lhese counlries olher lhan urundi, ve use lhe ICI eslimales of III GDI er caila
(see TabIe 8 in lhe melhodoIogy seclion of lhe ICI reorl), muIliIied by lhe share of househoId
consumlion in GDI for each counlry laken from lhe WorId DeveIomenl Indicalors. Ior urundi ve
do lhe same, excel ve use lhe 2005 GDI er caila III figure from lhe WorId DeveIomenl
Indicalors as none is avaiIabIe in lhe ICI reorl.
Ncic. c - (a + | + c + 1)
n |
2
- 4a
n 2|c 4c
r (n
2
- 4nc
2
)
1/2

Hz -
1
2m
n + r(b+2z/) (b+2z/)
2
- m
-1/2
(8)

DEV/DOC(2010)2
OICD 2010 49
on Iess lhan USD10 and USD100 a day using equalion (7)
&#
. Nole lhal lhis imIicilIy assumes
a) lhal consumlion grovs al lhe same rale as GDI, i.e. lhe share of consumlion in GDI viII
remain conslanl over lime, and b) lhal lhe Lorenz curve remains conslanl over lime, i.e. lhal
grovlh is dislribulionaIIy neulraI. IinaIIy, ve caIcuIale lhe number of oor, middIe cIass, and
rich individuaIs in each counlry using our ouIalion ro|eclions.

&#
We aIso use asl reaI GDI er caila grovlh slalislics lo caIcuIale consumlion er caila dala back lo
1991. We do nol alleml lo go back furlher lhan lhis due lo dala Iimilalions from lhe Soviel era.


DEV/DOC(2010)2
50 OICD 2010
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DEV/DOC(2010)2
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OTHER TITLES IN THE SERIES/
AUTRES TITRES DANS LA SRIE
The former series knovn as TechnicaI Iaers and Webdocs merged in November 2003
inlo DeveIomenl Cenlre Working Iaers. In lhe nev series, former Webdocs 1-17 foIIov
former TechnicaI Iaers 1-212 as Working Iaers 213-229.
A|| incsc !ccuncnis naq |c !cun|ca!c! jrcn.
hll://vvv.oecd.org/dev/v cr c|iainc! tia c-nai| (dev.conlacl+oecd.org).

Working Iaer No.1, Macrccccncnic A!jusincni an! |nccnc Oisiri|uiicn. A Macrc-Micrc Sinu|aiicn Mc!c|, by Iranois ourguignon,
WiIIiam H. ranson and }aime de MeIo, March 1989.
Working Iaer No. 2, |nicrnaiicna| |nicraciicns in |cc! an! Agricu|iura| Pc|icics. Tnc |jjcci cj A|icrnaiitc Pc|icics, by }oachim Zielz and
AIberlo VaIdes, AriI, 1989.
Working Iaer No. 3, Tnc |npaci cj Bu!gci |circncnncni cn |nccnc Oisiri|uiicn in |n!cncsia. A Sccia| Acccuniing Mairix App|icaiicn, by
Sleven Keuning and Irik Thorbecke, }une 1989.
Working Iaer No. 3a, Siaiisiica| Anncx. Tnc |npaci cj Bu!gci |circncnncni, }une 1989.
Documenl de lravaiI No. 4, Ic |ccqui|i|ragc cnirc |c sccicur pu||ic ci |c sccicur pritc . |c cas !u Mcxiquc, ar C.-A. MichaIel, |uin 1989.
Working Iaer No. 5, |c|a|ancing inc Pu||ic an! Pritaic Sccicrs. Tnc Casc cj Ma|aqsia, by R. Leeds, }uIy 1989.
Working Iaer No. 6, |jjicicncq, Wc|jarc |jjccis an! Pc|iiica| |casi|i|iiq cj A|icrnaiitc Aniipctcriq an! A!jusincni Prcgrans, by AIain de
}anvry and IIisabelh SadouIel, December 1989.
Documenl de lravaiI No. 7, Ajusicncni ci !isiri|uiicn !cs rctcnus . app|icaiicn !un nc!c|c nacrc-nicrc au Marcc, ar Chrislian Morrisson,
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Working Iaer No. 10, A |inancia| Ccnpuia||c Gcncra| |qui|i|riun Mc!c| jcr inc Ana|qsis cj |cua!crs Sia|i|izaiicn Prcgrans, by Andre
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Working Iaer No. 11, Macrccccncnic Aspccis, |crcign ||cus an! Ocncsiic Satings Pcrjcrnancc in Octc|cping Ccunirics. A Siaic cj Tnc
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Working Iaer No. 13, Agricu|iura| Grcuin an! |ccncnic Octc|cpncni. Tnc Casc cj Pakisian, by Naved Hamid and Wouler Tims,
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Working Iaer No. 14, |c|a|ancing inc Pu||ic an! Pritaic Sccicrs in Octc|cping Ccunirics. Tnc Casc cj Gnana, by H. Akuoko-Irimong,
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Working Iaer No. 15, Agricu|iurc an! inc |ccncnic Cqc|c. An |ccncnic an! |ccncnciric Ana|qsis uiin Spccia| |cjcrcncc ic Brazi|, by
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Working Iaer No. 16, Ccnparaiitc A!taniagc. Tnccrq an! App|icaiicn ic Octc|cping Ccunirq Agricu|iurc, by Ian GoIdin, }une 1990.
Working Iaer No. 17, Biciccnnc|cgq an! Octc|cping Ccunirq Agricu|iurc. Maizc in Brazi|, by ernardo Sor| and }ohn WiIkinson,
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Working Iaer No. 18, |ccncnic Pc|icics an! Sccicra| Grcuin. Argcniina 1913-1984, by Yair MundIak, Domingo CavaIIo, Roberlo
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Working Iaer No. 19, Biciccnnc|cgq an! Octc|cping Ccunirq Agricu|iurc. Maizc |n Mcxicc, by }aime A. Malus Gardea, Arluro Iuenle
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DEV/DOC(2010)2
54 OICD 2010
Working Iaer No. 21, |nicrnaiicna| Ccnpariscns cj |jjicicncq in Agricu|iura| Prc!uciicn, by GuiIIermo IIichmann, }uIy 1990.
Working Iaer No. 22, Uncnp|cqncni in Octc|cping Ccunirics. Ncu Iigni cn an O|! Prc||cn, by David Turnham and Denizhan IrcaI,
}uIy 1990.
Working Iaer No. 23, Opiina| Currcncq Ccnpcsiiicn cj |crcign Oc|i. inc Casc cj |itc Octc|cping Ccunirics, by Iier Giorgio Gavronski,
Augusl 1990.
Working Iaer No. 24, |rcn G|c|a|izaiicn ic |cgicna|izaiicn. inc Mcxican Casc, by WiIson Ieres Nuez, Augusl 1990.
Working Iaer No. 25, ||ccircnics an! Octc|cpncni in Vcnczuc|a. A Uscr-Oricnic! Siraicgq an! iis Pc|icq |np|icaiicns, by CarIola Ierez,
Oclober 1990.
Working Iaer No. 26, Tnc Icga| Prcicciicn cj Scjiuarc. |np|icaiicns jcr Iaicccncr Siraicgics in Ncu|q |n!usiria|ising |ccncnics (N||s) an!
Mi!!|c-|nccnc |ccncnics (M||s), by CarIos Maria Correa, Oclober 1990.
Working Iaer No. 27, Spccia|izaiicn, Tccnnica| Cnangc an! Ccnpciiiitcncss in inc Brazi|ian ||ccircnics |n!usirq, by CIaudio R. Irischlak,
Oclober 1990.
Working Iaer No. 28, |nicrnaiicna|izaiicn Siraicgics cj japancsc ||ccircnics Ccnpanics. |np|icaiicns jcr Asian Ncu|q |n!usiria|izing
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Working Iaer No. 29, Tnc Siaius an! an |ta|uaiicn cj inc ||ccircnics |n!usirq in Taiuan, by Gee San, Oclober 1990.
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Working Iaer No. 34, Biciccnnc|cgq an! Octc|cping Ccunirq Agricu|iurc. Maizc in |n!cncsia, by Hid|al Nalaalmad|a ci a|., }anuary 1991.
Working Iaer No. 35, Cnanging Ccnparaiitc A!taniagc in Tnai Agricu|iurc, by Ammar SiamvaIIa, Sulhad Selboonsarng and Irasong
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Working Iaer No. 36, Capiia| ||cus an! inc |xicrna| |inancing cj Turkcqs |npcris, by Ziya nis and SIeyman zmucur, }uIy 1991.
Working Iaer No. 37, Tnc |xicrna| |inancing cj |n!cncsias |npcris, by GIenn I. }enkins and Henry .I. Lim, }uIy 1991.
Working Iaer No. 38, Icng-icrn Capiia| |cj|cu un!cr Macrccccncnic Sia|i|izaiicn in Iaiin Ancrica, by ealriz Armendariz de Aghion,
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Working Iaer No. 39, Buq|acks cj IOC Oc|i an! inc Sccpc jcr |crgitcncss, by ealriz Armendariz de Aghion, }uIy 1991.
Working Iaer No. 40, Mcasuring an! Mc!c||ing Ncn-Tarijj Oisicriicns uiin Spccia| |cjcrcncc ic Tra!c in Agricu|iura| Ccnnc!iiics, by
Ieler }. LIoyd, }uIy 1991.
Working Iaer No. 41, Tnc Cnanging Naiurc cj |M| Ccn!iiicna|iiq, by }acques }. IoIak, Augusl 1991.
Working Iaer No. 42, Tinc-Varqing |siinaics cn inc Opcnncss cj inc Capiia| Acccuni in Kcrca an! Taiuan, by HeImul Reisen and HeIene
Yeches, Augusl 1991.
Working Iaer No. 43, Tcuar! a Ccnccpi cj Octc|cpncni Agrccncnis, by I. Gerard Adams, Augusl 1991.
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Working Iaer No. 45, Tnc |xicrna| |inancing cj Tnai|an!s |npcris, by Suole Chunanunlhalhum, Oclober 1991.
Working Iaer No. 46, Tnc |xicrna| |inancing cj Brazi|ian |npcris, by Inrico CoIomballo, vilh IIisa Luciano, Luca GargiuIo, Iielro
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Working Iaer No. 47, Sccnarics jcr inc Wcr|! Tra!ing Sqsicn an! incir |np|icaiicns jcr Octc|cping Ccunirics, by Roberl Z. Lavrence,
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Working Iaer No. 48, Tra!c Pc|icics in a G|c|a| Ccnicxi. Tccnnica| Spccijicaiicns cj inc |ura|/Ur|an-Ncrin/Scuin (|UNS) App|ic! Gcncra|
|qui|i|riun Mc!c|, by }ean-Marc urniaux and Dominique van der Mensbrugghe, November 1991.
Working Iaer No. 49, Macrc-Micrc Iinkagcs. Siruciura| A!jusincni an! |crii|izcr Pc|icq in Su|-Sanaran Ajrica, by }ean-Marc Ionlaine
vilh lhe coIIaboralion of AIice Sindzingre, December 1991.
Working Iaer No. 50, Aggrcgaiicn |q |n!usirq in Gcncra| |qui|i|riun Mc!c|s uiin |nicrnaiicna| Tra!c, by Ieler }. LIoyd, December 1991.
Working Iaer No. 51, Pc|icq an! |nircprcncuria| |cspcnscs ic inc Mcnirca| Prciccc|. Scnc |ti!cncc jrcn inc Oqnanic Asian |ccncnics, by
David C. O'Connor, December 1991.
Working Iaer No. 52, On inc Pricing cj IOC Oc|i. an Ana|qsis Basc! cn Hisicrica| |ti!cncc jrcn Iaiin Ancrica, by ealriz Armendariz
de Aghion, Iebruary 1992.
Working Iaer No. 53, |ccncnic |cgicna|isaiicn an! |nira-|n!usirq Tra!c. Pacijic-Asian Pcrspcciitcs, by Kiichiro Iukasaku,
Iebruary 1992.
Working Iaer No. 54, Oc|i Ccntcrsicns in Yugcs|atia, by Mo|mir Mrak, Iebruary 1992.
Working Iaer No. 55, |ta|uaiicn cj Nigcrias Oc|i-|c|icj |xpcricncc (1985-1990), by N.I. Ogbe, March 1992.
Documenl de lravaiI No. 56, I|xpcricncc !c |a||cgcncni !c |a !ciic !u Ma|i, ar }ean-CIaude erlheIemy, fevrier 1992.
Working Iaer No. 57, Ccnj|ici cr |n!ijjcrcncc. US Mu|iinaiicna|s in a Wcr|! cj |cgicna| Tra!ing B|ccs, by Louis T. WeIIs, }r., March 1992.
Working Iaer No. 58, japans |api!|q |ncrging Siraicgq Tcuar! Asia, by Idvard }. LincoIn, AriI 1992.
Working Iaer No. 59, The IoIilicaI Iconomy of SlabiIizalion Irogrammes in DeveIoing Counlries, by runo S. Irey and Reiner
Iichenberger, AriI 1992.

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Working Iaer No. 60, Scnc |np|icaiicns cj |urcpc 1992 jcr Octc|cping Ccunirics, by SheiIa Iage, AriI 1992.
Working Iaer No. 61, Taiuancsc Ccrpcraiicns in G|c|a|isaiicn an! |cgicna|isaiicn, by Gee San, AriI 1992.
Working Iaer No. 62, Icsscns jrcn inc |ani|q P|anning |xpcricncc jcr Ccnnuniiq-Basc! |ntircnncnia| |!ucaiicn, by Winifred
Weekes-VagIiani, AriI 1992.
Working Iaer No. 63, Mcxican Agricu|iurc in inc |rcc Tra!c Agrccncni. Transiiicn Prc||cns in |ccncnic |cjcrn, by Sanliago Levy and
Sveder van Wi|nbergen, May 1992.
Working Iaer No. 64, Ojjcnsitc an! Ocjcnsitc |cspcnscs |q |urcpcan Mu|iinaiicna|s ic a Wcr|! cj Tra!c B|ccs, by }ohn M. Sloford,
May 1992.
Working Iaer No. 65, |ccncnic |nicgraiicn in inc Pacijic |cgicn, by Richard Drobnick, May 1992.
Working Iaer No. 66, Iaiin Ancrica in a Cnanging G|c|a| |ntircnncni, by Winslon Irilsch, May 1992.
Working Iaer No. 67, An Asscssncni cj inc Bra!q P|an Agrccncnis, by }ean-CIaude erlheIemy and Roberl Lensink, May 1992.
Working Iaer No. 68, Tnc |npaci cj |ccncnic |cjcrn cn inc Pcrjcrnancc cj inc Scc! Sccicr in |asicrn an! Scuincrn Ajrica, by IIizabelh
CromveII, }une 1992.
Working Iaer No. 69, |npaci cj Siruciura| A!jusincni an! A!cpiicn cj Tccnnc|cgq cn Ccnpciiiitcncss cj Majcr Cccca Prc!ucing Ccunirics,
by ImiIy M. IoomfieId and R. Anlony Lass, }une 1992.
Working Iaer No. 70, Siruciura| A!jusincni an! Mcrcccan Agricu|iurc. an Asscssncni cj inc |cjcrns in inc Sugar an! Ccrca| Sccicrs, by
}onalhan Kydd and Sohie Thoyer, }une 1992.
Documenl de lravaiI No. 71, IA||cgcncni !c |a !ciic au C|u| !c Paris . |cs ctc|uiicns rcccnics cn pcrspcciitc, ar Ann Vourc'h, |uin 1992.
Working Iaer No. 72, Biciccnnc|cgq an! inc Cnanging Pu||ic/Pritaic Sccicr Ba|ancc. Octc|cpncnis in |icc an! Cccca, by CarIiene renner,
}uIy 1992.
Working Iaer No. 73, Nani|ian Agricu|iurc. Pc|icics an! Prcspccis, by WaIler IIkan, Ieler Amulenya, }ochbelh Andima, Robin
Sherbourne and IIine van der Linden, }uIy 1992.
Working Iaer No. 74, Agricu|iurc an! inc Pc|icq |ntircnncni. Zan|ia an! Zin|a|uc, by Doris }. }ansen and Andrev Rukovo,
}uIy 1992.
Working Iaer No. 75, Agricu|iura| Prc!uciitiiq an! |ccncnic Pc|icics. Ccnccpis an! Mcasurcncnis, by Yair MundIak, Augusl 1992.
Working Iaer No. 76, Siruciura| A!jusincni an! inc |nsiiiuiicna| Oincnsicns cj Agricu|iura| |cscarcn an! Octc|cpncni in Brazi|. Scq|cans,
Wncai an! Sugar Canc, by }ohn WiIkinson and ernardo Sor|, Augusl 1992.
Working Iaer No. 77, Tnc |npaci cj Iaus an! |cgu|aiicns cn Micrc an! Sna|| |nicrpriscs in Nigcr an! Suazi|an!, by IsabeIIe }oumard,
CarI LiedhoIm and DonaId Mead, Selember 1992.
Working Iaer No. 78, Cc-|inancing Transaciicns |ciuccn Mu|ii|aicra| |nsiiiuiicns an! |nicrnaiicna| Banks, by MicheI ouchel and Amil
Ghose, Oclober 1992.
Documenl de lravaiI No. 79, A||cgcncni !c |a !ciic ci crcissancc . |c cas ncxicain, ar }ean-CIaude erlheIemy el Ann Vourc'h,
oclobre 1992.
Documenl de lravaiI No. 80, Ic Sccicur injcrnc| cn Tunisic . ca!rc rcg|cncniairc ci praiiquc ccuranic, ar Abderrahman en Zakour el
Iarouk Kria, novembre 1992.
Working Iaer No. 81, Sna||-Sca|c |n!usirics an! |nsiiiuiicna| |rancucrk in Tnai|an!, by NaruemoI un|ong|il and Xavier Oudin,
November 1992.
Working Iaer No. 81a, Siaiisiica| Anncx. Sna||-Sca|c |n!usirics an! |nsiiiuiicna| |rancucrk in Tnai|an!, by NaruemoI un|ong|il and
Xavier Oudin, November 1992.
Documenl de lravaiI No. 82, I|xpcricncc !c |a||cgcncni !c |a !ciic !u Nigcr, ar Ann Vourc'h el Maina oukar Moussa, novembre 1992.
Working Iaer No. 83, Sia|i|izaiicn an! Siruciura| A!jusincni in |n!cncsia. an |nicricnpcra| Gcncra| |qui|i|riun Ana|qsis, by David
RoIand-HoIsl, November 1992.
Working Iaer No. 84, Siriting jcr |nicrnaiicna| Ccnpciiiitcncss. Icsscns jrcn ||ccircnics jcr Octc|cping Ccunirics, by }an Maarlen de Vel,
March 1993.
Documenl de lravaiI No. 85, Micrc-cnircpriscs ci ca!rc insiiiuiicnnc| cn A|gcric, ar Hocine enissad, mars 1993.
Working Iaer No. 86, |njcrna| Sccicr an! |cgu|aiicns in |cua!cr an! janaica, by ImiIio KIein and Viclor I. Tokman, Augusl 1993.
Working Iaer No. 87, A|icrnaiitc |xp|anaiicns cj inc Tra!c-Ouipui Ccrrc|aiicn in inc |asi Asian |ccncnics, by CoIin I. radford }r. and
Naomi Chakvin, Augusl 1993.
Documenl de lravaiI No. 88, Ia |aisa|i|iic pc|iiiquc !c |ajusicncni !ans |cs paqs ajricains, ar Chrislian Morrisson, }ean-Dominique Lafay
el Sebaslien Dessus, novembre 1993.
Working Iaer No. 89, Cnina as a Ica!ing Pacijic |ccncnq, by Kiichiro Iukasaku and Mingyuan Wu, November 1993.
Working Iaer No. 90, A Ociai|c! |npui-Ouipui Ta||c jcr Mcrcccc, 1990, by Maurizio ussoIo and David RoIand-HoIsl November 1993.
Working Iaer No. 91, |nicrnaiicna| Tra!c an! inc Transjcr cj |ntircnncnia| Ccsis an! Bcncjiis, by Hiro Lee and David RoIand-HoIsl,
December 1993.
Working Iaer No. 92, |ccncnic |nsiruncnis in |ntircnncnia| Pc|icq. Icsscns jrcn inc O|CO |xpcricncc an! incir |c|ctancc ic Octc|cping
|ccncnics, by }ean-IhiIie arde, }anuary 1994.
Working Iaer No. 93, Wnai Can Octc|cping Ccunirics Icarn jrcn O|CO Ia|cur Markci Prcgranncs an! Pc|icics`, by Asa SohIman vilh
David Turnham, }anuary 1994.

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Working Iaer No. 94, Tra!c Ii|cra|izaiicn an! |np|cqncni Iinkagcs in inc Pacijic Basin, by Hiro Lee and David RoIand-HoIsl,
Iebruary 1994.
Working Iaer No. 95, Pariicipaicrq Octc|cpncni an! Gcn!cr. Ariicu|aiing Ccnccpis an! Cascs, by Winifred Weekes-VagIiani,
Iebruary 1994.
Documenl de lravaiI No. 96, Prcncutcir |a naiirisc |cca|c ci rcgicna|c !u !ctc|cppcncni . unc !cnarcnc pariicipaiitc a Ma!agascar, ar
IhiIie de Rham el ernard Lecomle, |uin 1994.
Working Iaer No. 97, Tnc O|CO Grccn Mc!c|. an Up!aic! Otcrticu, by Hiro Lee, }oaquim OIiveira-Marlins and Dominique van der
Mensbrugghe, Augusl 1994.
Working Iaer No. 98, Pcnsicn |un!s, Capiia| Ccnirc|s an! Macrccccncnic Sia|i|iiq, by HeImul Reisen and }ohn WiIIiamson,
Augusl 1994.
Working Iaer No. 99, Tra!c an! Pc||uiicn Iinkagcs. Picccnca| |cjcrn an! Opiina| |nicrtcniicn, by }ohn eghin, David RoIand-HoIsl
and Dominique van der Mensbrugghe, Oclober 1994.
Working Iaer No. 100, |nicrnaiicna| |niiiaiitcs in Biciccnnc|cgq jcr Octc|cping Ccunirq Agricu|iurc. Prcniscs an! Prc||cns, by CarIiene
renner and }ohn Komen, Oclober 1994.
Working Iaer No. 101, |npui-|asc! Pc||uiicn |siinaics jcr |ntircnncnia| Asscssncni in Octc|cping Ccunirics, by Sebaslien Dessus,
David RoIand-HoIsl and Dominique van der Mensbrugghe, Oclober 1994.
Working Iaer No. 102, Transiiicna| Prc||cns jrcn |cjcrn ic Grcuin. Sajciq Ncis an! |inancia| |jjicicncq in inc A!jusiing |gqpiian
|ccncnq, by Mahmoud AbdeI-IadiI, December 1994.
Working Iaer No. 103, Biciccnnc|cgq an! Susiaina||c Agricu|iurc. Icsscns jrcn |n!ia, by Ghayur AIam, December 1994.
Working Iaer No. 104, Crcp Biciccnnc|cgq an! Susiaina|i|iiq. a Casc Siu!q cj Cc|cn|ia, by Luis R. Saninl, }anuary 1995.
Working Iaer No. 105, Biciccnnc|cgq an! Susiaina||c Agricu|iurc. inc Casc cj Mcxicc, by }ose Luis SoIIeiro ReboIIedo, }anuary 1995.
Working Iaer No. 106, |npirica| Spccijicaiicns jcr a Gcncra| |qui|i|riun Ana|qsis cj Ia|cr Markci Pc|icics an! A!jusincnis, by Andrea
MaechIer and David RoIand-HoIsl, May 1995.
Documenl de lravaiI No. 107, Ics Migranis, paricnaircs !c |a cccpcraiicn inicrnaiicna|c . |c cas !cs Ma|icns !c |rancc, ar Chrislohe Daum,
|uiIIel 1995.
Documenl de lravaiI No. 108, Outcriurc ci crcissancc in!usiric||c cn Cninc . ciu!c cnpiriquc sur un ccnanii||cn !c ti||cs, ar SyIvie
Demurger, selembre 1995.
Working Iaer No. 109, Biciccnnc|cgq an! Susiaina||c Crcp Prc!uciicn in Zin|a|uc, by }ohn }. Woodend, December 1995.
Documenl de lravaiI No. 110, Pc|iiiqucs !c |cntircnncncni ci |i|cra|isaiicn !cs ccnangcs au Ccsia |ica . unc tuc !cnscn||c, ar Sebaslien
Dessus el Maurizio ussoIo, fevrier 1996.
Working Iaer No. 111, Grcu Ncu/C|can Iaicr, cr inc Pursuii cj Susiaina||c Octc|cpncni?, by David O'Connor, March 1996.
Working Iaer No. 112, |ccncnic Transiiicn an! Tra!c-Pc|icq |cjcrn. Icsscns jrcn Cnina, by Kiichiro Iukasaku and Henri-ernard
SoIignac Lecomle, }uIy 1996.
Working Iaer No. 113, Cnincsc Ouiuar! |ntcsincni in Hcng Kcng. Trcn!s, Prcspccis an! Pc|icq |np|icaiicns, by Yun-Wing Sung,
}uIy 1996.
Working Iaer No. 114, Vcriica| |nira-in!usirq Tra!c |ciuccn Cnina an! O|CO Ccunirics, by Lisbelh HeIIvin, }uIy 1996.
Documenl de lravaiI No. 115, Ic |5|c !u capiia| pu||ic !ans |a crcissancc !cs paqs cn !ctc|cppcncni au ccurs !cs annccs 80, ar Sebaslien
Dessus el Remy Herrera, |uiIIel 1996.
Working Iaer No. 116, Gcncra| |qui|i|riun Mc!c||ing cj Tra!c an! inc |ntircnncni, by }ohn eghin, Sebaslien Dessus, David RoIand-
HoIsl and Dominique van der Mensbrugghe, Selember 1996.
Working Iaer No. 117, Ia|cur Markci Aspccis cj Siaic |nicrprisc |cjcrn in Vici Nan, by David O'Connor, Selember 1996.
Documenl de lravaiI No. 118, Crcissancc ci ccnpciiiitiic !c |in!usiric nanujaciuricrc au Scncga|, ar Thierry LalreiIIe el Arislomene
Varoudakis, oclobre 1996.
Working Iaer No. 119, |ti!cncc cn Tra!c an! Wagcs in inc Octc|cping Wcr|!, by DonaId }. Robbins, December 1996.
Working Iaer No. 120, Ii|cra|ising |crcign |ntcsincnis |q Pcnsicn |un!s. Pcsiiitc an! Ncrnaiitc Aspccis, by HeImul Reisen,
}anuary 1997.
Documenl de lravaiI No. 121, Capiia| Hunain, cutcriurc cxicricurc ci crcissancc . csiinaiicn sur !cnnccs !c panc| !un nc!c|c a cccjjicicnis
taria||cs, ar }ean-CIaude erlheIemy, Sebaslien Dessus el Arislomene Varoudakis, |anvier 1997.
Working Iaer No. 122, Ccrrupiicn. Tnc |ssucs, by Andrev W. Goudie and David Slasavage, }anuary 1997.
Working Iaer No. 123, Ouij|cus cj Capiia| jrcn Cnina, by David WaII, March 1997.
Working Iaer No. 124, |ncrging Markci |isk an! Sctcrcign Crc!ii |aiings, by GuiIIermo Larrain, HeImul Reisen and }uIia von
MaIlzan, AriI 1997.
Working Iaer No. 125, Ur|an Crc!ii Cc-cpcraiitcs in Cnina, by Iric Girardin and Xie Iing, Augusl 1997.
Working Iaer No. 126, |isca| A|icrnaiitcs cj Mcting jrcn Unjun!c! ic |un!c! Pcnsicns, by Roberl HoIzmann, Augusl 1997.
Working Iaer No. 127, Tra!c Siraicgics jcr inc Scuincrn Mc!iicrrancan, by Ieler A. Ielri, December 1997.
Working Iaer No. 128, Tnc Casc cj Missing |crcign |ntcsincni in inc Scuincrn Mc!iicrrancan, by Ieler A. Ielri, December 1997.
Working Iaer No. 129, |ccncnic |cjcrn in |gqpi in a Cnanging G|c|a| |ccncnq, by }oseh Licari, December 1997.

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Working Iaer No. 130, Oc |un!c! Pcnsicns Ccniri|uic ic Higncr Aggrcgaic Satings? A Crcss-Ccunirq Ana|qsis, by }eanine aiIIiu and
HeImul Reisen, December 1997.
Working Iaer No. 131, Icng-run Grcuin Trcn!s an! Ccntcrgcncc Acrcss |n!ian Siaics, by RayaroIu Nagara|, Arislomene Varoudakis
and Marie-Ange Veganzones, }anuary 1998.
Working Iaer No. 132, Susiaina||c an! |xccssitc Currcni Acccuni Ocjiciis, by HeImul Reisen, Iebruary 1998.
Working Iaer No. 133, |nic||cciua| Prcpcriq |ignis an! Tccnnc|cgq Transjcr in Octc|cping Ccunirq Agricu|iurc. |ncicric an! |ca|iiq, by
CarIiene renner, March 1998.
Working Iaer No. 134, |xcnangc-raic Managcncni an! Manujaciurc! |xpcris in Su|-Sanaran Ajrica, by KhaIid Sekkal and Arislomene
Varoudakis, March 1998.
Working Iaer No. 135, Tra!c |nicgraiicn uiin |urcpc, |xpcri Oitcrsijicaiicn an! |ccncnic Grcuin in |gqpi, by Sebaslien Dessus and
Akiko Suva-Iisenmann, }une 1998.
Working Iaer No. 136, Ocncsiic Causcs cj Currcncq Criscs. Pc|icq Icsscns jcr Crisis Atci!ancc, by HeImul Reisen, }une 1998.
Working Iaer No. 137, A Sinu|aiicn Mc!c| cj G|c|a| Pcnsicn |ntcsincni, by Landis MacKeIIar and HeImul Reisen, Augusl 1998.
Working Iaer No. 138, Ocicrninanis cj Cusicns |rau! an! Ccrrupiicn. |ti!cncc jrcn Tuc Ajrican Ccunirics, by David Slasavage and
CeciIe Daubree, Augusl 1998.
Working Iaer No. 139, Siaic |njrasiruciurc an! Prc!uciitc Pcrjcrnancc in |n!ian Manujaciuring, by Aru Milra, Arislomene Varoudakis
and Marie-Ange Veganzones, Augusl 1998.
Working Iaer No. 140, |ura| |n!usiria| Octc|cpncni in Vici Nan an! Cnina. A Siu!q in Ccnirasis, by David O'Connor, Selember 1998.
Working Iaer No. 141,Ia|cur Markci Aspccis cj Siaic |nicrprisc |cjcrn in Cnina, by Ian Gang,Maria Rosa Lunali and David
O'Connor, Oclober 1998.
Working Iaer No. 142, |igniing |xircnc Pctcriq in Brazi|. Tnc |nj|ucncc cj Ciiizcns Aciicn cn Gctcrnncni Pc|icics, by Iernanda Loes
de CarvaIho, November 1998.
Working Iaer No. 143, Hcu Ba! Gctcrnancc |npc!cs Pctcriq A||ctiaiicn in Bang|a!csn, by Rehman Sobhan, November 1998.
Documenl de lravaiI No. 144, Ia |i|cra|isaiicn !c |agricu|iurc iunisicnnc ci |Unicn curcpccnnc. unc tuc prcspcciitc, ar Mohamed
AbdeIbassel Chemingui el Sebaslien Dessus, fevrier 1999.
Working Iaer No. 145, |ccncnic Pc|icq |cjcrn an! Grcuin Prcspccis in |ncrging Ajrican |ccncnics, by Ialrick GuiIIaumonl, SyIviane
GuiIIaumonl }eanneney and Arislomene Varoudakis, March 1999.
Working Iaer No. 146, Siruciura| Pc|icics jcr |nicrnaiicna| Ccnpciiiitcncss in Manujaciuring. Tnc Casc cj Cancrccn, by Ludvig SderIing,
March 1999.
Working Iaer No. 147, Cninas Unjinisnc! Opcn-|ccncnq |cjcrns. Ii|cra|isaiicn cj Scrticcs, by Kiichiro Iukasaku, Yu Ma and Qiumei
Yang, AriI 1999.
Working Iaer No. 148, Bccn an! Busi an! Sctcrcign |aiings, by HeImul Reisen and }uIia von MaIlzan, }une 1999.
Working Iaer No. 149, |ccncnic Opcning an! inc Ocnan! jcr Ski||s in Octc|cping Ccunirics. A |cticu cj Tnccrq an! |ti!cncc, by David
O'Connor and Maria Rosa Lunali, }une 1999.
Working Iaer No. 150, Tnc |c|c cj Capiia| Accunu|aiicn, A!jusincni an! Siruciura| Cnangc jcr |ccncnic Takc-cjj. |npirica| |ti!cncc jrcn
Ajrican Grcuin |pisc!cs, by }ean-CIaude erlheIemy and Ludvig SderIing, }uIy 1999.
Working Iaer No. 151, Gcn!cr, Hunan Capiia| an! Grcuin. |ti!cncc jrcn Six Iaiin Ancrican Ccunirics, by DonaId }. Robbins,
Selember 1999.
Working Iaer No. 152, Tnc Pc|iiics an! |ccncnics cj Transiiicn ic an Opcn Markci |ccncnq in Vici Nan, by }ames RiedeI and WiIIiam
S. TurIey, Selember 1999.
Working Iaer No. 153, Tnc |ccncnics an! Pc|iiics cj Transiiicn ic an Opcn Markci |ccncnq. Cnina, by Wing Thye Woo, Oclober 1999.
Working Iaer No. 154, |njrasiruciurc Octc|cpncni an! |cgu|aicrq |cjcrn in Su|-Sanaran Ajrica. Tnc Casc cj Air Transpcri, by Andrea
I. GoIdslein, Oclober 1999.
Working Iaer No. 155, Tnc |ccncnics an! Pc|iiics cj Transiiicn ic an Opcn Markci |ccncnq. |n!ia, by Ashok V. Desai, Oclober 1999.
Working Iaer No. 156, C|inaic Pc|icq Wiincui Tcars. CG|-Basc! Anci||arq Bcncjiis |siinaics jcr Cni|c, by Sebaslien Dessus and David
O'Connor, November 1999.
Documenl de lravaiI No. 157, Ocpcnscs !c!ucaiicn, qua|iic !c |c!ucaiicn ci pautrcic . |cxcnp|c !c cinq paqs !Ajriquc jranccpncnc, ar
Kalharina MichaeIova, avriI 2000.
Documenl de lravaiI No. 158, Unc csiinaiicn !c |a pautrcic cn Ajriquc su|sanaricnnc !aprcs |cs !cnnccs aninrcpcnciriqucs, ar Chrislian
Morrisson, HeIene GuiImeau el CharIes Linskens, mai 2000.
Working Iaer No. 159, Ccntcrging |urcpcan Transiiicns, by }orge raga de Macedo, }uIy 2000.
Working Iaer No. 160, Capiia| ||cus an! Grcuin in Octc|cping Ccunirics. |cccni |npirica| |ti!cncc, by MarceIo Solo, }uIy 2000.
Working Iaer No. 161, G|c|a| Capiia| ||cus an! inc |ntircnncni in inc 21si Ccniurq, by David O'Connor, }uIy 2000.
Working Iaer No. 162, |inancia| Criscs an! |nicrnaiicna| Arcniicciurc. A |urcccniric Pcrspcciitc, by }orge raga de Macedo,
Augusl 2000.
Documenl de lravaiI No. 163, |cscu!rc |c prc||cnc !c |a !ciic . !c |iniiiaiitc PPT| a Cc|cgnc, ar Anne }oseh, aol 2000.
Working Iaer No. 164, |-Ccnncrcc jcr Octc|cpncni. Prcspccis an! Pc|icq |ssucs, by Andrea GoIdslein and David O'Connor,
Selember 2000.

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Working Iaer No. 165, Ncgaiitc A|cncnq? Ccrrupiicn an! Ccnpcsiiicn cj Capiia| ||cus, by Shang-}in Wei, Oclober 2000.
Working Iaer No. 166, Tnc H|PC |niiiaiitc. Truc an! |a|sc Prcniscs, by DanieI Cohen, Oclober 2000.
Documenl de lravaiI No. 167, Ics jacicurs cxp|icaiijs !c |a na|nuiriiicn cn Ajriquc su|sanaricnnc, ar Chrislian Morrisson el CharIes
Linskens, oclobre 2000.
Working Iaer No. 168, Hunan Capiia| an! Grcuin. A Sqnincsis |cpcri, by Chrisloher A. Iissarides, November 2000.
Working Iaer No. 169, O|siac|cs ic |xpan!ing |nira-Ajrican Tra!c, by Roberlo Longo and KhaIid Sekkal, March 2001.
Working Iaer No. 170, |cgicna| |nicgraiicn |n Wcsi Ajrica, by Irnesl Aryeeley, March 2001.
Working Iaer No. 171, |cgicna| |nicgraiicn |xpcricncc in inc |asicrn Ajrican |cgicn, by Andrea GoIdslein and N|uguna S. Ndung'u,
March 2001.
Working Iaer No. 172, |nicgraiicn an! Cc-cpcraiicn in Scuincrn Ajrica, by CaroIyn }enkins, March 2001.
Working Iaer No. 173, |O| in Su|-Sanaran Ajrica, by Ludger OdenlhaI, March 2001
Documenl de lravaiI No. 174, Ia rcjcrnc !cs ic|cccnnunicaiicns cn Ajriquc su|sanaricnnc, ar Ialrick IIane, mars 2001.
Working Iaer No. 175, |igniing Ccrrupiicn in Cusicns A!ninisiraiicn. Wnai Can Wc Icarn jrcn |cccni |xpcricnccs?, by Irene Hors,
AriI 2001.
Working Iaer No. 176, G|c|a|isaiicn an! Transjcrnaiicn. |||usicns an! |ca|iiq, by Grzegorz W. KoIodko, May 2001.
Working Iaer No. 177, |xicrna| Sc|tcncq, Oc||arisaiicn an! |ntcsincni Gra!c. Tcuar!s a Viriucus Circ|c?, by Marlin Grandes, }une 2001.
Documenl de lravaiI No. 178, Ccngc 1965-1999. Ics cspcirs !cus !u Brcsi| ajricain , ar }oseh Malon avec Henri-ernard SoIignac
Lecomle, selembre 2001.
Working Iaer No. 179, Grcuin an! Hunan Capiia|. Gcc! Oaia, Gcc! |csu|is, by DanieI Cohen and MarceIo Solo, Selember 2001.
Working Iaer No. 180, Ccrpcraic Gctcrnancc an! Naiicna| Octc|cpncni, by CharIes I. Oman, Oclober 2001.
Working Iaer No. 181, Hcu G|c|a|isaiicn |nprctcs Gctcrnancc, by Iederico onagIia, }orge raga de Macedo and Maurizio ussoIo,
November 2001.
Working Iaer No. 182, C|caring inc Air in |n!ia. Tnc |ccncnics cj C|inaic Pc|icq uiin Anci||arq Bcncjiis, by Maurizio ussoIo and David
Working Iaer No. 183, G|c|a|isaiicn, Pctcriq an! |ncqua|iiq in su|-Sanaran Ajrica. A Pc|iiica| |ccncnq Appraisa|, by Yvonne M. Tsikala,
December 2001.
Working Iaer No. 184, Oisiri|uiicn an! Grcuin in Iaiin Ancrica in an |ra cj Siruciura| |cjcrn. Tnc |npaci cj G|c|a|isaiicn, by SamueI
A. MorIey, December 2001.
Working Iaer No. 185, G|c|a|isaiicn, Ii|cra|isaiicn, Pctcriq an! |nccnc |ncqua|iiq in Scuincasi Asia, by K.S. }omo, December 2001.
Working Iaer No. 186, G|c|a|isaiicn, Grcuin an! |nccnc |ncqua|iiq. Tnc Ajrican |xpcricncc, by Sleve Kayizzi-Mugerva, December 2001.
Working Iaer No. 187, Tnc Sccia| |npaci cj G|c|a|isaiicn in Scuincasi Asia, by Mari Iangeslu, December 2001.
Working Iaer No. 188, Wncrc Occs |ncqua|iiq Ccnc |rcn? |!cas an! |np|icaiicns jcr Iaiin Ancrica, by }ames A. Robinson,
December 2001.
Working Iaer No. 189, Pc|icics an! |nsiiiuiicns jcr |-Ccnncrcc |ca!incss. Wnai Can Octc|cping Ccunirics Icarn jrcn O|CO |xpcricncc?,
by IauIo aslos Tigre and David O'Connor, AriI 2002.
Documenl de lravaiI No. 190, Ia rcjcrnc !u sccicur jinancicr cn Ajriquc, ar Anne }oseh, |uiIIel 2002.
Working Iaer No. 191, Viriucus Circ|cs? Hunan Capiia| |crnaiicn, |ccncnic Octc|cpncni an! inc Mu|iinaiicna| |nicrprisc, by Ilhan
. Kaslein, Augusl 2002.
Working Iaer No. 192, Ski|| Upgra!ing in Octc|cping Ccunirics. Has |nuar! |crcign Oircci |ntcsincni P|aqc! a |c|c?, by Mallhev
}. SIaughler, Augusl 2002.
Working Iaer No. 193, Gctcrnncni Pc|icics jcr |nuar! |crcign Oircci |ntcsincni in Octc|cping Ccunirics. |np|icaiicns jcr Hunan Capiia|
|crnaiicn an! |nccnc |ncqua|iiq, by Dirk WiIIem le VeIde, Augusl 2002.
Working Iaer No. 194, |crcign Oircci |ntcsincni an! |nic||cciua| Capiia| |crnaiicn in Scuincasi Asia, by ryan K. Rilchie, Augusl 2002.
Working Iaer No. 195, |O| an! Hunan Capiia|. A |cscarcn Agcn!a, by Magnus Iomslrm and Ari Kokko, Augusl 2002.
Working Iaer No. 196, Kncu|c!gc Oijjusicn jrcn Mu|iinaiicna| |nicrpriscs. Tnc |c|c cj Ocncsiic an! |crcign Kncu|c!gc-|nnancing
Aciitiiics, by Yasuyuki Todo and Ko|i Miyamolo, Augusl 2002.
Working Iaer No. 197, Wnq Arc Scnc Ccunirics Sc Pccr? Ancincr Icck ai inc |ti!cncc an! a Mcssagc cj Hcpc, by DanieI Cohen and
MarceIo Solo, Oclober 2002.
Working Iaer No. 198, Cncicc cj an |xcnangc-|aic Arrangcncni, |nsiiiuiicna| Sciiing an! |nj|aiicn. |npirica| |ti!cncc jrcn Iaiin Ancrica,
by Andreas Ireylag, Oclober 2002.
Working Iaer No. 199, Wi|| Basc| || Ajjcci |nicrnaiicna| Capiia| ||cus ic |ncrging Markcis?, by ealrice Weder and MichaeI Wedov,
Oclober 2002.
Working Iaer No. 200, Ccntcrgcncc an! Oitcrgcncc cj Sctcrcign Bcn! Sprca!s. Icsscns jrcn Iaiin Ancrica, by Marlin Grandes,
Oclober 2002.
Working Iaer No. 201, Prcspccis jcr |ncrging-Markci ||cus ani! |ntcsicr Ccnccrns a|cui Ccrpcraic Gctcrnancc, by HeImul Reisen,
November 2002.
Working Iaer No. 202, |c!iscctcring |!ucaiicn in Grcuin |cgrcssicns, by MarceIo Solo, November 2002.

DEV/DOC(2010)2
OICD 2010 59
Working Iaer No. 203, |nccniitc Bi!!ing jcr Mc|i|c |ntcsincni. |ccncnic Ccnscqucnccs an! Pcicniia| |cspcnscs, by Andrev CharIlon,
}anuary 2003.
Working Iaer No. 204, Hca|in |nsurancc jcr inc Pccr? Ocicrninanis cj pariicipaiicn Ccnnuniiq-Basc! Hca|in |nsurancc Scncncs in |ura|
Scncga|, by }ohannes }lling, }anuary 2003.
Working Iaer No. 205, Cninas Scjiuarc |n!usirq an! iis |np|icaiicns jcr |n!ia, by Ted Tschang, Iebruary 2003.
Working Iaer No. 206, Agricu|iura| an! Hunan Hca|in |npacis cj C|inaic Pc|icq in Cnina. A Gcncra| |qui|i|riun Ana|qsis uiin Spccia|
|cjcrcncc ic Guang!cng, by David O'Connor, Ian Zhai, Krislin Aunan, Ter|e ernlsen and Haakon Vennemo, March 2003.
Working Iaer No. 207, |n!ias |njcrnaiicn Tccnnc|cgq Sccicr. Wnai Ccniri|uiicn ic Brca!cr |ccncnic Octc|cpncni?, by Nirvikar Singh,
March 2003.
Working Iaer No. 208, Pu||ic Prccurcncni. Icsscns jrcn Kcnqa, Tanzania an! Ugan!a, by WaIler Odhiambo and IauI Kamau,
March 2003.
Working Iaer No. 209, |xpcri Oitcrsijicaiicn in Icu-|nccnc Ccunirics. An |nicrnaiicna| Cna||cngc ajicr Ocna, by Iederico onagIia and
Kiichiro Iukasaku, }une 2003.
Working Iaer No. 210, |nsiiiuiicns an! Octc|cpncni. A Criiica| |cticu, by }ohannes }lling, }uIy 2003.
Working Iaer No. 211, Hunan Capiia| |crnaiicn an! |crcign Oircci |ntcsincni in Octc|cping Ccunirics, by Ko|i Miyamolo, }uIy 2003.
Working Iaer No. 212, Ccnira| Asia sincc 1991. Tnc |xpcricncc cj inc Ncu |n!cpcn!cni Siaics, by Richard Iomfrel, }uIy 2003.
Working Iaer No. 213, A Mu|ii-|cgicn Sccia| Acccuniing Mairix (1995) an! |cgicna| |ntircnncnia| Gcncra| |qui|i|riun Mc!c| jcr |n!ia
(||G|M|), by Maurizio ussoIo, Mohamed Chemingui and David O'Connor, November 2003.
Working Iaer No. 214, |aiings Sincc inc Asian Crisis, by HeImul Reisen, November 2003.
Working Iaer No. 215, Octc|cpncni |c!ux. |cj|cciicns jcr a Ncu Para!ign, by }orge raga de Macedo, November 2003.
Working Iaer No. 216, Tnc Pc|iiica| |ccncnq cj |cgu|aicrq |cjcrn. Tc|cccns in inc Scuincrn Mc!iicrrancan, by Andrea GoIdslein,
November 2003.
Working Iaer No. 217, Tnc |npaci cj |!ucaiicn cn |crii|iiq an! Cni|! Mcria|iiq. Oc |aincrs |ca||q Maiicr Icss inan Mcincrs?, by Lucia
reierova and Islher DufIo, November 2003.
Working Iaer No. 218, ||cai in Or!cr ic |ix? Icsscns jrcn |ncrging Markcis jcr |U Acccssicn Ccunirics, by }orge raga de Macedo and
HeImul Reisen, November 2003.
Working Iaer No. 219, G|c|a|isaiicn in Octc|cping Ccunirics. Tnc |c|c cj Transaciicn Ccsis in |xp|aining |ccncnic Pcrjcrnancc in |n!ia,
by Maurizio ussoIo and }ohn WhaIIey, November 2003.
Working Iaer No. 220, Pctcriq |c!uciicn Siraicgics in a Bu!gci-Ccnsirainc! |ccncnq. Tnc Casc cj Gnana, by Maurizio ussoIo and
}effery I. Round, November 2003.
Working Iaer No. 221, Pu||ic-Pritaic Parincrsnips in Octc|cpncni. Tnrcc App|icaiicns in Tincr Icsic, by }ose raz, November 2003.
Working Iaer No. 222, Pu||ic Opinicn |cscarcn, G|c|a| |!ucaiicn an! Octc|cpncni Cc-cpcraiicn |cjcrn. |n Scarcn cj a Viriucus Circ|c, by Ida
Mc DonneII, Henri-ernard SoIignac Lecomle and Liam Wegimonl, November 2003.
Working Iaer No. 223, Bui|!ing Capaciiq ic Tra!c. Wnai Arc inc Pricriiics?, by Henry-ernard SoIignac Lecomle, November 2003.
Working Iaer No. 224, Oj ||qing Gccks an! O-|ings. Iccaiing Scjiuarc an! |T Scrticcs in |n!ias |ccncnic Octc|cpncni, by David
Documenl de lravaiI No. 225, Cap Vcri. Gcutcrnancc ci Octc|cppcncni, ar }aime Loureno and CoIm Ioy, novembre 2003.
Working Iaer No. 226, G|c|a|isaiicn an! Pctcriq Cnangcs in Cc|cn|ia, by Maurizio ussoIo and }ann Lay, November 2003.
Working Iaer No. 227, Tnc Ccnpcsiic |n!icaicr cj |ccncnic Aciitiiq in Mczan|iquc (|CA|). |i||ing in inc Kncu|c!gc Gaps ic |nnancc
Pu||ic-Pritaic Parincrsnip (PPP), by Roberlo }. Tibana, November 2003.
Working Iaer No. 228, |ccncnic-|cccnsiruciicn in Pcsi-Ccnj|ici Transiiicns. Icsscns jcr inc Ocnccraiic |cpu||ic cj Ccngc (O|C), by
Graciana deI CasliIIo, November 2003.
Working Iaer No. 229, Prcti!ing Icu-Ccsi |njcrnaiicn Tccnnc|cgq Acccss ic |ura| Ccnnuniiics |n Octc|cping Ccunirics. Wnai Wcrks?
Wnai Paqs? by Georg Casary and David O'Connor, November 2003.
Working Iaer No. 230, Tnc Currcncq Prcniun an! Icca|-Currcncq Ocncninaic! Oc|i Ccsis in Scuin Ajrica, by Marlin Grandes, MarceI
Ieler and NicoIas Iinaud, December 2003.
Working Iaer No. 231, Macrccccncnic Ccntcrgcncc in Scuincrn Ajrica. Tnc |an! Zcnc |xpcricncc, by Marlin Grandes, December 2003.
Working Iaer No. 232, |inancing G|c|a| an! |cgicna| Pu||ic Gcc!s inrcugn OOA. Ana|qsis an! |ti!cncc jrcn inc O|CO Crc!iicr
|cpcriing Sqsicn, by HeImul Reisen, MarceIo Solo and Thomas Weilhner, }anuary 2004.
Working Iaer No. 233, Ian!, Vic|cni Ccnj|ici an! Octc|cpncni, by NicoIas Ions-Vignon and Henri-ernard SoIignac Lecomle,
Iebruary 2004.
Working Iaer No. 234, Tnc |npaci cj Sccia| |nsiiiuiicns cn inc |ccncnic |c|c cj Wcncn in Octc|cping Ccunirics, by Chrislian Morrisson
and }ohannes }lling, May 2004.
Documenl de lravaiI No. 235, Ia ccn!iiicn !csjcnncs cn |n!c, Kcnqa, Scu!an ci Tunisic, ar Chrislian Morrisson, aol 2004.
Working Iaer No. 236, Occcnira|isaiicn an! Pctcriq in Octc|cping Ccunirics. |xp|cring inc |npaci, by }ohannes }lling,
CeIine Kauffmann, Ida Mc DonneII, HoIger Oslerrieder, NicoIas Iinaud and Lucia Wegner, Augusl 2004.
Working Iaer No. 237, Naiura| Oisasicrs an! A!apiitc Capaciiq, by }eff Daylon-}ohnson, Augusl 2004.

DEV/DOC(2010)2
60 OICD 2010
Working Iaer No. 238, Pu||ic Opinicn Pc||ing an! inc Mi||cnniun Octc|cpncni Gca|s, by }ude Iransman, AIhonse L. MacDonnaId,
Ida Mc DonneII and NicoIas Ions-Vignon, Oclober 2004.
Working Iaer No. 239, Otcrccning Barricrs ic Ccnpciiiitcncss, by Orsella Causa and DanieI Cohen, December 2004.
Working Iaer No. 240, |xicn!ing |nsurancc? |uncra| Asscciaiicns in |inicpia an! Tanzania, by Slefan Dercon, Tessa oId, }oachim
De Weerdl and AIuIa Iankhursl, December 2004.
Working Iaer No. 241, Macrccccncnic Pc|icics. Ncu |ssucs cj |nicr!cpcn!cncc, by HeImul Reisen, Marlin Grandes and NicoIas Iinaud,
}anuary 2005.
Working Iaer No. 242, |nsiiiuiicna| Cnangc an! iis |npaci cn inc Pccr an! |xc|u!c!. Tnc |n!ian Occcnira|isaiicn |xpcricncc, by
D. Narayana, }anuary 2005.
Working Iaer No. 243, |npaci cj Cnangcs in Sccia| |nsiiiuiicns cn |nccnc |ncqua|iiq in Cnina, by Hiroko Uchimura, May 2005.
Working Iaer No. 244, Pricriiics in G|c|a| Assisiancc jcr Hca|in, A|OS an! Pcpu|aiicn (HAP), by Landis MacKeIIar, }une 2005.
Working Iaer No. 245, Tra!c an! Siruciura| A!jusincni Pc|icics in Sc|ccic! Octc|cping Ccunirics, by }ens Andersson, Iederico onagIia,
Kiichiro Iukasaku and CaroIine Lesser, }uIy 2005.
Working Iaer No. 246, |ccncnic Grcuin an! Pctcriq |c!uciicn. Mcasurcncni an! Pc|icq |ssucs, by Slehan KIasen, (Selember 2005).
Working Iaer No. 247, Mcasuring Gcn!cr (|n)|qua|iiq. |nirc!ucing inc Gcn!cr, |nsiiiuiicns an! Octc|cpncni Oaia Basc (G|O),
by }ohannes I. }lling, Chrislian Morrisson, }eff Daylon-}ohnson and Denis DrechsIer (March 2006).
Working Iaer No. 248, |nsiiiuiicna| Bcii|cnccks jcr Agricu|iura| Octc|cpncni. A Sicck-Taking |xcrcisc Basc! cn |ti!cncc jrcn Su|-Sanaran
Ajrica by }uan R. de LaigIesia, March 2006.
Working Iaer No. 249, Migraiicn Pc|icq an! iis |nicraciicns uiin Ai!, Tra!c an! |crcign Oircci |ntcsincni Pc|icics. A Backgrcun! Papcr, by
Theodora Xenogiani, }une 2006.
Working Iaer No. 250, |jjccis cj Migraiicn cn Scn!ing Ccunirics. Wnai Oc Wc Kncu? by Louka T. KalseIi, Roberl I.. Lucas and
Theodora Xenogiani, }une 2006.
Documenl de lravaiI No. 251, Iai!c au !ctc|cppcncni ci |cs auircs j|ux ncr!-su! . ccnp|cncniariic cu su|siiiuiicn ?, ar Denis Cogneau el
SyIvie Lamberl, |uin 2006.
Working Iaer No. 252, Angc| cr Octi|? Cninas Tra!c |npaci cn Iaiin Ancrican |ncrging Markcis, by }orge Iazquez-Lidoy, }avier
Rodriguez and }avier Sanliso, }une 2006.
Working Iaer No. 253, Pc|icq Ccncrcncc jcr Octc|cpncni. A Backgrcun! Papcr cn |crcign Oircci |ntcsincni, by Thierry Mayer, }uIy 2006.
Working Iaer No. 254, Tnc Ccncrcncc cj Tra!c ||cus an! Tra!c Pc|icics uiin Ai! an! |ntcsincni ||cus, by Akiko Suva-Iisenmann and
Thierry Verdier, Augusl 2006.
Documenl de lravaiI No. 255, Siruciurcs jani|ia|cs, iransjcris ci cpargnc . cxancn, ar Chrislian Morrisson, aol 2006.
Working Iaer No. 256, U|qsscs, inc Sircns an! inc Ari cj Natigaiicn. Pc|iiica| an! Tccnnica| |aiicna|iiq in Iaiin Ancrica, by }avier Sanliso
and Laurence Whilehead, Selember 2006.
Working Iaer No. 257, Octc|cping Ccunirq Mu|iinaiicna|s. Scuin-Scuin |ntcsincni Ccncs cj Agc, by DiIek Aykul and Andrea
GoIdslein, November 2006.
Working Iaer No. 258, Tnc Usua| Suspccis. A Princr cn |ntcsincni Banks |cccnncn!aiicns an! |ncrging Markcis, by Sebaslian Nielo-
Iarra and }avier Sanliso, }anuary 2007.
Working Iaer No. 259, Banking cn Ocnccracq. Tnc Pc|iiica| |ccncnq cj |nicrnaiicna| Pritaic Bank Icn!ing in |ncrging Markcis, by }avier
Rodriguez and }avier Sanliso, March 2007.
Working Iaer No. 260, Ncu Siraicgics jcr |ncrging Ocncsiic Sctcrcign Bcn! Markcis, by Hans Iommeslein and }avier Sanliso, AriI
2007.
Working Iaer No. 261, Pritaiisaiicn in inc M|OA rcgicn. Wncrc !c uc sian!?, by CeIine Kauffmann and Lucia Wegner, }uIy 2007.
Working Iaer No. 262, Sircngincning Prc!uciitc Capaciiics in |ncrging |ccncnics inrcugn |nicrnaiicna|isaiicn. |ti!cncc jrcn inc
App|iancc |n!usirq, by Iederico onagIia and Andrea GoIdslein, }uIy 2007.
Working Iaer No. 263, Banking cn Octc|cpncni. Pritaic Banks an! Ai! Ocncrs in Octc|cping Ccunirics, by }avier Rodriguez and }avier
Sanliso, November 2007.
Working Iaer No. 264, |isca| Occcnira|isaiicn, Cnincsc Siq|c. Gcc! jcr Hca|in Ouiccncs?, by Hiroko Uchimura and }ohannes }lling,
November 2007.
Working Iaer No. 265, Pritaic Sccicr Pariicipaiicn an! |cgu|aicrq |cjcrn in Waicr supp|q. inc Scuincrn Mc!iicrrancan |xpcricncc, by
Idouard Ierard, }anuary 2008.
Working Iaer No. 266, |njcrna| |np|cqncni |c-|ca!c!, by }ohannes }lling, }anle IarIevIiel and Theodora Xenogiani, }anuary 2008.
Working Iaer No. 267, Hcuscnc|! Siruciurcs an! Satings. |ti!cncc jrcn Hcuscnc|! Surtcqs, by }uan R. de LaigIesia and Chrislian
Morrisson, }anuary 2008.
Working Iaer No. 268, Pru!cni tcrsus |npru!cni Icn!ing ic Ajrica. |rcn Oc|i |c|icj ic |ncrging Icn!crs, by HeImul Reisen and Sokhna
Ndoye, Iebruary 2008.
Working Iaer No. 269, Icn!ing ic inc Pccrcsi Ccunirics. A Ncu Ccunicr-Cqc|ica| Oc|i |nsiruncni, by DanieI Cohen, HeIene D|oufeIkil-
Collenel, Iierre }acquel and CeciIe VaIadier, AriI 2008.
Working Iaer No.270, Tnc Macrc Managcncni cj Ccnnc!iiq Bccns. Ajrica an! Iaiin Ancricas |cspcnsc ic Asian Ocnan!, by RoIando
Avendao, HeImul Reisen and }avier Sanliso, Augusl 2008.

DEV/DOC(2010)2
OICD 2010 61
Working Iaer No. 271, |cpcri cn |njcrna| |np|cqncni in |cnania, by }anle IarIevIiel and Theodora Xenogiani, }uIy 2008.
Working Iaer No. 272, Wa|| Sircci an! ||cciicns in Iaiin Ancrican |ncrging Ocnccracics, by Sebaslian Nielo-Iarra and }avier Sanliso,
Oclober 2008.
Working Iaer No. 273, Ai! Vc|aii|iiq an! Macrc |isks in I|Cs, by Iduardo orenszlein, }uIia Cage, DanieI Cohen and CeciIe VaIadier,
November 2008.
Working Iaer No. 274, Wnc Sau Sctcrcign Oc|i Criscs Ccning?, by Sebaslian Nielo-Iarra, November 2008.
Working Iaer No. 275, Octc|cpncni Ai! an! Pcrijc|ic |un!s. Trcn!s, Vc|aii|iiq an! |ragncniaiicn, by ImmanueI Irol and }avier Sanliso,
December 2008.
Working Iaer No. 276, |xiraciing inc Maxinun jrcn ||T|, by DiIan Icer, Iebruary 2009.
Working Iaer No. 277, Taking Sicck cj inc Crc!ii Cruncn. |np|icaiicns jcr Octc|cpncni |inancc an! G|c|a| Gctcrnancc, by Andrev MoId,
Sebaslian IauIo and AnnaIisa Irizzon, March 2009.
Working Iaer No. 278, Arc A|| Migranis |ca||q Wcrsc Ojj in Ur|an Ia|cur Markcis? Ncu |npirica| |ti!cncc jrcn Cnina, by }ason
Gagnon, Theodora Xenogiani and Chunbing Xing, }une 2009.
Working Iaer No. 279, Hcr!ing in Ai! A||ccaiicn, by ImmanueI Irol and }avier Sanliso, }une 2009.
Working Iaer No. 280, Ccncrcncc cj Octc|cpncni Pc|icics. |cua!crs |ccncnic Tics uiin Spain an! incir Octc|cpncni |npaci, by IIiana
OIivie, }uIy 2009.
Working Iaer No. 281, |ctisiiing Pc|iiica| Bu!gci Cqc|cs in Iaiin Ancrica, by Sebaslian Nielo-Iarra and }avier Sanliso, Augusl 2009.
Working Iaer No. 282, Arc Wcrkcrs |cniiianccs |c|ctani jcr Crc!ii |aiing Agcncics?, by RoIando Avendao, Norberl GaiIIard and
Sebaslian Nielo-Iarra, Oclober 2009.
Working Iaer No. 283, Arc SW| |ntcsincnis Pc|iiica||q Biasc!? A Ccnpariscn uiin Muiua| |un!s, by RoIando Avendao and }a vier
Sanliso, December 2009.
Working Iaer No. 284, Crusnc! Ai!. |ragncniaiicn in Sccicra| Ai!, by ImmanueI Irol and }avier Sanliso, }anuary 2010.

OECD - Middle Class

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OICD DIVILOIMINT CINTRI

THI IMIRGING MIDDLI CLASS

is an eslimale of lhe reaI exchange rale, as delermined by lhe regression

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