April 30, 2014
The question of the Latin American middle class has been a frequent topic of news in recent years. It has become a matter of intense debate, perhaps because the region has long been home to some of the world’s highest levels of inequality.
Why should we care about the size of the region’s middle class? First, because growth represents more consumers demanding goods and services above subsistence levels, which increases the size of local markets. Second, a larger middle class can have beneficial social consequences. Academic research shows that restricting unequal incomes improves social cohesion and that a growing middle class favors the democratization process.
Several studies indicate that Latin America’s middle class has grown in size in the last decade. Research gives a wide range of estimates for its real size, from 170 to 350 million people. While a 2010 OECD study estimated that between 40% and 50% of Latin Americans were middle class, World Bank economists last year estimated its relative size to be 29%. Figures vary because these studies use different methods and economists have yet to establish a common standard for measurement.
Most of these studies cite household per capita income as a pertinent measure of relative wealth. Various methodologies traditionally used to gauge the middle class consider these incomes and their possible growth.
Who is middle class?
The OECD study fixes a central point as a median income, and considers middle class all those earning within a range around that. It defines the middle class as those households with a per capita income of between 50% and 150% of the national middle income. Using this measure, the middle class constitutes 56% of Uruguay’s population, 45% of Brazil’s and 40% of Bolivia and Colombia. The study indicates that reducing income inequalities over the past decade has prompted a relative growth in the middle class.
The World Bank’s study on Latin America, which is gradually becoming a standard reference, defines as middle class households with a daily per capita income of between $10 and $50. For a four-member household, that means an annual income of between $14,600 and $73,000. It is a more restrictive definition of the middle class than many used before for regional countries, among them Brazil.
An interesting aspect of the World Bank study is how the $10 daily income threshhold was devised specifically for the Latin American context. The $10 value implies there is a maximum probability of 10% that household incomes could be below the threshold used to measure poverty in the region, set at $4. In this definition of the middle class, the World Bank found it increased from 20% of the population in 1995 to 29% in 2009. Again, the country with the largest middle class in this study is Uruguay, where more than half the population qualify. In Brazil’s case, the middle class as defined by the World Bank is smaller, a little below a third of the population despite its considerable growth since 1995.
The main reason for middle class growth is a better economy. According to the World Bank, when household revenues begin to exceed $4 per head, they are no longer poor but enter a vulnerable category until their incomes exceed $10 per head. At that point they start moving toward the middle class, which is precisely what Latin American households have been doing. The percentage of households in the vulnerable, transitional group has not increased much, so reduction in poverty is reflected in a growing middle class.
And in the future? The World Bank predicts that the Latin American middle class could increase 10%, to reach 40% of the total population in 2030. Only time can confirm that. In any case, it will depend on the policies of governments and how they deal with financial turmoils that affect all emerging markets.
*Rolf Campos is a professor of economics at IESE Business School.
America Economia is Latin America's leading business magazine, founded in 1986 by Elias Selman and Nils Strandberg. Headquartered in Santiago, Chile, it features a region-wide monthly edition and regularly updated articles online, as well as country-specific editions in Chile, Brazil, Ecuador and Mexico.
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Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger
October 20, 2021
Welcome to Wednesday, where chaos hits Syria, Brazilian president Jair Bolsonaro is accused of crimes against humanity and a social media giant plans to rebrand itself. For Spanish daily La Razon, reporter Paco Rodríguez takes us to the devastated town of Belchite, where visitors are reporting paranormal phenomenons.
🌎 7 THINGS TO KNOW RIGHT NOW
• Syrian violence erupts: Army shelling on residential areas of the rebel-held region of northwestern Syria killed 13 people, with school children among the victims. The attack occurred shortly after a bombing killed at least 14 military personnel in Damascus. In central Syria, a blast inside an ammunition depot kills five soldiers.
• Renewed Ethiopia air raids on capital of embattled Tigray region: Ethiopian federal government forces have launched its second air strike this week on the capital of the northern Tigray. The air raids mark a sharp escalation in the near-year-old conflict between the government forces and the Tigrayan People's Liberation Front (TPLF) that killed thousands and displaced over 2 million people.
• Bolsonaro accused of crimes against humanity: A leaked draft government report concludes that Brazilian President Jair Bolsonaro should be charged with crimes against humanity, forging documents and incitement to crime, following his handling of the country's COVID-19 pandemic. The report blames Bolsonaro's administration for more than half of Brazil's 600,000 coronavirus deaths.
• Kidnappers in Haiti demand $17 million to free a missionary group: A Haitian gang that kidnapped 17 members of a Christian aid group, including five children, demanded $1million ransom per person. Most of those being held are Americans; one is Canadian.
• Putin bows out of COP26 in Glasgow: Russian President Vladimir Putin will not fly to Glasgow to attend the COP26 climate summit. A setback for host Britain's hopes of getting support from major powers for a more radical plan to tackle climate change.
• Queen Elizabeth II cancels trip over health concerns: The 95-year-old British monarch has cancelled a visit to Northern Ireland after she was advised by her doctors to rest for the next few days. Buckingham Palace assured the queen, who attended public events yesterday, was "in good spirits."• A new name for Facebook? According to a report by The Verge website, Mark Zuckerberg's social media giant is planning on changing the company's name next week, to reflect its focus on building the "metaverse," a virtual reality version of the internet.
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"Oil price rise causes earthquake," titles Portuguese daily Jornal I as surging demand coupled with supply shortage have driven oil prices to seven-year highs at more than $80 per barrel.
#️⃣ BY THE NUMBERS
For the first time women judges have been appointed to Egypt's State Council, one of the country's main judicial bodies. The council's chief judge, Mohammed Hossam el-Din, welcomed the 98 new judges in a celebratory event in Cairo. Since its inception in 1946, the State Council has been exclusively male and until now actively rejected female applicants.
📰 STORY OF THE DAY
Spanish civil war town now a paranormal attraction
Ghosts from Spain's murderous 1930s civil war are said to roam the ruins of Belchite outside Zaragoza. Tourists are intrigued and can book a special visit to the town, reports Paco Rodríguez in Madrid-based daily La Razon.
🏚️ Between August 24 and September 6, 1937, during the Spanish Civil War, more than 5,000 people died in 14 days of intense fighting in Belchite in north-eastern Spain, and the town was flattened. The fighting began on the outskirts and ended in house-to-house fighting. Almost half the town's 3,100 residents died in the struggle. The war annihilated centuries of village history. The town was never rebuilt, though a Pueblo Nuevo (or new town) was built by the old one.
😱 Belchite became an open-air museum of the horror of the civil war of 1936-39, which left 300,000 dead and wounds that have yet to heal or, for some today, mustn't. For many locals, the battle of Belchite has yet to end, judging by reports of paranormal incidents. Some insist they have heard the screams of falling soldiers, while others say the Count of Belchite wanders the streets, unable to find a resting place after his corpse was exhumed.
🎟️ Ordinary visitors have encountered unusual situations. Currently, you can only visit Belchite at set times every day, with prior booking. More daring visitors can also visit at 10 p.m. on weekends. Your ticket does not include a guaranteed paranormal experience, but many visitors insist strange things have happened to them. These include sudden changes of temperature or the strange feeling of being observed from a street corner or a window. Furthermore, such phenomena increase as evening falls, as if night brought the devastated town to life.
➡️ Read more on Worldcrunch.com
We still cling to the past because back then we had security, which is the main thing that's missing in Libya today.
— Fethi al-Ahmar, an engineer living in the Libyan desert town Bani Walid, told AFP, as the country today marks the 10-year anniversary of the death of dictator Muammar Gaddafi. The leader who had reigned for 42 years over Libya was toppled in a revolt inspired by the Arab Spring uprisings and later killed by rebels. Some hope the presidential elections set in December can help the country turn the page on a decade of chaos and instability.
🇮🇷🎓 IN OTHER NEWS
Iran to offer Master's and PhD in morality enforcement
Iran will create new "master's and doctorate" programs to train state morality agents checking on people's public conduct and attire, according to several Persian-language news sources.
Mehran Samadi, a senior official of the Headquarters to Enjoin Virtues and Proscribe Vices (Amr-e be ma'ruf va nahy az monkar) said "anyone who wants to enjoin virtues must have the knowledge," the London-based broadcaster Iran International reported, citing reports from Iran.
The morality patrols, in force since the 1979 revolution, tend to focus mostly on young people and women, particularly the public appearance for the latter. Loose headscarves will send women straight to a police station, often in humiliating conditions. Five years ago, the regime announced a new force of some 7,000 additional agents checking on women's hijabs and other standards of dress and behavior.
Last week, for example, Tehran police revealed that they had "disciplined" agents who had been filmed forcefully shoving a girl into a van. Such incidents may increase under the new, conservative president, Ibrahim Raisi.
Speaking about the new academic discipline, Samadi said morals go "much further than headscarves and modesty," and those earning graduate degrees would teach agents "what the priorities are."
Iran's Islamic regime, under the guidance of Shia jurists, continuously fine tunes notions of "proper" conduct — and calibrates its own, interventionist authority. More recently the traffic police chief said women were not allowed to ride motorbikes, and "would be stopped," Prague-based Radio Farda reported.Days before, a cleric in the holy city of Qom in central Iran insisted that people must be vaccinated by a medic of the same sex "as often as possible," and if not, there should be no pictures of mixed-sex vaccinations.
✍️ Newsletter by Anne-Sophie Goninet, Jane Herbelin and Bertrand Hauger
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