The Role of the Middle Class in Economic Development: What Do Cross-Country Data Show?
This paper investigates the channels through which the middle class may matter for consumption growth and development, as well as the determinants of size and growth of the middle class. Using different middle class measures and a panel of 72 developing countries spanning the period 1985-2006, they find that a larger middle class influences growth primarily through higher levels of human capital investment. While institutional and cultural characteristics may present barriers to fostering the middle class, enlarging governments, developing urban areas, promoting democracy, and limiting ethnic concentration are all potentially conducive to boosting the size of the middle class.
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