The Growing Middle Class in Emerging Markets in Asia Research Paper

The Growing Middle Class in Emerging Markets in Asia - Research Paper Example This research will begin with the statement that posts 2008 financial crisis across the US and around the world, there has been considerable interest in the emergence of the Asian middle class because they can play a significant role in reviving the world economy. As more and more people in the Asian region fall into the middle-income category, they are likely to be a future growth engine. So far economies of China, South Korea, or Taiwan have been driven more by their export bases; however, with the emergence of a middle class in these countries, their reliance on exports will diminish in the coming years as their domestic consumption will fuel the future growth. It is a fact that the wider the base of a middle-income group across the world, the more cushioning will it provide to the world economy. In other words, the world economy is likely to be more resilient to the future economic shocks unlike the one witnessed during the financial crisis of 2008-09. While there is no specific definition of the middle class, different people/agencies use different criteria. According to the definition of the Asian Development Bank, the people earning between USD2 and USD20, in purchasing power parity terms, fall in a category of the middle class. According to Homi Kharas – the deputy director and the economist at the Brookings Institution, a middle class is defined as those households whose income fall between USD10 and USD100 per day based on purchasing power parity (PPP) perspective. Pezzini, the director of OECD development, argues that emerging middle class in Asian countries is likely to be a main engine of growth, especially in China and India due to their large population base. According to him, this middle class has been a front-runner in accumulating the useful capital necessary for further growth in the region. Larger middle class in the region helps fuel growth through domestic consumption rather than depending upon export-based growth. South Koreas larg e proportion of the population now falls in the middle-income category or above and has already become a major engine of economic growth in the region. Asia Foundation has been a major organization in supporting economic growth across Asia through private and public institutions. Its economic development program consists of three core areas that include policy reform and develops business environments, supporting entrepreneurship, and creating economic cooperation across the region.