The contribution of the Emerging World to global growth is bound to be even bigger than we had initially projected, due to recent updates in purchasing power parity estimates across the globe. There are now more countries included in our EAGLEs list. The new additions come mainly from Asia and the Middle East.
March 2, 2015
Flourishing middle classes in the emerging world to keep driving reductions in global inequality
BBVA projections for world population by GDP per capita: -Middle classes to comprise two-thirds of world population by 2025, doubling the share in 2000 -A low middle class citizen is today’s worldwide median -Emerging economies become predominant in wealthier segments -A dramatic reshaping of global consumer business away from basic products
In this paper we assess empirically whether financial inclusion contributes to reducing income inequality when controlling for other key factors, such as economic development and fiscal policy. We conclude that financial inclusion contributes to reducing income inequality to a significant degree, while the size of the financial sector does not. The policy implication of this result is that financial inclusion should be at the forefront of government policies to reduce income inequality in a given economy. Given the broad way in which we have defined inequality in our empirical analysis, this means facilitating the use of credit to both households, especially low-income ones, as well as to small and medium-sized enterprises. JEL: D63, F63, F65, G21, H23, O15.