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World Politics Review Article on the Global Middle Class – Part II

The damage done to the global middle class, while significant, is not irreparable. The solutions are as varied as the countries themselves, but they all share several key features that influence whether a consumer-driven economy will flourish or not.

First and foremost is access to capital for small and medium-sized enterprises. In developed and developing economies alike, funding all but dried up during the economic crisis that began in U.S. and quickly spread around the world. Especially during recessionary periods, start-ups are critical job creators compared to existing firms, which tend to shed employees. During the 1991 and 2002 U.S. recessions, start-ups added nearly 3 million new jobs, while established firms laid off 4 million to 5 million people, according to a Kaufmann Foundation report.

Misguided government regulations have also been thwarting the return of the middle class. Breaking up the excessive influence of conglomerates in emerging economies is another way to create room for the middle class, but doing so often proves to be difficult and controversial. Policymakers, no matter where they are, need to shift their fixation from top-line statistics like GDP growth, which can obscure wealth-gap and purchasing-power problems, and focus more on the health and size of their middle class. Until the world’s middle class recovers, there will be no global recovery.

Full article is available on the World Politics Review website.

Photo: President Barack Obama signs the Middle Class Tax Relief and Job Creation Act of 2012 in the Oval Office, Feb. 22, 2012 (White House photo by Pete Souza).

Brian • August 9, 2012


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Comments

  1. Akhtar Hussain Mayo September 6, 2012 - 5:47 am

    This is true, for nations, families and individuals. The wealth needs to be distributed among as many as judicially possible. And give a fair chance to grow to the individuals without corrupt legislation / practices by the conglomerates / influential groups.

    Growing to the comfortable level is a unique human desire / quality that forces its inner abilities of innovation / hard work / survival of the fittest / dedicate more time to work / protect waste of time and money and keep his family intact and educate them to continue grow after his death / retirement. The more is this part of the society members the more resilience / growing / progressing society / nation / continent it will be.

    Akhtar Hussain Mayo
    Pakistan,

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