Homi Kharas' interesting report doesn't do a line item review of nations -- but he does of regions. And he delves into China's and India's growth vectors in great detail in his paper -- as well as comparing many other high growth economies, including Brazil's.
What he argues is that while there are serious structural constraints facing the super sizing of China's and India's middle class -- both are poised to grow this segment of their economy faster than nearly any other part of the world in the decades to come. Kharas writes that China's 157 million person middle class is now only second to the United States in absolute size. China is now the world's largest user of energy, the largest vehicle market, the number one cell phone market. Kharas also argues that "China's new middle class is eager to become the world's leading consumers" nothing that Chinese consumers shop 9.8 hours per week compared to 3.6 hours a week for the average American.
Kharas cautiously notes that China's middle class is still small -- only 12% -- but that the growth rate of the middle class may help it overcome Brazil's middle class distribution "trap."
About Brazil, Kharas writes:
In this regard, China would do well to look to the contrasting experiences of Brazil and South Korea. Between 1965 and 1980, Brazil grew at an average of 5.6 per cent per capita per year, becoming a middle-income country with a per capita income level of USD7600 (PPP). Yet due to its high income inequality, Brazil's middle class made up only 29 per cent of the country's population in 1980.
This made it impossible for the country to rely on middle-class consumption to drive the transformation into an innovation-based economy. Since 1980 the country has remained primarily a commodity exporter, and has struggled to sustain growth. Per capita incomes today are only slightly higher than they were thirty years ago (0.7 per cent annual growth), and the middle class never took off, currently accounting for just 38 per cent of total population. Brazil's recent growth performance is more hopeful and it may yet join the club of convergers, especially if it can leverage recent oil finds into sustained growth.
In the chart at the top of this article, one sees what happens to the distribution of global middle class consumption if Kharas' assumptions are correct.
Essentially, North America's share of middle class consumption plummets from 26% in 2009 to 10% by 2030; Europe from 38% in 2009 to 20% by 2030; the Asia Pacific from 23% in 2009 to 59% in 2030. Central and South America falls from 7% in 2009 to 6% over this period; Sub-Saran Africa remains at 1% during the time span while the Middle East and North Africa remain flat at 4% over those two decades.
One sees why President Obama and his National Security Advisor Tom Donilon have committed to strategically rebalancing America's assets toward Asia and are reducing the footprint of attention and resources directed at South Asia and the Middle East. The Asia Pacific is where a juggernaut of world economic growth will be.