IDEAS home Printed from https://ideas.repec.org/p/agd/wpaper/14-026.html
   My bibliography  Save this paper

Middle class in Africa: Determinants and Consequences

Author

Listed:
  • Oasis Kodila-Tedika

    () (Université de Kinshasa Département d’Eco)

  • Simplice Asongu

    () (Yaoundé/Cameroun)

  • Julio Mukendi Kayembe

    (Economiste, Rawbank)

Abstract

This study complements the inclusive growth literature by examining the determinants and consequences of the middle class in a continent where economic growth has been relatively high. The empirical evidence is based on a sample of 33 African countries for a 2010 cross-sectional study. OLS, 2SLS, 3SLS and SUR estimation techniques are employed to regress a plethora of middle class indicators, notably, the: floating, middle-class with floating, middle-class without floating, lower-middle-income and upper-middle-income categories. Results can be classified into two main strands. First, results on determinants broadly show that GDP per capita and education positively affect all middle class dependent variables. However, we have seen a negative nexus for the effect of ethnic fragmentation, political stability in general and partially for economic vulnerability. Simple positive correlations have been observed for: the size of the informal sector, openness and democracy. Second, on the consequences, the middle class enables the accumulation of human and infrastructural capital, while its effect is null on political stability and democracy in the short-run but positive for governance and modernisation. Policy implications are discussed.

Suggested Citation

  • Oasis Kodila-Tedika & Simplice Asongu & Julio Mukendi Kayembe, 2014. "Middle class in Africa: Determinants and Consequences," Working Papers 14/026, African Governance and Development Institute..
  • Handle: RePEc:agd:wpaper:14/026
    as

    Download full text from publisher

    File URL: http://www.afridev.org/RePEc/agd/agd-wpaper/Middle-class-in-Africa.Determinants-and-Consequences.pdf
    File Function: Revised version, 2014
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Johnson, Simon & Kaufmann, Daniel & Zoido-Lobaton, Pablo, 1998. "Regulatory Discretion and the Unofficial Economy," American Economic Review, American Economic Association, vol. 88(2), pages 387-392, May.
    2. Elise Huillery, 2009. "History Matters: The Long-Term Impact of Colonial Public Investments in French West Africa," American Economic Journal: Applied Economics, American Economic Association, vol. 1(2), pages 176-215, April.
    3. Andrei Shleifer & Florencio Lopez-de-Silanes & Rafael La Porta, 2008. "The Economic Consequences of Legal Origins," Journal of Economic Literature, American Economic Association, vol. 46(2), pages 285-332, June.
    4. Augustin Kwasi Fosu, 2010. "Inequality, Income, and Poverty: Comparative Global Evidence," Social Science Quarterly, Southwestern Social Science Association, vol. 91(s1), pages 1432-1446.
    5. Simplice Asongu & Jacinta C. Nwachukwu & Gilbert A. A. Aminkeng, 2014. "China’s Strategies in Economic Diplomacy: A Survey of Updated Lessons for Africa, the West and China," Working Papers 14/036, African Governance and Development Institute..
    6. Fosu, Augustin Kwasi, 2010. "Does inequality constrain poverty reduction programs? Evidence from Africa," Journal of Policy Modeling, Elsevier, vol. 32(6), pages 818-827, November.
    7. Joël CARIOLLE & Michaël GOUJON, 2013. "A retrospective economic vulnerability index, 1990-2011 - Using the 2012 UN-CDP definitions," Working Papers I17, FERDI.
    8. Ravallion, Martin, 1997. "Can high-inequality developing countries escape absolute poverty?," Economics Letters, Elsevier, vol. 56(1), pages 51-57, September.
    9. Fosu, Augustin Kwasi, 2017. "Growth, inequality, and poverty reduction in developing countries: Recent global evidence," Research in Economics, Elsevier, vol. 71(2), pages 306-336.
    10. repec:spr:soinre:v:134:y:2017:i:2:d:10.1007_s11205-016-1439-6 is not listed on IDEAS
    11. Piyabha Kongsamut & Sergio Rebelo & Danyang Xie, 2001. "Beyond Balanced Growth," Review of Economic Studies, Oxford University Press, vol. 68(4), pages 869-882.
    12. Cogneau, Denis & Moradi, Alexander, 2014. "Borders That Divide: Education and Religion in Ghana and Togo Since Colonial Times," The Journal of Economic History, Cambridge University Press, vol. 74(03), pages 694-729, September.
    13. Robert J. Barro, 1999. "Determinants of Democracy," Journal of Political Economy, University of Chicago Press, vol. 107(S6), pages 158-183, December.
    14. Kevin M. Murphy & Andrei Shleifer & Robert Vishny, 1989. "Income Distribution, Market Size, and Industrialization," The Quarterly Journal of Economics, Oxford University Press, vol. 104(3), pages 537-564.
    15. Simplice Asongu, 2016. "Reinventing Foreign Aid For Inclusive And Sustainable Development: Kuznets, Piketty And The Great Policy Reversal," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 736-755, September.
    16. Denis Cogneau, 2003. "Colonisation, School and Development in Africa. An empirical analysis," Working Papers DT/2003/01, DIAL (Développement, Institutions et Mondialisation).
    17. Luis López-Calva & Eduardo Ortiz-Juarez, 2014. "A vulnerability approach to the definition of the middle class," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 12(1), pages 23-47, March.
    18. Frederick van der Ploeg, 2011. "Natural Resources: Curse or Blessing?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 366-420, June.
    19. Fernando Borraz & Nicolás González & Máximo Rossi, 2013. "Polarization and the Middle Class in Uruguay," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 50(2), pages 289-326, November.
    20. Augustin Kwasi Fosu, 2008. "Inequality and the growth-poverty nexus: specification empirics using African data," Applied Economics Letters, Taylor & Francis Journals, vol. 15(7), pages 563-566.
    21. Asongu, Simplice A, 2014. "Sino-African relations: a review and reconciliation of dominant schools of thought," MPRA Paper 66597, University Library of Munich, Germany.
    22. Abhijit V. Banerjee & Esther Duflo, 2008. "What Is Middle Class about the Middle Classes around the World?," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 3-28, Spring.
    23. Matthias Doepke & Fabrizio Zilibotti, 2008. "Occupational Choice and the Spirit of Capitalism," The Quarterly Journal of Economics, Oxford University Press, vol. 123(2), pages 747-793.
    24. Simplice A Asongu, 2012. "On the effect of foreign aid on corruption," Economics Bulletin, AccessEcon, vol. 32(3), pages 2174-2180.
    25. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    26. Mthuli Ncube & John C. Anyanwu & Kjell Hausken, 2014. "Inequality, Economic Growth and Poverty in the Middle East and North Africa (MENA)," African Development Review, African Development Bank, vol. 26(3), pages 435-453, September.
    27. Ncube, Mthuli & Shimeles, Abebe, 2013. "The Making of Middle Class in Africa: Evidence from DHS Data," IZA Discussion Papers 7352, Institute for the Study of Labor (IZA).
    28. Alwyn Young, 2012. "The African Growth Miracle," Journal of Political Economy, University of Chicago Press, vol. 120(4), pages 696-739.
    29. Kakwani, Nanak, 1993. "Poverty and Economic Growth with Application to Cote d'Ivoire," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(2), pages 121-139, June.
    30. Alwyn Young, 2012. "The African Growth Miracle," NBER Working Papers 18490, National Bureau of Economic Research, Inc.
    31. J.A. Agbor & J. W. Fedderke & N. Viegi, 2010. "How Does Colonial Origin Matter for Economic Performance in sub-Saharan Africa?," Working Papers 176, Economic Research Southern Africa.
    32. Simplice Asongu, 2014. "Globalization (fighting), corruption and development: How are these phenomena linearly and nonlinearly related in wealth effects?," Journal of Economic Studies, Emerald Group Publishing, vol. 41(3), pages 346-369, May.
    33. Barro, Robert J. & Lee, Jong Wha, 2013. "A new data set of educational attainment in the world, 1950–2010," Journal of Development Economics, Elsevier, vol. 104(C), pages 184-198.
    34. Daniele, Vittorio, 2013. "Does the intelligence of populations determine the wealth of nations?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 46(C), pages 27-37.
    35. Simplice A. Asongu, 2012. "Law and Finance in Africa," Brussels Economic Review, ULB -- Universite Libre de Bruxelles, vol. 55(4), pages 385-408.
    36. Augustin Kwasi Fosu, 2015. "Growth, Inequality and Poverty in Sub-Saharan Africa: Recent Progress in a Global Context," Oxford Development Studies, Taylor & Francis Journals, vol. 43(1), pages 44-59, March.
    37. Augustin Kwasi Fosu, 2009. "Inequality and the Impact of Growth on Poverty: Comparative Evidence for Sub-Saharan Africa," Journal of Development Studies, Taylor & Francis Journals, vol. 45(5), pages 726-745.
    38. Kodila-Tedika, Oasis & Tcheta-Bampa, Albert, 2014. "Cold War and Institutional Quality: Some Empirical Evidence," MPRA Paper 53965, University Library of Munich, Germany.
    39. Denis COGNEAU, 2012. "The Political Dimension Of Inequality During Economic Development," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 35, pages 11-36.
    40. Maxim Pinkovskiy & Xavier Sala-i-Martin, 2014. "Africa is on time," Journal of Economic Growth, Springer, vol. 19(3), pages 311-338, September.
    41. repec:spo:wpecon:info:hdl:2441/10262 is not listed on IDEAS
    42. Easterly, William, 2001. "The Middle Class Consensus and Economic Development," Journal of Economic Growth, Springer, vol. 6(4), pages 317-335, December.
    43. Fosu, Augustin K., 2010. "Income Distribution and Growth’s Ability to Reduce Poverty: Evidence from Rural and Urban African Economies," WIDER Working Paper Series 092, World Institute for Development Economic Research (UNU-WIDER).
    44. Kalwij, Adriaan & Verschoor, Arjan, 2007. "Not by growth alone: The role of the distribution of income in regional diversity in poverty reduction," European Economic Review, Elsevier, vol. 51(4), pages 805-829, May.
    45. Palma, J.G., 2011. "Homogeneous middles vs. heterogeneous tails, and the end of the ‘Inverted-U’: the share of the rich is what it's all about," Cambridge Working Papers in Economics 1111, Faculty of Economics, University of Cambridge.
    46. Lalountas, Dionisios A. & Manolas, George A. & Vavouras, Ioannis S., 2011. "Corruption, globalization and development: How are these three phenomena related?," Journal of Policy Modeling, Elsevier, vol. 33(4), pages 636-648, July.
    47. Mthuli Ncube & John Anyanwu & Kjell Hausken, 2014. "Working Paper 195 - Inequality, Economic Growth, and Poverty in the Middle East and North Africa (MENA)," Working Paper Series 999, African Development Bank.
    48. repec:dau:papers:123456789/4563 is not listed on IDEAS
    49. Juliet U. Elu & Linda Loubert, 2013. "Earnings Inequality and the Intersectionality of Gender and Ethnicity in Sub-Saharan Africa: The Case of Tanzanian Manufacturing," American Economic Review, American Economic Association, vol. 103(3), pages 289-292, May.
    50. Montfort Mlachila & René Tapsoba & Sampawende J. A. Tapsoba, 2017. "A Quality of Growth Index for Developing Countries: A Proposal," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 134(2), pages 675-710, November.
    51. Adams, Richard Jr., 2004. "Economic Growth, Inequality and Poverty: Estimating the Growth Elasticity of Poverty," World Development, Elsevier, vol. 32(12), pages 1989-2014, December.
    52. José Cheibub & Jennifer Gandhi & James Vreeland, 2010. "Democracy and dictatorship revisited," Public Choice, Springer, vol. 143(1), pages 67-101, April.
    53. Datt, Gaurav & Ravallion, Martin, 1992. "Growth and redistribution components of changes in poverty measures : A decomposition with applications to Brazil and India in the 1980s," Journal of Development Economics, Elsevier, vol. 38(2), pages 275-295, April.
    54. Augustin Kwasi Fosu, 2015. "Growth, Inequality and Poverty in Sub-Saharan Africa: Recent Progress in a Global Context," Oxford Development Studies, Taylor & Francis Journals, vol. 43(1), pages 44-59, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Simplice Asongu & Oasis Kodila-Tedika, 2014. "Institutions and Poverty: A Critical Comment Based on Evolving Currents and Debates," Working Papers 14/031, African Governance and Development Institute..
    2. Asongu, Simplice & Leke, Ivo, 2017. "External Flows and Inclusive Human Development in Sub-Saharan Africa," MPRA Paper 85485, University Library of Munich, Germany.
    3. Asongu, Simplice A. & Nwachukwu, Jacinta C., 2017. "Quality of Growth Empirics: Comparative gaps, benchmarking and policy syndromes," Journal of Policy Modeling, Elsevier, vol. 39(5), pages 861-882.
    4. Simplice Asongu, 2015. "Growth and Institutions in African Development, by Augustin K. Fosu," Working Papers 15/033, African Governance and Development Institute..
    5. Simplice A. Asongu & Jacinta C. Nwachukwu, 2016. "Mobile Phone Penetration, Mobile Banking and Inclusive Development in Africa," The African Finance Journal, Africagrowth Institute, vol. 18(1), pages 34-52.
    6. Simplice Asongu & Sara le Roux, 2018. "Understanding Sub-Saharan Africa’s Extreme Poverty Tragedy," Working Papers 18/012, African Governance and Development Institute..

    More about this item

    Keywords

    D31; O1; O4; O55; I32;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • O55 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Africa

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:agd:wpaper:14/026. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Asongu Simplice). General contact details of provider: http://edirc.repec.org/data/agdiycm.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.