Striving for Economic Security : Emerging Middle Class in the East Asia and Pacific Region

The East Asia and Pacific region has made remarkable progress on poverty reduction, transforming the economic lives of hundreds of millions of people. With growth prospects dimmer in a world that is increasingly polarized, the question of what it will take to convert the success in poverty reduction into a similar success in growing and nurturing the emergent middle class has become critical for the region. Providing an updated definition of middle class that is grounded in the concept of economic security, this paper presents new evidence on the size, evolution, and characteristics of the region’s middle class. The results show that around a third of the region’s population belongs to the middle class, and more than half still live in relative poverty and vulnerability. From a global perspective, the region stands out for the fastest rate of expansion of the middle class, but China accounts for a large share of this progress. Excluding China, middle-class growth in the rest of the region has stalled in recent years. A larger share of the region’s poor today live in urban areas than a decade earlier (47 percent versus 34 percent), suggesting marked progress on rural convergence. Still, urban areas continue to provide better prospects for upward mobility into the middle class (44 percent) than rural areas (22 percent). Jobs have been pivotal in driving middle-class growth in the region and future mobility prospects will continue to depend on countries being able to generate more and better-quality jobs. Improving quality of services and closing the remaining gaps across economic classes will be crucial for building human capital and ensuring upward mobility for all. This will also necessitate and reinforce the emerging middle class’s commitment to the social contract, including greater tax contributions.