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Surging BRIC middle classes are eclipsing global poverty

By 2022, those living in poverty will be a minority for the first time, as the global middle class – particularly from BRIC (Brazil, Russia, India, China) nations – surges. Does new affluence signal shifting global power?

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There are other pioneers on this East-West route, particularly in consumer electronics, auto parts, and construction equipment, says Elizabeth Stephenson of the global consulting firm McKinsey & Company. In 2007, Finland's Nokia introduced seven low-cost cellphones in India; at least three of them are now marketed in the US. Last year, General Electric developed a low-cost electrocardiograph machine for rural India, and within weeks 500 units were en route to Germany.

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"As companies have begun to sell into emerging markets, they've had to innovate – both multinationals and local companies. They've learned to do things at a much better value-to-price ratio," says Ms. Stephenson, coauthor of a 2010 McKinsey report on emerging-market growth. "Now, what you're starting to see is a lot of that innovation flow back. These new low-cost innovations are beginning to disrupt Western markets. The emerging market story is really a global story."

Within a decade, Americans could start to see some of the inexpensive cars now being launched in China, such as GM's new Baojun 630, which began selling last month starting at $10,800. But due to higher US standards for emissions and safety, along with consumer desire for sound systems and other amenities, even such cars will cost much more in America.

"At this point, they're not ready to play here with the level of expectations in the US market," says David Cole, chairman of the Center for Automotive Research in Ann Ar­bor, Mich. "But they are getting there. As the internationals work there, they are introducing state-of-the-art technology."

With such growth, China, India, and Brazil are projected to become among the world's top-five economies by 2050. As these nations gain clout, understanding the people behind their governments becomes crucial to discerning the world's future.

Values under pressure

Roy, the Indian traveler, directs a think tank in Delhi, where he lives in an upscale neighborhood with his wife and daughter. It's a long way from his childhood hut in Bihar, one of India's most undeveloped states.

In March, Roy flew home for his father's funeral – a 12-day ceremony involving four feasts. Electric power was available only three hours a day, and Roy's new cellphone, with a power-hogging color screen, kept running out of juice. By Day 2 he was wondering how he could escape.

"I realized that the place is so traditional I had to do all the rituals, even against my wishes," he says. He drew the line at shaving his head. His excuse: Airport security wouldn't accept his photo ID if he showed up bald.

His experience epitomizes the tension between traditional values and upward mobility that is playing out across the developing world.

But in India, the tightly knit family structure has kept values from changing dramatically and will have an effect on the character of change.


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