The New Middle Class in Emerging Markets: Burgeoning Buergeoisie

Articles on the middle class in emerging markets make me believe that the recent violence leading to better security in Rio de Janeiro is long-term bullish for Brazil and Emerging Markets; phases of counterinsurgency in Iraq or Afghanistan could be useful comparison — much, much less violence was seen in Brazil, though pictures of rocket launchers in Rio local papers are alarming!

The Economist cites a Brazilian retailer focusing on new customers in a favela as an example of the middle class in emerging markets.

“THE crowd surges back and forth, hands above heads, mobile-phone cameras snapping one of Brazil’s best-known samba bands. It could be almost anywhere in Latin America’s largest city on a Saturday night. But this is Paraisopolis, one of São Paulo’s notorious crime-infested favelas (slums). Casas Bahia, the country’s largest retailer, is celebrating the opening there of its first ever store in a favela (pictured above). It is selling television sets and refrigerators in a place that, at first glance, has no running water or electricity. Among the shacks, though, rise three-storey brick structures with satellite dishes on their tin roofs. In the new shop, Brazilians without bank accounts—plumbers, salesmen, maids—flock to buy on instalment credit. In a country with no credit histories, the system is cumbersome: the staff interview customers about their qualifications and get them to sign stacks of promissory notes, like post-dated cheques, before allowing them to take their purchases home. But it works, more or less. According to Maria, a cleaner, “Everything I have comes from Casas Bahia. Things are very expensive but the means of payment are better for people like us, without any money.” This is the emerging markets’ new middle class out shopping. Eduardo Giannetti da Fonseca, one of Brazil’s most distinguished economists, describes members of the middle class as “people who are not resigned to a life of poverty, who are prepared to make sacrifices to create a better life for themselves but who have not started with life’s material problems solved because they have material assets to make their lives easy.” That covers a broad range of ambitions, as two other examples will show.”

This is part of my survey of the 30 best articles from The Economist over the past two years to gain insight into whether Brazilian attitudes towards America have declined, and global attitudes towards Brazil — comments welcome!

Published by Janar Wasito

Janar Wasito is the manager of Magis Capital in San Diego, CA. He is a graduate of Harvard and Stanford Law School, and a former Marine Officer.

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