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SUMMARY

Cars

The typical urban household in China owns a TV, a refrigerator, a washing machine, and a computer, but does not yet own a car. In this paper, we draw on data for a panel of countries and detailed household level surveys for the largest emerging markets to document a remarkably stable relationship between GDP per capita and car ownership, highlighting the importance of within-country income distribution factors: we find that car ownership is low up to per capita incomes of about US$5000 and then takes off very rapidly. Several emerging markets, including India and China, the most populous countries in the world, are currently at the stage of development when such takeoff is expected to take place. We project that the number of cars will increase by 2.3 billion between 2005 and 2050, with an increase by 1.9 billion in emerging market and developing countries. We outline a number of possible policy options to deal with the implications for the countries affected and the world as a whole.

— Marcos Chamon, Paolo Mauro and Yohei Okawa