This paper was prepared for the October Panel Meeting of Economic Policy in Lisbon (October 2007). We are grateful to two anonymous referees and our discussants Christian Schultz and Jonathan Temple. We also thank the other participants in the Panel Meeting for helpful comments. Maria Victoria Fazio provided excellent research assistance. Any errors are our own. The views expressed herein are those of the authors and should not be attributed to the IMF, its Executive Board, or its management.
Mass car ownership in the emerging market giants
Article first published online: 18 MAR 2008
© International Monetary Fund, 2008
Volume 23, Issue 54, pages 243–296, April 2008
How to Cite
Chamon, M., Mauro, P. and Okawa, Y. (2008), Mass car ownership in the emerging market giants. Economic Policy, 23: 243–296. doi: 10.1111/j.1468-0327.2008.00201.x
The Managing Editor in charge of this paper was Jan van Ours.
- Issue published online: 18 MAR 2008
- Article first published online: 18 MAR 2008
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