Research into household consumption patterns conducted by Griffith University senior lecturer Dr Andreas Chai has been used as the basis for the opening chapters of the United Nations Industrial Development Organisation‘s latest global Industrial Development Report.
The first such report to be published in two years, the 2018 IDR focuses on the demand for manufacturing around the world, and ways to drive inclusive and sustainable industrial development.
Dr Chai – who is also the Discipline Lead for Economics in Griffith Business School‘s Department of Accounting, Finance and Economics – has had an interest in the data behind household consumption since he was a PhD student, when he first came across an 1856 manuscript, written by statistician Ernst Engel, exploring the living conditions of the working poor.
“Engel made some excellent insights into how to assess the living conditions of households and what can be done by governments to improve living standards,” Dr Chai said.
“One of these was Engel’s Law, which states that as households grow rich, the budget share of food expenditure declines.”
Drawing on Engel’s research and eponymous law for his paper, Dr Chai investigated the links between contemporary household consumption patterns and the sectoral composition of growing economies.
Previously, Dr Chai has written on long-term consumption patterns in the United Kingdom, in a research collaboration with Associate Professor Alessio Moneta, of the Sant’Anna School of Advanced Studies in Pisa, Italy.
It was this prior experience that led to UNIDO approaching the Griffith academic about contributing to the 2018 IDR, which has now been launched across 99 member countries and taken Dr Chai’s work around the world.
”The key finding of my paper is that what people spend tends to fundamentally change as the economy develops and their income grows, particularly as a country moves from least developed to more developed stages of economic development,” he said.
“This creates important opportunities for emerging industries in developing countries. The rate at which households switch their spending away from basic necessities like food to things like clothes, shoes, fridges, washing machines and stoves provides new profit opportunities for industries and entrepreneurs.
“Policymakers in developing countries across Africa and Asia need to take these rates into account when considering how they can foster greater industrialisation and economic development.”
Dr Chai credits the support of the Griffith Asia Institute in helping him complete his research, through providing financial assistance for him to attend two Expert Group meetings in Vienna.
Read Dr Chai’s contributions – and the wider 2018 UNIDO Industrial Development Report – here.