It is no secret that the countries that were once of ripe working age—like the US, nearly all of Europe, and China—are now facing aging populations. By contrast, countries like India, and nearly all those in Africa and South America—who had young populations in the 1990s when the work force was booming elsewhere—are now seeing their own populations reach that ripe working age when large workforces drive economic growth substantially.
Will this translate to a proportionate shift in world balances? Will the economy of aging countries falter while the younger ones reign supreme?
By the start of the 2020s, Japan was the sole definitively “old” country by demographic measures. Most of its population was at least 65-years-old. By the 2030s, most of Europe’s largest countries will follow suit. Britain and South Korea will follow by the early 2040s. By this time India and large parts of Southeast Asia will have workforces in their prime working age.
In writing about this I am in fact writing about my own generation. In a way, I am even writing about myself.
But not everything is so straightforward. For instance, having too many working age people and too few jobs for them (or for that matter too many young kids and too few schools to educate them) translates to a suffering economy, not a booming one. And if richer, older countries have to show sustenance, they would have to relax their immigration laws to allow younger populations from elsewhere into their country. They will continue to take their pick of the brightest, most qualified minds but the legislative changes have to come sooner or later.
Furthermore, this situation is harder to predict than it appears to be at first sight. While people have grown old, never in the history of the world have we had countries that managed to live up to this age. And—more happily—never have we had so many women enter the workforce, which means the potential economic boom, should we get things right legislatively and administratively, will be enormous.
A great example of all this arises from a comparison of Latin America and East Asia over the past decades: both had similarly aged populations yet East Asia fared better economically because of better interaction between the demography and the legislation. This meant more and better opportunities existed in East Asia along with policies that helped the population utilise those opportunities. The Latin American economic rise was nowhere near as good as East Asia’s.
If richer, older countries can find ways to offer younger populations from elsewhere a much better life than they would get back home, they could potentially ride out the crises of an aging economy unscathed. In the meanwhile, several countries could see their young populations grow old without necessarily growing rich if they do not take steps to satisfy all that a young, working age population requires to live to their fullest potential.
The problem of aging populations can potentially bring about a shift of world economic power, but only so long as countries do the right thing—something they’ve all been having trouble with lately.