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Saturday, October 25, 2014         

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Aging of Asia

Declining birthrates in Asia’s richer economies — such as Japan and South Korea — will shift the power balance to youthful nations like India

By East-West Center

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Over the past 50 years, economic and social modernization in Asia has been accompanied by a remarkable drop in birthrates. Gains in education, employment and living standards, combined with dramatic breakthroughs in health and family-planning technology, have led to lower fertility in every country of the region.

Today, four of Asia's most prosperous economies — Japan, Singapore, South Korea and Taiwan — have among the lowest birthrates in the world. And recently released census figures show that China's birthrate has been falling, and its population aging, even faster than expected.

The proportion of Chinese over the age of 60 is now more than 13 percent, up from less than 9 percent just two decades ago, while the percentage of youth has been dropping sharply. According to UN projections, seniors will account for a quarter of China's population by 2030, and more than a third by 2050.

In Japan and South Korea, which have been leading the low-fertility trend in Asia, the proportion of the population age 60 and above has nearly doubled in the past two decades.

Among the causes of decreasing birthrates, according to analysts, is the rise in women's education levels and employment rates that accompany increased prosperity, leading women to postpone childbirth or hold off altogether. Rapid urbanization trends play a role as well, since women in cities tend to have fewer children than rural women.

The trend toward low birthrates has raised concerns about wide-ranging social and economic impacts, including expanding elderly populations and a shrinking workforce to pay for social services and drive economic growth.

In a recent policy brief, East-West Center researchers Andrew Mason and Sang Hyop Lee write that the rapid growth of elderly populations may bring two important national goals into conflict.

The first is to develop systems that will provide economic security to the growing number of old people, while the second is to sustain strong economic growth. Achieving these two goals will require new policies to encourage saving, investment in health and education, and smoothly functioning financial and labor markets.

Raising birthrates is proving to be an even greater challenge. Surveys indicate that nearly all young women in Asia's low-fertility societies want to marry and have children, according to a brief by EWC specialists Sidney Westley, Minja Kim Choe and Robert Retherford. Yet policymakers are finding that it is more difficult to raise fertility than it was to lower it. Introducing family planning technology 30 years ago was much less expensive than efforts today to provide tax breaks and subsidized daycare to working parents with young children. Since the forces of development that keep fertility low are very strong, the question now is whether government policies and programs that are attempting to raise fertility can be effective.

The notable exception to Asia's low-birthrate picture, experts say, is in South Asia.

In India, for example, which also recently completed a national census, population growth has slowed somewhat but still remains high at nearly 18 percent over the past decade, compared to less than 6 percent in China and essentially zero growth in Japan and South Korea. In fact, Japan's total population has already started shrinking.

Analysts predict that India will overtake China as the world's most populous country sometime around 2030. India currently has about 1.2 billion people, while China has more than 1.3 billion.

Perhaps most significantly, the number of people in India's working-age population (age 15-60), is projected to keep growing for years after China's begins to decline. This will give India the same kind of demographic scenario — a youthful population and growing work force but a shrinking overall birth rate — that analysts say helped lead to economic miracles in Japan, China and the "Tiger Economies" of Southeast Asia in previous decades.

With populations in those countries now rapidly aging and their work-force populations set to shrink while India's grows, the coming decades could see significant rebalancing in the geography of Asia's economic growth.






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