Addressing the Challenge of Global Ageing—Funding Issues

28
Addressing the Challenge of Global Ageing—Funding Issues and Insurance Solutions
and then, more recently, of China. 7 The dynamic is now also helping to propel the growth
of other emerging markets around the world, from Brazil to India and Indonesia.
In some of the developing world’s most successful economies, however, demographics
are beginning to lean against economic growth. The initial economic impact of falling
fertility may be positive, but as societies age the relative decline in the number of children
is eventually overtaken by the relative growth in the number of elderly and dependency
burdens once again rise. The emerging markets of East Asia, where fertility has fallen
faster than elsewhere in the developing world, are now approaching this tipping point.
All have rapidly ageing populations and all, including China, will have stagnant or
contracting working-age populations within a decade. Demographics will also be leaning
against growth throughout Central and Eastern Europe, whose fertility decline has not
been as precipitous as East Asia’s but began much earlier.
Figure 4: GDP (in 2005 US$) by country or country group, as a percentage
of Figure G-20 total, 4: GDP 2009-2050 (in 2005 U.S. Dollars) by Country or Country Group, as
a Percent of G-20 Total, 2009-2050
100%
Emerging Markets
90%
28%
Other G-7
80%
U.S.
50%
70%
59%
60%
50%
40%
30%
20%
10%
0%
38%
34%
24%
16%
26% 24%
2009 2030 2050
2009 2050
Canada 3% 2%
France 6% 3%
Germany 7% 3%
Italy 4% 2%
Japan 12% 4%
U.K. 6% 3%
U.S. 34% 24%
Source: Uri Dadush and Bennett Stancil, “The World Order in 2050,” Policy Outlook (Carnegie Endowment
Source: Dadush for International and Stancil Peace, (2010). April 2010).
These crosscurrents notwithstanding, demographic trends will continue to drive the relative
rise of today’s emerging markets—and the relative decline of the developed economies.
During the era of the Industrial Revolution, the population of the developed world grew
faster than the rest of the world’s population, peaking at 25 per cent around 1930. Since then,
its share has declined. By 2010, it stood at just 13 per cent and it is projected to decline still
further to 10 per cent by 2050. As a share of the world’s economy, the GDP of the developed
countries will also be declining—and much more steeply. According to projections by the
Carnegie Endowment for International Peace, the U.S. share of G-20 GDP will fall from
34 per cent in 2009 to 24 per cent in 2050. The combined share of the other G-7 countries—
7 See, for example, Bloom and Williamson (1998); Bloom, Canning and Malaney (1999); and
Williamson (2001).