Sunday, June 9, 2024

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Demographics is destiny


(Part 1)

The Philippines’ promising economic future is attributed to two advantages: a geographic advantage and a demographic advantage.fifi

“The Asia-Pacific region plays a significant role beyond its geographic location.”fi

The Philippines is located in the Indo-Pacific region.fi

India is now the most populous nation in the world, overtaking China according to the United Nations on July 1. This has caught the attention of government and business leaders worldwide. Elon Musk, CEO of Twitter, has commented on the situation, stating that “Demographics is destiny.” Musk has been advocating for higher birth rates as a solution to the issue of ageing populations for some time now.ff

Explored were the highly developed nations in Europe and East Asia, along with a select few middle-income countries such as China and Thailand.

India is currently demonstrating its strong economic performance, with the highest projected GDP growth rate in the Indo-Pacific region for 2023. In comparison, China’s GDP growth rate is expected to slow down to 3-4%. India’s population has a median age of 28.2 years, while the Philippines’ median age is 24 years and China’s is 39 years. With an average age difference of 10 years between Indians and Chinese, India can rely on a significant portion of their population being younger.fi

It may be difficult for India to maintain a strong workforce and dynamic domestic market for an extended period of time. However, many experts believe that this could be a potential advantage for India over China in the next few decades. This is also a challenge faced by the Philippines, which is currently experiencing similar benefits.fi

One way to address the needs of a growing and youthful population is to heed the advice of Amartya Sen, a renowned Indian economist. In his acclaimed book Development as Freedom, Nobel Laureate Sen emphasized the importance of investing in education, health, and social infrastructure in order for young individuals to make a positive impact in reducing poverty and achieving a First World status.

Elon Musk has stated that China’s crisis is also affecting the United States. Due to the US’s past acceptance of immigration, the country’s low birth rate has not yet caused a major aging crisis. Despite this, Mr. Musk is not taking the situation lightly and has continuously warned Americans about the severity of the issue.ff

Elon Musk has expressed concerns about the declining birth rates in the US, which could lead to a demographic crisis similar to what Japan is currently facing. He referenced Japan as a warning sign for the rest of the world and shared statistics from the US Centers for Disease Control and Prevention, which reported a 1% increase in births in 2020 compared to 2019, despite the peak of the COVID-19 pandemic. Musk is directly addressing those who advocate for population control, particularly in organizations like the World Bank and United Nations. He believes that the real threat is not overpopulation, but rather underpopulation caused by low birth rates, which poses a greater risk to civilization than climate change.

st century

According to Tomas Sobotka from the Vienna Institute of Demography, there is disagreement with Mr. Musk’s perspective. Sobotka believes that despite the current global population surpassing 8 billion, a collapse is not imminent. Even the most extreme estimates forecast a world population of approximately 8.8 billion in 2100. The majority of projections concur that the world population will reach its highest point in the latter half of the 21st century.st

The population growth in most regions is expected to slow down in the 21st century, either reaching a plateau or decreasing gradually. However, the United Nations predicts that eastern and southeastern Asia, including Japan, China, South Korea, and Singapore, will experience a decline between 2022 and 2050. On the other hand, sub-Saharan Africa’s population is projected to nearly double from 1.2 billion in 2022 to just under 2.1 billion in 2050. Over the same period, India’s population is estimated to increase by more than 250 million, widening the gap between it and China’s population.

Japan’s situation demonstrates that the crisis is primarily caused by the rapidly aging population, rather than the total number of people. For over ten years, the number of deaths has surpassed the number of births in Japan, presenting a significant challenge for the third largest economy in the world. The crisis is not solely due to a decline in population, but also due to a growing elderly population and a declining workforce struggling to support pensions and healthcare amidst increasing demands from the aging population. Since the 1980s, Japan’s population has been steadily decreasing, with a fertility rate of 1.3 births per fertile woman, well below the replacement rate of 2.1 births. Additionally, Japan has one of the longest life expectancies globally, with government data showing that in 2020, one out of every 1,500 Japanese citizens were over 100 years old. Other East Asian countries such as China, South Korea, Taiwan, and Singapore are also facing similar aging crises, with some struggling for decades to encourage young people to have more children due to rising living costs and social discontent, but without success.

5G technology

Japan’s Prime Minister, Fumio Kishida, has cautioned that the country is at risk of being unable to sustain its social functions. To combat the aging population, Japanese officials are promoting the idea of welcoming more foreign residents and workers, which is a challenging task for a nation that is largely homogenous and has low levels of immigration. With a declining workforce, there are calls from politicians to raise the retirement age to 68 and encourage seniors to work part-time. The government is set to announce “radical” measures in an attempt to increase the birth rate, which includes utilizing 5G technology.fi

The government plans to increase the lump sum baby bonus to 500,000 yen (approximately $3,800) in April this year. This financial support aims to assist with child rearing, preschool education, nursing care services, and workplace improvements. fi
Efforts are underway to develop financial initiatives aimed at encouraging mothers to increase their family size. However, there is a growing belief that Japan’s population crisis has reached a critical and irreversible stage. Previous attempts to implement pro-natalist policies in countries like Singapore have yielded minimal results.

bject to

The situation in Japan provides undeniable proof that those who do not agree with Elon Musk’s analysis are completely misguided. They are still vulnerable to the consequences.ff

The notion of being against procreation, as promoted by international organizations such as the United Nations and private institutions like the Rockefeller Foundation and the Bill and Melinda Gates Foundation, is a mindset that has been prevalent since the last century. Unfortunately, this mindset has resulted in many countries implementing birth control programs out of unfounded fears of a “population bomb,” which has now led to the current crisis of an aging population. Rating agencies are now drawing attention to the negative financial consequences of this aging population, with Mary McDougall’s article in the Financial Times on May 18 warning of potential downgrades for countries that fail to address these costs. These agencies have noted that the rise in borrowing costs is exacerbating the impact on the growth of working-age populations and putting a strain on public funds.fi

Financial experts predict that countries in central and southeastern Europe will struggle to cover increasing healthcare and pension expenses due to their aging populations. According to analysts, these nations have some of the most unfavorable demographic profiles.fi

The global population is aging, with Germany experiencing one of the highest rates of aging.

(To be continued.)

 

Bernardo M. Villegas earned a doctoral degree in Economics from Harvard and currently holds the position of professor emeritus at the University of Asia and the Pacific. He is also a visiting professor at the IESE Business School in Barcelona, Spain. In addition, he served as a member of the 1986 Constitutional Commission.

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