If you were born in 1900, you were expected to live a mere 50 years. Today, the average global life expectancy is 72.8 years. The good news is that people are living longer. The bad news is that many of the resources necessary to care for the aging population are dwindling. Of all the demographic trends in the world today, preparing for and managing the implications of the aging population might be the most important.
globalEDGE Blog - By Tag: demographics
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The world is going through a major demographic transition. Population growth is decreasing around the world, while the age distribution is leaning towards the elderly. But how would this alter any economy? Population growth plays a key role in every economy in the world, where a lower population growth rate means that there will be fewer workers and consumers. An aging population would lead to a smaller working-age population, which would decrease the growth of the labor force. Both of these trends result in lower GDP growth.
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The Life Cycle Hypothesis (LCH) is an economic model developed by famed economist Franco Modigliani in the early 1950’s, which attempts to explain the saving and consumption patterns of individuals over their lifetime. The crux of the hypothesis is that by assuming all individuals maintain stable lifestyles, they will plan to even out their consumption as best they can over their lifetime. This implies that an individual will transition through multiple phases of saving and consumption patterns throughout their life. In their youth, before entering the workforce, an individual will borrow against future earnings, many to pay for education and training. Once that individual enters the workforce, they will become a net saver, as they put money away for their eventual retirement. Finally, in the twilight stages of their life, once an individual retires, they will become a dis-saver, as they begin to drain their accumulated retirement savings.
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In the third installment of the long-term mega trends blog series from globalEDGE we will examine urbanization and its implications for economic growth. Urbanization is taking place across the globe from the developed nations of North America & Western Europe, to some of the poorest places on Earth, including Sub-Saharan Africa and Southern Asia. Each region of the world is urbanizing at different paces and are creating different degrees of economic growth as a result of urbanization. In this blog we will examine how the world is urbanizing and the differences in urban population growth rate/population percentage throughout the world.
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This week, the globalEDGE blog is taking a look at long-term mega trends that will have a major impact on international business in the coming years. Today, the focus is on changes in demographics and society, and how these factors can influence business decisions. Being aware of demographic and social shifts is vital for businesses, especially those who are conducting business across international borders. Changes in population or consumer attitudes can force businesses to adapt, or risk losing their place in the industry. Because of this, many businesses are constantly looking to the future to try to get ahead of the trends before their competitors can.
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At the turn of the century in 1800, only 2% of the world’s population lived in cities. Today that percentage is nearly 54%, meaning a majority of the world’s population lives in cities and urban areas. This rapid urbanization, a significant portion of which has occurred in the last 50 years, has created a unique set of challenges and opportunities unlike anything mankind has ever faced.
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With the world population more than doubling from 3.035 billion people in 1960 to today’s global population of approximately 7.347 billion, and with UN projections estimating a global population of 9.7 billion by 2050, there has been much rhetoric and concern over the social, environmental, and economic impact of this growth. Many of the fastest growing nations in the world have gone as far as implementing government policies and programs aimed at stemming this rapid growth, the most notable of which was the Chinese one-child policy, which was introduced in 1978 and began to be phased out only last year. While there is no questioning the legitimacy and seriousness of the issues caused by rapid population growth, there is also a myriad of other issues, equal in severity, that stem from the fact that the world population is not growing fast enough, particularly in developed nations. The focus of this article will be on the latter set of population growth issues, those which can be linked to the insufficient population growth.
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By 2050, the world’s population will have grown by 32%, but the working age population (ages 15-64) will have only expanded by 26%. Amongst the more advanced economies, by 2050, the working age population will have shrunk 26% in South Korea, 23% in both Germany and Italy, and 28% in Japan. India’s population is expected to grow by 33%, however Russia and China’s working population will contract by 21%.