Is Demographics Destiny? How Demographics Changes Will Alter the Economic Futures of the BRICs
Demographics can play a powerful role in supercharging or dragging a nation’s rate of economic growth. As a nation’s working-age population rises relative to its elderly and youth populations, it has a unique opportunity to convert this population transition into a “demographic dividend.” While Brazil, Russia, India and China (commonly referred to as the BRICs) are all classified as emerging or developing economies, they have distinctly different demographic profiles, notes the study. Some of its key findings are summarized below:
Brazil has had some of the most favorable demographics of any nation in the world over the past three decades but has little to show for it. Immigration and a relatively high birth rate, however, will keep Brazil’s population relatively young and growing until mid-century.
Russia’s workforce is shrinking and health standards are declining, which is likely to negatively impact its demographic profile in the future. The country’s working-age population is predicted to fall by 15 million from 2010 to 2025 and by a further 20 million by mid-century. Life expectancy in Russia is also on the decline: it is as low as 59 for men, which is three years lower than in 1955.
While India has by far the best demographics of any of the BRICs, its economy must create an average of 12 million jobs a year between now and 2030 to accommodate new job seekers. For India to “cash in” on this demographic dividend, however, they must fundamentally overhaul and reform their labor markets and educational system.
China’s demographic “deficit” is just starting. The growing scarcity of cheap labor and the uneven demographic profiles of its urban and rural areas could reduce China’s long-run economic growth rate by two percentage points.
There is, however, one critical demographic characteristic all the BRICs share. And it is not a good one. The BRICs will all be well on their way toward old-age before they become wealthy. While the industrialized nations have had a long time to accumulate wealth and realize high levels of income well before growing “old”, the BRICs are or will be encountering rapidly aging populations at much lower levels of wealth and income. For example, China’s pattern of aging is very similar to that currently in Japan, Hong Kong, Singapore, South Korea and Taiwan. The critical difference is that in China this is happening at a time when the country is still relatively poor. According to the World Bank, China had a per capita income of approximately $6,000 in 2008 (measure in purchasing power parity). The United States had a per capita income almost four times that in 1990 ($23,000) when its median age was the same as China’s now.