“Many countries in the region are reaching the end of their demographic free ride. China’s workforce will contract from 2017.”
Back in 1994, Paul Krugman enraged Asians with his Foreign Affairs article “The Myth of Asia’s Miracle”. In it, he argued that seemingly remarkable growth in countries such as Singapore was not so remarkable after all. None of the expansion was the result of a rise in productivity, he said. Rather, all could be explained by an increase in measured inputs, namely of labour and capital.
Mr Krugman’s paper triggered not a little outrage. Leaders who had overseen what seemed to them like a startling transformation of their economies didn’t take kindly to his arguments. They saw themselves as statesmen who had engineered economic miracles, not lucky beneficiaries of favourable demographics and of thrifty populations whose savings could be recycled into factories and roads. read more.