Nicholas Eberstadt: World Population Prospects and the Global Economic Outlook

In a February 2011 working paper, Nicholas Eberstadt of the American Enterprise Institute writes (bold emphasis is our own):

On demographic changes in emerging markets:

“For today‘s affluent Western economies, the demographic challenges ahead—increasingly stagnant and aging populations, mounting health and pension claims on a shrinking pool of prospective workers—are already generating concern, especially in Europe and Japan. But the demographic constraints on many of today‘s “emerging markets”—rising economies such as China, Russia and India, the places that are widely expected to serve as increasingly important engines of global growth in the decades immediately ahead—are in any case both more serious and more intractable than generally appreciated.”

On the worldwide decline in fertility rates:

“If the Twentieth Century‘s revolutionary trend was the “health explosion,” with radical and pervasive reductions in mortality, the Twenty First‘s looks to be a “fertility implosion”: a dramatic, far-reaching and as yet unremitting global reduction in birth rates from previous “traditional” levels. This low-fertility revolution is pregnant with implications, so to speak, for both our demographic and our economic future.”

On the global decline in the ‘working age’ population:

“By the reckoning of the UN Population Division, the world‘s population of “working age” (conventionally, albeit somewhat imperfectly, defined as men and women 15-64 years of age) grew by 1.3 billion, or about 40%, between 1990 and 2010: a pace averaging about 1.7% a year. Given the pronounced global fall-off in fertility over the recent past, however, the world‘s manpower of economically-active ages is set to grow much more slowly between now and the year 2030. By the Census Bureau‘s projections, the absolute increase in the world‘s working age population for 2010-2030 would be around 900 million—400 million fewer than over the past two decades—and the projected average rate of global manpower growth for the coming decades is 0.9% per annum—that is to say, only just over half the tempo for 1990-2010.”

On China’s demographic challenges:

China is confronting the demographic version of “the perfect storm” and these new demographic realities may ultimately force us to revise today‘s received wisdom about “China‘s rise”.”

“China‘s future demographic profile will differ substantially from its current population situation, mainly because of the country‘s low levels of fertility. Although there are some inconsistencies and problems in official Chinese population data, population specialists believe that China became a sub-replacement fertility society about two decades ago—and that birth rates have fallen far below the replacement level since then.”

“In the decades immediately ahead, China will see the emergence of a growing host of essentially unmarriageable young men. This outcome will be the all but inescapable arithmetic consequence of the gender imbalance that has accompanied the country‘s “One Child Policy” – while ordinary human populations regularly and predictably report 103 to 105 baby boys for every 100 baby girls, China‘s officially reported sex ratio at birth (or SRB) was almost 120 boys for every 100 girls in 2005. This imbalance between the numbers of little boys and little girls in China sets the stage for a “marriage squeeze” of monumental proportions in the decades just ahead.”

On India’s North-South demographic divide:

“[India’s] dilemma can be highlighted by contrasting the prospective educational profiles of Kerala (which is now one of India‘s most prosperous states) and Bihar (one of its poorest). In just over a decade and a half, Kerala‘s working-age population will be on the brink of stagnation—but the state‘s working age manpower will be fairly well trained (roughly half of Keralites aged 15-64 would have high school education or better). By contrast, Bihar‘s working-age manpower will still be growing briskly—but as 2030 approaches, these projections suggest that well over half of working-age Biharis will have received no more than some primary schooling, and nearly a third of the state‘s working age manpower will have no formal education at all.”

On developed economies:

“Two unanswered demographic questions will loom especially heavily over the Western European economy in the decades immediately ahead. First, can the region succeed in attracting and incorporating the foreign workers their economies will need in the coming decades?”

“Second, can Europe translate health improvements into a longer working life for its progressively aging population?”

Read the working paper here.