Some Global Demographic Analysis

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The IMF’s David E. Bloom writes,

Ninety-nine percent of projected growth over the next four decades will occur in countries that are classified as less developed—Africa, Asia (excluding Japan), Latin America and the Caribbean, Melanesia, Micronesia, and Polynesia. Africa is currently home to one-sixth of the world’s population, but between now and 2050, it will account for 54 percent of global population growth. Africa’s population is projected to catch up to that of the more-developed regions (Australia, Europe, Japan, New Zealand, and northern America—mainly Canada and the United States) by 2018; by 2050, it will be nearly double their size.

Read the whole thing,

1 thought on “Some Global Demographic Analysis”

  1. Rapid population growth poses significant challenges. Among them is the need to provide jobs for large numbers of people and give them the human capital (quality education, training, and health) they need to be productive. Nations must also lay down the requisite physical capital and infrastructure to support higher employment; otherwise mass suffering and political, social, and economic instability and conflict could become ever more common.

    I think the words, ‘provide jobs’, reveals the mindset of economic central planning, but maybe I’m reading too much into.

    Still, a few decades ago it was permissible – even fashionable – to point out that under a very simple Solow model (ignoring foreign lending) the equilibrium level of capital per person, and the rate of accumulation, were both inversely related to the population growth rate. The whole ‘demographic dividend’ section of the article hints at the logic.

    But with the possibility of foreign investment, you have huge new populations in the less developed world at very low levels of capital-per-capita and, under the theory, their labor productivity should be boosted tremendously with more capital, and surely more than enough to pay back historically low interest rates.

    But I don’t think that’s what’s happening. Apparently there is a massive risk premium (see, e.g., this story about Barclay’s) But in addition to that, I think the “GDP Factory” story combined with the simple Solow model has really broken down, especially lately, and especially for these countries.

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