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Asymmetric Demography and the Global Economy contributes to our understanding of why the demographic transition matters to domestic macroeconomics and global capital movements.



Introduction: The Project, the Results, and Policy Implications

Introduction: The Project, the Results, and Policy Implications

The global economy has experienced deep structural transformations since the demise of the Bretton Woods system gave rise to the second globalization. From the point of view of emerging countries, three dimensions of the transformations are particularly relevant: the changes in the international growth dynamics, the expansion of capital movements, and the global demographic transition (Dervis, 2012; World Bank, 2012a).

José María Fanelli

The Demographic Transition and the Macroeconomy: Setting the Stage


Chapter 1. Demographic Asymmetries and the Global Macroeconomy

This chapter sets the stage for the analysis in the rest of the book. We provide empirical and conceptual background concerning international demographic asymmetries and examine the consequences for the distribution of the international labor force, global savings, and the growth dynamics of countries experiencing different demographic stages. We focus on the countries of the G-20 and, particularly, the four emerging economies selected for the country studies: Brazil, China, India, and South Africa (see chapters 6–9). Based on this evidence, we discuss the implications for global imbalances, capital flows, and the required expansion of the domestic financial system in emerging market economies. We interpret the implications in light of the financial and monetary distortions and flaws in the rules of the game that the global post-crisis scenario reveals.

José María Fanelli, Ramiro Albrieu

Chapter 2. Demography and the Macroeconomy: A Methodological Framework

In this chapter we develop a methodological framework to examine demographic data from a macroeconomic perspective. It is based on the concepts utilized in the National Transfers Account (NTA) approach, as well as those used in the study of macroeconomic fluctuations, growth, and capital movements (Dervis, 2012). Using the data provided by the NTA database, we apply the framework in the next chapter to study the linkages between changes in the population’s size and structure and the macroeconomy, seeking to identify a set of stylized facts on such linkages in emerging countries. The methodology also provides a framework to interpret the evidence and research results discussed in the rest of the book.

José María Fanelli

Demographic Asymmetries and the Global System


Chapter 3. On the Macroeconomic and Financial Implications of the Demographic Transition

In this chapter we examine a set of problems concerning the interactions between the demographic transition and the macroeconomy in emerging countries that are particularly relevant to the issues discussed in the book. Analytically, the study is founded on the concepts, methodologies, and problems discussed in the previous chapter and, empirically, it is based on the UN population projections ( and NTA demographic data on expenditure and income age-profiles ( corresponding to four G-20 emerging countries: Brazil, China, India, and South Africa. To enrich the comparative perspective we will frequently refer to the experience of Korea as standard of comparison. Korea is a good standard because the country succeeded in accelerating growth during the period in which the demographic window of opportunity (DW) was open.

José María Fanelli, Ramiro Albrieu

Chapter 4. Demography, Economic Growth, and Capital Flows

We are living through a demographic revolution. Longevity continues to increase throughout most of the world, at a rate of more than two years a decade. Birth rates continue to fall throughout most of the world, from their global peak in the mid-1960s, but with large differences from country to country. For both quite different reasons, the world population is ageing rapidly, with the median age (half older, half younger) rising from 29 years in 2010 to a projected 36 years in 2040. Thus while the world’s population will grow by an additional 2 billion between 2010 and 2040, its geographical and age structure will change dramatically. Some countries, most notably Russia, Japan, and Germany, are already experiencing a decline in total population, despite increasing longevity. Many others, especially in Europe and East Asia, can be expected to grow only slowly. Some of the poorest countries, particularly in sub-Saharan Africa but also including Afghanistan, Yemen, and Guatemala, continue to grow rapidly in population. Among the rich countries, the United States stands out as experiencing more rapid population growth; and among the emerging markets, China stands out as ageing with exceptional rapidity.

Richard N. Cooper

Chapter 5. Emerging Economies and the Reform of the Global Monetary System

The recent global financial crisis placed the issue of global macroeconomic and financial stability at the center of the world agenda. The first of these objectives may be understood as guaranteeing an adequate supply of liquidity at the international level and the coherence of the domestically determined macroeconomic policies (regional in the case of the Eurozone monetary policy), particularly those of major countries. The second may be understood as a coherent set of rules that helps prevent as well as better manage financial crises when they do occur.

José Antonio Ocampo

On Challenges and Opportunities for Emerging Economies


Chapter 6. Macroeconomic Effects of the Demographic Transition in Brazil

Brazil is a relatively young, prominent developing country undergoing what is expected to be a fast demographic transition. Owing to a decline in the mortality rate, the Brazilian population increased significantly between 1940 and 1970. In the 1940s, the annual population growth rate was around 2.4 percent, rising to 3.0 percent in the 1950–60s, as life expectancy rose from 44 to 54 years. According to Carvalho (2004), the so-called demographic transition in Brazil started in the 1970s, with a sudden fall in the fertility rate. The latter kept decreasing since then, leading to important differences between the actual age distribution of the population and its so-called stable-equivalent.1 At the same time, longevity kept increasing. By 2010, population growth had fallen to only 1.0 percent per year, life expectancy had reached 74 years, and the economically active population had grown from 56 percent to 64 percent of the total population (between 1980 and 2010).

Ricardo D. Brito, Carlos Carvalho

Chapter 7. China’s Premature Demographic Transition in Government-Engineered Growth: Macroeconomic Insights and Policy Implications

In this chapter we investigate China’s demographic transition and discuss its financial and macroeconomic implications against the background of government-engineered growth. It should be emphasized from the very beginning that we do not take China’s demographic transition for granted. Rather, we consider China’s demographic transition as a premature process of a coherent part of China’s development strategy that was adopted in the early 1950s and carried out thereafter throughout both its planning and reform periods. In our analysis, we pay particular attention to the “cost” of the government’s forceful and substantial interventions in both demographic transition and resource allocation that aim to achieve a faster catch up with the advanced economies.

Harry X. Wu, Yang Du, Fang Cai

Chapter 8. A Study of Demographic and Financial Changes in India

Over the last two decades countries like China, India, Brazil, South Africa, and the Russian Federation experienced sweeping changes in their economies. Despite the lack of synchronicity in the alleged cause of these economic reforms, they were all able to settle onto their respective growth trajectories. It is no wonder then that the global forums recognize these economic successes as defining the new economic order, despite the admission of critical internal disadvantages that continue to group these countries alongside other developing and transition economies. This chapter attempts to review the macroeconomic and financial conditions prevailing in India during this important transition period. The focus of this research, therefore, is to explore and observe the possible links and synergies between economic and financial developments functionally related to an important and yet relatively less emphasized factor, namely, the changing demographic pattern in India.

Pranab Kumar Das, Saibal Kar

Chapter 9. Demographic Transition, Growth, and Wealth in South Africa

There is rising concern in South Africa that social security transfers and expenditure on public health may jeopardize the solvency of the public sector, thereby inducing macroeconomic and financial instability. Tito Mboweni, the immediate past Reserve Bank governor, warns of “a social revolution in South Africa similar to those in Portugal, Greece and Cyprus, where taxpayers protested in the streets when governments implemented budget cuts after over-committing on social expenditure” (Mboweni, 2013). For instance, within one and half decades since apartheid ended, social welfare spending has increased by 537.5 percent as a result of phenomenal growth in the number of welfare recipients from 2.4 million in 1996 to 15.3 million in 2011, and still rising. This growth in spending does not include expenditure on public health, which in itself is a significant line item in the budget, partly due to the public health treatment program in response to the HIV-AIDS.1 Tito Mboweni points to growing unemployment (4.7 million in 1996 and 5.6 million in 2011) as an important factor in the phenomenal increase in the demand for public support.

Melvin D. Ayogu, Olumide Taiwo


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