Developing
Asia’s demographic landscape will change dramatically in coming decades and
policymakers will need to manage the process carefully to ensure future growth
as populations age, says a new Asian Development Bank (ADB) report.
In the theme chapter of Asian Development
Outlook Update 2011, released today, ADB says developing Asian nations remain
relatively young, but are growing older very rapidly, which will put many
economies under pressure.
“Asia’s population is aging at a speed
unprecedented in human history,” said Changyong Rhee, ADB’s Chief Economist.
“As the population dividend that fueled Asia’s labor-intensive growth becomes a
tax, the region must find more innovative ways to sustain its economic
expansion, and to provide more comprehensive support for its growing elderly
population.”
Many parts of East and Southeast Asia are
already seeing a significant rise in the number of elderly. The People’s
Republic of China―the region’s biggest economy―is set to see the proportion of
elderly to working age people quadruple between now and 2050, surpassing the
United States. At the same time, younger countries such as India, Pakistan and
the Philippines have a relatively narrow window of opportunity to take economic
advantage of their youthful populations before they also begin to age.
These demographic challenges will require a
range of structural reforms and actions. In middle and advanced aging
societies, governments will need to strengthen state support systems for the
elderly, which remain largely underdeveloped.
“Asian governments need to promptly start
strengthening, and in some cases start building from scratch, their national
pension, health care and social security systems,” said Mr. Rhee.
Developing Asian nations must also make their
labor markets more flexible, allowing greater mobility of workers from younger,
labor-abundant countries to those where labor is scarce. Increased investments
in physical and human capital will also help both older and younger countries
sustain rapid growth in the face of the demographic transition.
With its high levels of savings and capital,
developing Asia is well positioned to tackle future demographic challenges, the
report says. At the same time, it should be looking to take advantage of
opportunities, such as a large and growing pool of retirement savings, which
could benefit the region as a whole. Such funds could be put to work to support
financial sector development and to invest in countries where capital is
scarce.
Asian Development Outlook and Asian
Development Outlook Update are ADB’s flagship economic reports analyzing
economic conditions and prospects in Asia and the Pacific, and are issued in
April and September, respectively.
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