The Great Aging Pyramids of Asia
In the United States, much of public discourse about the future of our economy focuses on an aging population and stressed government services. Social Security & Medicare are the largest line items in the budget, and more of GDP is moving towards healthcare rather than towards investment or improvements in productivity. On the other side of the globe, China continues to grow rapidly, and it is widely accepted that they will become the worlds foremost economic power in short order. However, China’s reign may be short-lived. The country’s one-child policy has resulted in an uneven age distribution and could eventually make the struggles the United States is facing look tame.
Not so quietly lurking behind China is India, the world’s largest democracy. According to the United Nations, will be the most populous nation of any kind by 2024. The country has far more young people than old and should be able to sustain a system of social welfare and pensioners better than China in the medium-to-long term future. India also continues to make reforms to its business culture to attract greater foreign direct investment. The country does not, however have an easy road. Although a shift towards market economics has helped to alleviate poverty, it remains a major issue. Additionally, Indian youth appears not to have the skills that Indian employers need.
I believe that the long-term economic hegemon in the world will be India. China’s high levels of debt and aging population are not a good mix. China’s now de facto dictatorship has also had the benefit of low-hanging fruit for economic development by focusing on large infrastructure projects and manufacturing. How will the people respond in an economic crisis? Will they be willing to have their credit-worthiness and ability to use public transportation determined by government-friendly social media posts when they have difficulty finding work? That remains to be seen. Either way, India should learn from the mistakes of the U.S. and China by maintaining moderate levels of debt and making sure its pensions and social safety nets are well funded. A young, and eventually fully-educated population with democratic values and expected to reach almost two billion people could take a place of prominence and leadership in the world.
By Jonathan Suquet