BETWEEN now and 2050, the world is expected to gain another 2.5 billion people, mostly in developing countries, before the global population stabilizes at around 9 billion—a huge leap from 2.5 billion in 1950. For economic policymakers, allowing for this increase will require enormous skill. But that’s only the tip of the iceberg. The age structure of the population is also projected to change dramatically, possibly altering education, retirement, and savings decisions. In developed countries, where the balance is already shifting from young to old, the proportion of the population aged 60+ is expected to jump from 20 percent currently to 32 percent by 2050. In developing countries, the figure could zoom from 8 percent to 20 percent in the same period.
This issue of F&D explores not only the many facets of the impact of demographic change on the global economy, but also the policy adjustments that countries will need to make. We have the IMF’s Peter Heller and Harvard University’s David Bloom to thank for helping us pull together such a diverse grouping of articles by top experts in their fields.
In terms of regions, we highlight Asia (the world’s most populous continent) and the European Union (where the working-age population is expected to fall some 16 percent by 2050, and the elderly population aged 65+ to rise by about 77 percent). In terms of topics, we examine the fiscal impact of aging, from health care (case study of New Zealand) and labor markets to pensions and financial markets, and look at cases of successful reform in Europe. The U.K.’s Adair Turner shares insights gained from chairing the U.K. Pensions Commission from 2003 to April 2006. And Harvard’s Jeffrey Williamson offers a glimpse into future migration patterns by examining two centuries of global mass migration.
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In “People in Economics,” we feature Nobel Prize winner Robert Mundell, who carried out some of his path-breaking research on open economies at the IMF in the early 1960s. In a chat with F&D, he fiercely defends the euro’s track record (he’s been referred to as its “intellectual father”) and sketches out monetary options for small and large countries alike, until the entire world is ready to become “one big optimum currency area, sharing a global currency.”
In “Straight Talk,” Raghuram Rajan warns that India’s spectacular economic rise over the past 25 years masks two areas of serious concern: not enough jobs are being created and inequality is rising. For India to grow quickly, he argues, it must exchange its “directive, paternalistic government” for one that creates an enabling environment—“willing to unleash the entrepreneurial spirit of the people.”