Can Technology Offset the Effects of Population Aging on Economic Growth? New Report from the Asian Development Bank
Population aging will leave many of Asia's economies increasingly dependent on an aging, and eventually a shrinking, workforce. Historically, an aging workforce has been seen as an impediment to economic growth. Experience from economies in advanced stages of aging suggests, however, that population aging can induce innovation and adoption of new technologies and so promote productivity and sustained growth. But there is no guarantee that all aging societies stand to benefit. Countries in Asia need to adopt technologies appropriate for their level of demographic transition, facilitate learning across all ages, and encourage regional cooperation for the most efficient use of their work forces and other resources.
An Aging Population in Asia Creates Economic Challenges
Elderly populations in Asia are expanding more quickly than other age groups. This shift in population age structure had two major impacts: demand for income support for the elderly will rise because their labor income tends to be extremely low; and gross domestic product (GDP) and other aggregate economic indicators will grow more slowly as growth in the effective labor force declines. In countries where government programs play an important role in old-age support, tax rates will have to rise or benefits will have to be curtailed or both—all options with significant political costs.
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