Asian Regionalism in the World Economy

Asian Regionalism in the World Economy

Engine for Dynamism and Stability

Edited by Masahiro Kawai, Jong-Wha Lee, Peter A. Petri and Giovanni Capanelli

The structure and policy architecture of the world economy, as it emerges from the historic challenges now underway, will be affected by the dramatic rise of Asian economies and deepening connections among them. This important book examines the rapid transformation of the Asian economy, the challenges it faces, emerging regional solutions, and how Asia can play a more constructive role in the global economy.

Chapter 3: Will Demographic Change Undermine Asia’s Growth Prospects?

Andy Mason, Sang-Hyop Lee and Ronald Lee

Subjects: asian studies, asian development, asian economics, development studies, asian development, development economics, economics and finance, asian economics, development economics

Extract

* Andrew Mason, Sang-Hyop Lee and Ronald Lee Demographic change is occurring rapidly throughout Asia, with fundamental implications for both national and regional economies. Often, population change is viewed with alarm – that economic prosperity will be undermined because population growth is too fast or too slow; because populations are too young or too old. On balance, however, demographic change is likely to provide a positive impetus for economic growth in Asia during the first half of the twenty-first century, especially if regional cooperation continues to improve. Of particular importance are policies that facilitate the flows of immigrants and capital between countries with young and growing populations and countries that have old and declining populations. The prosperity of Asia’s aging countries will depend, as well, on domestic policies that encourage investment in human capital, flexible labor markets, wellfunctioning financial markets and macroeconomic stability, and that discourage excessive reliance on large-scale transfer programs for the elderly. The countries of Asia are experiencing two fundamental changes in their populations that will influence standards of living and regional economic forces. First, population growth is slowing, albeit more rapidly in some countries than in others. Differential population growth will lead to regional shifts in population, labor force, the number of consumers and related economic activity. Second, populations are experiencing important changes in their age structures. In all economies, the percentage of children in the population is declining or has already reached low levels. The share of the working age population is increasing or has reached very...

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