Tuesday, February 27, 2024

Changing Global Demographics


During the 18th century, the now well-known political economist, Thomas Malthus, in his famous work, Essay on the Principle of Population (1798), expounded the theory that world population would grow unendingly without the natural constraints of war, famine, and disease.

Recent trends in global demographics, now reveal new factors limiting population growth, and suggest that by 2075 global population will have peaked and begun a substantial decline.

Falling Birth Rates

Throughout the 20th century, population predictions portended explosive global population growth and eventual Malthusian disaster. During the 1990s, it was feared that global population would reach 12 billion. Today, new population studies indicate that the present global population of 6 billion will level off by 2050 at 9 billion, and that by 2075 it will have declined by 500 million.

The global fertility rate, the rate at which a population replaces itself (with women bearing 2.1 children), is falling toward 1.85 children according to new United Nations predictions. Asia, Latin America, and both Western and Eastern Europe have been experiencing declining birthrates for years. Interestingly, birthrates are falling in virtually every country in the world today, with the exception of the U.S and France.

In many countries, fertility rates have declined because of an interconnected set of reasons that include:

  1. The availability of contraception which has allowed women to achieve higher levels of education, enhanced opportunities for employment, and greater individual financial independence.
  2. The trend toward urbanization which makes it harder to support more than one or two children.
  3. Governmental initiatives to limit family size in countries like China and Iran.

Ironically, in some nations such as Australia, Estonia, Singapore, and Scandinavia, postponing and minimizing birthrates has reached such a peak, that those governments have been led to devise incentives to increase childbearing to ensure national survival.

The U.S. population continues to expand, experiencing birthrates at the replacement rate of 2.1, plus the continuing influx of immigration. Even with greater hurdles to immigration, the foreign-born population in the U.S. increased by 5% during 2002. The U.S. population is expected to expand from the present 280 million to 400 million over the next 50 years, with 80% of that growth consisting of either immigrants or the descendants of immigrants.

Economic Implications

Population growth and sustained consumption are necessary to fuel the continued development of modern capitalism, both to provide a constant work force to drive productivity, and to ensure ongoing marketplace demand. The predicted population changes will, therefore, have profound implications for both business and the economy.

In general, prosperity reduces birthrates, which limits the work force, and leads to an increase in the elderly population. In Germany, Japan, and many of the developing world nations, the declining work forces are becoming unable to either maintain the necessary levels of productivity, or to support their rapidly increasing elderly populations.

In the U.S., where the over-85 population is expected to increase from the present 5 million to over 18 million by 2050, this increase is offset by a stable work force and increasing immigration from the developing nations. Globally, the youth of many nations continue to immigrate to the U.S. and Western Europe in search of opportunity. These immigration trends continue within the U.S., despite the recent difficult economy and new, terrorism-related hurdles to immigration.

Economically and socially it is hard to predict what these complex demographic shifts will mean for either the domestic or the global economy. In the U.S., and to a lesser extend in Western Europe, both consumption and the work force are likely to continue to grow, with marketplace demand realigning along changing demographic lines. This suggests continually changing markets and shifting target audiences, presenting new challenges to both marketing and selling operations as they become more demographically targeted in their activities.

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