In the current moment, the most pressing demographic shifts are those of growth and age. Though migration concerns remain high throughout the Western world (including in the US, where nobody can agree about how to deal with difficult-to-control illegal southern border crossings coming in from Mexico, which serves as a conduit for opportunistic migrants throughout lower Latin America), this is obviously less so the case these days throughout East and Southeast Asia, where migration activity from the War in Ukraine also can’t easily spread. Internally, certain age demographics are swelling in different economies at different times, offering novel opportunities and challenges in each.
To determine how many potential customers are going to be living in a potential market, as well as what kind of impact that will have on the larger economy, it’s quite simple: count the people.(B.U) National governments are well aware of the positive economic outcomes of population growth, which also explains why they are so petrified of population shrinkage.
Population Growth
Major economies promote and desire population growth largely due to its potential economic effects, such as expanding the workforce and labor talent pools, boosting overall national GDP and raising the standard of living by increasing the quality and variety of goods and services available to its citizens. Of course, population growth is a double-edged sword, and its negative effects are becoming more obvious in an age in which citizens and investors alike are ever-more increasingly aware of the environmental impacts of commercial existence (see: Natural Elements).
In the PRC, the widely reported population contraction of 2022 is not necessarily a death knell for Chinese population growth in general, but it does clearly indicate to CCP leadership the reality of a national economy no longer supported by unprecedented population expansion. Moving forward, China’s “whole nation” approach (according to CCP Vice Premiere Liu He) towards restructuring into a “Digital China” is critical, and the recently concluded annual “Two Sessions” conference laid out a fairly unified plan forward focusing on maturing certain critical industries (ie: national security, industrial and infrastructural upgrading) and nurturing certain new industries and opportunities (ie: semiconductor technology, green- and eco-development.) As the population growth-leveling sets in over time, the PRC appears aware that advancing and maturing available capabilities is their most opportunistic way forward now that the country’s economy lacks the thrust of an expanding labor pool. This transition, for the PRC, is both natural and inevitable.
Other East Asian nations have already begun their natural population declines; Japan has been shrinking since 2010, and South Korea since 2020. Now, those two economies are top competitors in the most advanced industries in the world. Leveling out population growth and economic industry maturing is not bad, it’s different.
The Kingdom of Thailand is also nearing its population growth apex and will likely begin to contract any year now. The median Thai age is over 40 years old, and the Thai population pyramid resembles those of Japan and Canada much more than any of the younger Asian nations(CIA).
On the expansion side of the coin, Vietnam and Indonesia still have decades of growth forthcoming, with even larger relative increases likely in Malaysia, and the Philippines. The Philippines alone is likely to add 1-2 million people to the Asian market every year for the next fifty years(MT). Companies positioned to tap into the growing regional population will continue to hold first-mover advantages.
Population Aging
Apart from population density and growth dynamics, understanding the breakdown of age demographics within an economy is fundamental to interpreting that economy’s ability to thrive in the current environment dynamics. As a country’s people ages (such as in Japan, with a median age in 2020 of 48.4 years, ~4 years older than any other East Asian nation and ~18 years older than the average across Southeast Asia)(UN) the national priorities must shift to accommodate for a larger capacity for elderly care and a shrinking workforce due to aging out of the ability to perform many different disciplines. Opportunities abound for capitalists who can coordinate across federal policy outlays to take advantage of aging-related market expansions where attention is being called.
Studying the different age groups of Asian nations reveals that Indonesia, Vietnam and the Philippines all have large relative populations of youth on the cusp of entering into working age and contributing economically to the nation and their own livelihood. In particular, Vietnam, a country that already has about a hundred million residents, boasts an enormous consumer population and strong economic fundamentals for its current growth pattern, so it has supportive conditions for continued consumer demands on new goods and services. This economic backdrop (further bolstered in Vietnam by a relatively large young adult consumer spending cohort) is inherently friendly to competition where it’s not prohibited by policy, and the modern era of increasingly digitized goods and services provision faces far fewer policy barriers than older and more entrenched industries.
Younger generations are increasingly participating online, through their own devices, and with expanding economic independence due to digital currency economics, so countries (via companies like Alibaba, via its AliPay system) that manage to cater to them as a growing generation of spenders will find the most future success.
On the older end of the spectrum, as countries age, studies have found that individuals tend to participate in the workforce for longer, shifting wage and employment dynamics in new ways. In a March 2023 working paper released by D. Park and K. Shin of the Asia Development Bank, a “silver dividend” is discussed in terms of possible benefits to economic growth in an aging workforce dynamic.(ADB) The silver dividend basically suggests that increased longevity and a longer working life provide additional contribution to economic growth. Though the paper seems to find that the contribution from the silver dividend is ultimately too-little-too-late for an aging economy’s overall economic rate of growth, the silver dividend does exist, and it is impossible to account for how increases to the digitization of medical care and adjustments in the quality of life for the elderly will reshape their ability to contribute to the future workforce, just as past experiences did so inefficiently for the current time. Optimistically, the silver dividend is actually a well of possibilities, and the contributions that the future elderly will be capable of making to the workforce have always been of an entirely different type than the young.
In South Korea, recent data from Statistics Korea (the official statistical division of the Korean central government, operated by the Ministry of Economy and Finance) shows that elderly workers (over 60) have increased their participation in the workforce and brought down the most recent level of overall unemployment in the country by at least 0.3%;(SK) this is the silver dividend shining through clearly. Debate is ongoing about the quality-of-life impact on the elderly class from this increased participation.
Since all nations are aging at different rates, and treat their elderly differently, regional commercial success will likely only be found by those companies which can provide the right mix of products and services to cater to the specific needs of each market. In markets such as Vietnam, where roughly two thirds of the population is still living in rural areas, the elderly are traditionally cared for by their younger family members, and age projections estimate that the total population of elderly people over 60 is expected to double over the next twenty years,(ADB) providing the necessary health and medical services will be a much more remote-oriented challenge than it is in Taiwan, where nearly 80% of the population is urbanized and medical care is much more centralized and rapidly advancing.
TPDEARR readers will be wise to remember that investing opportunities may exist in the older, middle, and/or younger age brackets, depending on a given nation’s other demographic factors and macroeconomic conditions. Seek out rising local capitalists who can manage new operations from personal experience in the target market.
Competition
As the aging trans-Pacific economies shift and adjust to compensate, many will seek to exploit and expand the silver dividend, re-enfolding older members of society into the economic network in more integrated ways. Multigenerational workforces will see different types of competition for positions and seniority. Younger workers will face more barriers to entry into legitimate industries as older workers fail to retire, also motivated by increasing levels of licensing requirements for many trades and professions, squeezing out an ever larger portion of the total potential employee base.
Competition in this new age is not immune to the finicky vicissitudes of age and the right to work, and the individual companies which most equally empower the largest diversity of employees will be able to tap into the multiplicative power of intergenerational innovation. This ought to be a going concern and close point of scrutiny for all investors concerned with corporate governance standards and the quality of environment produced for a company’s workers.
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