Developed countries have increased the size of their economies, educated their populations and reduced their #Birth Rates. The aging of society goes hand in hand with slower economic growth. Many European countries have experienced this, Japan has also been a victim of the aging of society. Recession is linked to lower birth rates in many countries. Many countries that grow fast these days have booming populations, as more consumers mean more sales. The US economy grows faster than the European one because US population has a higher demographic growth.

The population pyramid

In countries with young populations, there are 600, 700 or even more than 1,000 young people per every 100 seniors.

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This means that there are a lot of workers in activity per every retiree, thus, they can support seniors by paying taxes. On the other hand, in European countries, the ratio is 100 or even less than 70 young people per every 100 seniors as we can see in Italy and Germany. This increases the costs of social security dramatically. Taxes have to be increased to support an aging population.

Japan, recession, and aging

We remember how strong Japan was in the 80s, it became a great competitor for the United States. They invaded the US market with a lot of cars, steel, radios and more. But then the Asian economy lost speed, the 90s were not good for the Japanese economy. Real estate prices fell about 80% and the stock market was reduced to less than half of its value. There were many reasons for this but aging was among the most important ones.

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When the Japanese invaded the US market in the past decades, they were younger than Americans. Today the Japanese have a higher median age than the US and this means higher production costs.

China and India

Both countries have had high rates of demographic growth and this has increased the economic activity. China adds about 7 million people per year, it has about 18% of the global population but it produces more steel and cement than the rest of the world together. The Asian giant manufactures more vehicles than the United States, Japan, and Germany together. India gains about 18 million inhabitants per year and this country will experience a huge economic growth the coming years. There is demand because there are more new consumers every year. India already manufactures more vehicles than South Korea and 20% more steel than the United States. Clearly, a higher demographic growth is good for the economy.