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How world population affects the economy

Marketplace Staff Jan 5, 2011

How world population affects the economy

Marketplace Staff Jan 5, 2011


Bob Moon: If you really want to know what’s going on in the world, follow the money. And if you want to follow the money, you’ll need to go where the people are. A higher birth rate produces rising numbers of consumers. And a new analysis of world population trends suggests global economic power is shifting toward Asia.

Timothy Homan of Bloomberg News rounded up the facts and figures on populations around the globe. He joins us now. Welcome.

Timothy Homan: Thank you.

MOON: You went through a lot of data on world populations, and it seems Asia’s the big winner here. Is there something special about Asia’s population that makes for a bright future?

HOMAN: Well the fact that they have such large populations over there allows for a larger labor force, and that means lots of workers. Not only has it been attractive for companies in those countries, but it’s been very attractive for companies in sort of the Western world, that means lots of dollars are flowing into those countries and they just have more money to spend than they would have otherwise.

MOON: Well we’ve watched a rivalry emerge in the past few years between these two growing economic powers: China and India. How do population patterns play into that rivalry?

HOMAN: India has seen its population increase at a faster rate. They don’t have the one-child policy that China does. And that just means that they’re able to attract more foreign investment because foreign companies know that there will always be this replenishing supply in the labor force.

MOON: You point out a few developed nations where the populations are actually contracting. What is that going to mean for their position in the global economy?

HOMAN: That’s going to mean that they’re going to have a harder time supporting their aging population; if you don’t have younger workers entering the workforce, then you have a hard time supporting people through the equivalent of Social Security. A lot of these countries are going to have to be looking to outside labor, and that means they might have to relax their immigration policies.

MOON: I have to ask about us, as in U.S. What are the population trends here, and how might they relate to our future growth?

HOMAN: The U.S. has one of the lowest median age — about 39.6 in the U.S. — and that’s going to be younger than China in about the next 20 years. What it means is that the population growth in the U.S. is actually going to be buoyed by this higher fertility rate; it means we will sort of stay in the number three position of population for about the next 40 years.

MOON: The fountain of youth, right here. Timothy Homan is a reporter for Bloomberg, thanks for joining us.

HOMAN: Thank you.

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