Tuesday, March 29, 2011

Challenges for Asia as It Grows Old - NYTimes.com

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If demography is destiny, as the French philosopher Auguste Comte put it, then Asia faces daunting challenges in the coming decades.

Markets understandably track the rate and composition of gross domestic product to gauge short-term economic shifts. But it is changes to the underlying productive capacity of an economy that count in the long run. Swing factors include openness to outside capital and ideas as well as the quality of education and governance.

Another is the effect of population trends on the supply of labor and on savings and investment rates. Witness North Africa and the Middle East. One reason behind the turmoil engulfing the region is the failure of governments to address a youth bulge, spawning large cohorts of angry, unemployed young men.

With the notable exception of India, most Asian countries have the opposite problem. The region is growing old, as painfully illustrated by the March 11 earthquake in northeast Japan.
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