Demographic Change and Long-Term Economic Growth Path in Asia

Vol: 
48/2023
Author name: 
Lee JW
Song E
Year: 
2023
Month: 
October
Abstract: 

This study analyzes Asia’s economic prospects over the next half-century, focusing on demographic changes. To project the GDP and per capita GDP growth rates for the five major Asian countries and the United States (US) until 2070, an endogenous growth model is used where physical and human capital accumulation, technological progress, and substitution between physical capital and labor are important determinants of the long-term growth rate. The simulation results show that while the declining labor force growth and an aging population have a long-term negative impact on economic growth, they will not predetermine the future of Asian economies. Highlighted is the importance of promoting technological innovation as well as investment in physical and human capital to sustain strong growth in Asian economies. China’s average annual GDP growth is expected to decline to between 1.5% and 2.4% during 2051–2070, subject to scenarios. China’s higher growth trajectory could approach about 85% of the US PPP-adjusted per capita GDP by 2070. India is projected to surpass the US in PPP-adjusted GDP by 2050 and China by 2070.

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