EP 32: Demographics important but not everything

Summary:

In this episode, we discus the importance of demographics, particularly fertility rates, in shaping the future of countries. We present data showing a dramatic decline in global fertility rates, leading to population decline in most parts of the world. However, despite this trend, we present that demographics are not the sole determinant of a country's future success. We highlight the importance of a country's position in the Global Value Chain (GVC) as an additional factor in determining future economic strength, suggesting that maintaining a strong position in the GVC may be as critical as achieving high birth rates.

Questions to consider as you read/listen:

1. What are the implications of global demographic decline for the global economy and geopolitics?
2. How do factors like global value chains and demographic trends interact to influence the future of nations?
3. To what extent does global population decline challenge existing models of economic growth and development?

Long format:

Demographics important but not everything

There is within doubt a very large and irreversible demographic decline in the world in general. This is a problem.

I have fully drunk the Peter Zeihan kool aid that demographics are important.

However, they aren’t everything.

Consider this.

By 2100, only six of 204 countries and territories (Samoa, Somalia, Tonga, Niger, Chad, and Tajikistan) are expected to have fertility rates exceeding 2.1 births per female. In 13 countries, including Bhutan, Bangladesh, Nepal, and Saudi Arabia, rates are even predicted to fall below one child per female.

The Total Fertility Rate (TFR) in Western Europe is predicted to be 1.44 in 2050, dropping to 1.37 in 2100, with Israel, Iceland, Denmark, France, and Germany expected to have the highest fertility rates at between 2.09 and 1.40 at the end of the century. Rates are projected to be much lower across the rest of Europe and parts of Asia.

Most of the world is transitioning into natural population decline (when the number of deaths exceeds the number of livebirths); just 26 countries are still projected to be growing in population in 2100 as livebirths continue to outnumber deaths, including Angola, Zambia, and Uganda.

Source:

https://www.healthdata.org/news-events/newsroom/news-releases/lancet-dramatic-declines-global-fertility-rates-set-transform#:~:text=By%202100%2C%20only%20six%20of,and%20employment%2C%E2%80%9D%20said%20Vollset

https://www.un.org/development/desa/pd/sites/www.un.org.development.desa.pd/files/wpp2022_summary_of_results.pdf

But those 16 countries don’t make Peter Zeihan’s top 5 future winners (“Now, the shortlist of countries that could function without the Americans, Japan's far away the top of the list. Turkey makes the top four. France does really well, so does Argentina.”)

It is interesting to me to contemplate the chicken or the egg. Is it more important to stay on top of the Global Value Chain (GVC) or mind replacement rates and demographics? If a proverbial gun was put to your head and you had to choose demographic “win” of replacement rate above say 3 versus being on top of the GVC, which would you choose and why?