How Demographics and Social Changes are Shaping the Future
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Demographics

An Investing Megatrend: How Demographics and Social Changes are Shaping the Future

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For millennia, people have found support and community through defining factors, ranging from age and race to income and education levels.

However, these characteristics are not static—and drastic demographic changes are starting to create powerful ripple effects in the 21st-century economy.

The Impact of Demographics and Social Changes

Today’s infographic from BlackRock delves into the significant impact that demographics and human rights movements have on global markets. Of the five megatrends explored in this series, demographics are predicted to have the farthest-reaching impact.

Megatrends - Demographics and Social Change

What are Demographics?

Demographics are the characteristics of populations that change over time. These include:

  • Age
  • Gender
  • Race
  • Birth and death rates
  • Education levels
  • Income levels
  • Average family size

As a result, major demographic trends offer both unique challenges and opportunities for businesses, societies, and investors.

The Biggest Shifts

What are the biggest shifts in demographics that the world faces today?

1. Aging Population

The global population is aging rapidly─as fertility rates decline worldwide, those in the 65 years and older age bracket are steadily increasing in numbers.

2. Future Workforce

As the population continues to age, fewer people are available to sustain the working population. For the first time in recorded history, the number of people in developed nations between 20 to 64 years old is expected to shrink in 2020.

3. Immigration Increase

Immigration has been steadily increasing since the turn of the 21st century. Primary migration factors range from the serious (political turmoil) to the hopeful (better job offers).

In particular, areas such as Asia and Europe see much higher movement than others, causing a strain on resources in those regions.

4. Consumer Spending

A steadily aging population is slowly shifting the purchasing power to older households. In Japan, for example, half of all current household spending comes from people over 60, compared with 13% of spending from people under 40.

How Does Social Change Play a Part?

Demographics are the characteristics of people that change over time, whereas social change is the evolution of people’s behaviours or cultural norms over time.

Strong social change movements have often been influenced by demographic changes, including:

  • Ending poverty and hunger
  • Expanding healthcare in developing nations
  • Reforming education quality and accessibility
  • Championing gender and racial equality

Examples of major human rights movements include creating stronger environmental policies and securing women’s right to vote.

Opportunities for Investors

These changes pose some exciting opportunities for investors, both now and in the near future.

Healthcare

Global healthcare spending is predicted to grow from US$7.7 trillion in 2017 to over US$10 trillion in 2022. To meet the demands of age-related illnesses, companies will need solutions that offer quality care at much lower costs—for patients and an overburdened healthcare system.

Changing Workforce

With a declining working population, adapting a workforce’s skill set may be the key to keeping economies afloat.

As automation becomes commonplace, workers will need to develop more advanced skills to stay competitive. Newer economies will need to ensure that automation supports a shrinking workforce, without restricting job and wage growth.

Education Reform

By 2100, over 50% of the world will be living in either India, China, or Africa.

Global policy leadership and sales of education goods and services will be shaped less by issues and needs in the U.S., and more by the issues and needs of Africa, South Asia, and China.

—Shannon May, CoFounder of Bridge International Academies

In the future, education and training in these growing regions will be based on skills relevant to the modern workforce and shifting global demographics.

Consumer Behaviour

Spending power will continue to migrate to older populations. Global consumer spending from those over 60 years is predicted to nearly double, from US$8 trillion in 2010 to a whopping US$15 trillion in 2020.

Investing Megatrends

Demographics and social changes are the undercurrents of many economic, cultural, and business decisions. They underpin all other megatrends and will significantly influence how the world evolves.

As demographics shift over time, we will see the priorities of economies shift as well─and these changes will continue to offer new opportunities for investors to make an impact for the future of a global society.

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Demographics

Mapped: The World’s Population Density by Latitude

How much of the Earth’s population is located near the equator? This map visualizes the world’s population density by latitude.

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A map of the world population by latitude.

Mapped: The World’s Population Density by Latitude

When you think about areas with high population densities, certain regions spring to mind. This could be a populous part of Asia or a cluster of cities in North America or Europe.

Usually density comparisons are made using cities or countries, but this map from Alasdair Rae provides another perspective. This world map depicts population density by latitude, going from the densest populated coordinates in deep red to the sparsest in light blue.

Why Certain Latitudes (and Regions) Are More Densely Populated

Numerous factors affect an area’s population density. These can range from topography, or the physical terrain characteristics of the place, to more direct factors like an area’s climate, which can impact both the survivability and agricultural potential.

Political, economic, and social factors are also at play⁠—for example, there is a natural lack of livelihood opportunities in sparse areas such as the Amazon rainforest or the Himalayas.

Breaking down the population by latitude, we see the population becomes more concentrated near the equator. In particular, the 25th and 26th parallel north are the most densely populated latitude circles. Around 279 million people reside in these latitude lines, which run through large countries like India, Pakistan, Bangladesh, China, the United States, Mexico, and others.

Despite their large landmasses, many of these countries do not themselves have very high population densities. Since density measures the ratio of people to physical space, countries with vast but sparse regions like China and India are less dense than imagined.

Out of the top 10 most densely populated countries in the world, only a couple can be found on the 25th and 26th parallel north⁠—Bangladesh and Bahrain. For a size comparison, Bangladesh is 1.55% the size of China, and Bahrain is only 0.01%.

The Future of Population Density Near the Equator

Looking ahead to 2100, the UN projects that the global population will rise to almost 11 billion. This would increase global population density from 59.11 people per square kilometer in 2022 to 80.82 per square kilometer in 2100.

However, the projections show that Asia will not be the biggest contributor to this growth. Instead, the most considerable jump in population is predicted for Africa, set to grow by almost 200% from almost 1.5 billion people today to 4.3 billion in 2100.

The equator runs right through the middle of Africa and crisscrosses countries like the Congo (both the Republic and DRC), Kenya, Gabon, Uganda, and Somalia.

As Africa’s population expands, this means that at latitudes near the equator, there could be even higher population densities coming. Or course, this largely depends on how the world’s fastest growing cities⁠—most of which are in Africa⁠—shape up over the coming decades.

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Demographics

The Yuxi Circle: The World’s Most Densely Populated Area

Population density varies across the globe. These maps use geographical circles to show the most densely populated areas on multiple continents.

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The Yuxi Circle: The World’s Most Densely Populated Area

The Yuxi Circle: The World’s Most Densely Populated Area

If you wanted to capture over 55% of the global population inside a circle with a 4,000km radius, which city would you place at its epicenter?

In 2013, a post appeared on Reddit marking a circular area of the globe with “more people living inside this circle than outside of it.” The circle had a radius of 4,000 km (just under 2,500 miles) and was named the Valeriepieris circle after author Ken Myers’ username.

Acknowledging that the Valeriepieris circle is not actually a circle (it was drawn on a two-dimensional map rather than a globe) and is based on data that has become outdated, mapmaker Alasdair Rae went digging and discovered what he calls The Yuxi Circle, the world’s most densely populated area.

Introducing the Yuxi Circle

Rae traced circles around 1,500 cities worldwide to find out how many people lived within a 4,000 km radius, just like the original Valeriepieris circle. He based his calculations on WorldPop data from 2020, based on a global population of 7.8 billion people.

Of the 1,500 circles that Rae made calculations for, 148 contained populations of 4 billion or more. He found many examples in Asia including in China, Myanmar (Mandalay), Laos (Vientiane), Bangladesh (Chattogram), India (Agartala), Bhutan (Thimpu), and Vietnam (Hanoi) to name a few.

But of them all, Yuxi, a city in the Yunnan province of China, has the largest population living within a 4,000 km radius: 4.32 billion.

Put another way? The circle encompasses over 55% of the world’s population, despite including desolate areas like the Taklamakan Desert, the Tibetan Plateau, Mongolia, and Southern Siberia.

Densely Populated Areas Around the Globe

Rae’s search for densely populated clusters also turned up notable circles beyond Asia. They surrounded cities like Cairo, Paris, and Mexico City.

Note: Keep in mind that the white lines on the flat maps are equidistant circles but will only look like circles when plotted on a globe.

The World’s Most Densely Populated Areas - Hanoi

Circling Hanoi yields a population of 4.27 billion (54% of the global population). It was the runner up city circle in Rae’s original search.

Populated Area Circles - Cairo

Circling Cairo yields a population of 2.29 billion. This circle reaches most of Europe while still containing populated areas of India, Pakistan, and Africa.

Populated Area Circles - Paris

Comparatively, circling Paris yields a population of 1.19 billion. This Euro-centric circle contains large tracts of water and scarcely populated islands such as Iceland and Greenland.

Populated Area Circles - Mexico City

Across the Atlantic, circling Mexico City yields a population of 0.73 billion. It’s significantly smaller than the other circles, as the total population in the Americas is concentrated in just three countries, the U.S., Mexico, and Brazil (not included in this circle).

It’s worth noting that the Valeriepieris circle also inspired other people to look at population density in different ways. In 2015, Danny Quah of the London School of Economics looked more closely at the Valeriepieris circle and was inspired to find the smallest circle with more people living inside of it than outside. He determined that a circle with a radius of 3,300 km centered near Mong Khet, Myanmar was “the world’s tightest cluster of people.”

While the Yuxi Circle contains the largest population using Rae’s approach as of early 2022, global populations are constantly changing. Who knows where the next Yuxi Circle will be?

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