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Demographics

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

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Demographic Megatrends preview

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

Animated Map: The Comparative Might of Continents

We’ve come a long way since Pangea. This short video examines the area, population, and GDP of our continents as a share of the world’s total.

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Animated Map: The Comparative Might of Continents

We’ve come quite a long way since the time of Pangea. Today, the world’s continents are home to over 7.8 billion people, and each one is unique in its own way.

This video from the data visualization tool Vizzu compares the surface area, population, and GDP of the continents—all in terms of their contribution to the world’s total. Let’s dive further into the results of each category.

Click through to source to see the country breakdowns. Antarctica has been excluded from these calculations.

Surface Area: Does Size Matter?

When it comes to sheer land mass, Asia emerges on top with over one-third of the global surface area. On that front, it certainly has a little help from the combined forces of Russia and China, even as the former overlaps Eastern Europe as well.

RankRegionShare of Global Surface AreaLargest Country
#1Asia36.5%🇷🇺 Russia
#2Africa22.3%🇩🇿 Algeria
#3North America17.1%🇨🇦 Canada
#4South America13.2%🇧🇷 Brazil
#5Oceania6.4%🇦🇺 Australia
#6Europe4.6%🇷🇺 Russia

Africa comes in second, but doesn’t lag behind by much. A stone’s throw from Europe, Algeria is the largest country on the continent—and the 10th largest in the world.

Failing to grasp the true size of Africa is a common mental mistake, as many maps systematically underestimate its scale. The continent could easily fit the entirety of China, India, the U.S., and multiple European countries within its borders.

Population: Packing People Together

Another way to look at things is in terms of the number of inhabitants in each region. Asia is once again on top, with almost two-thirds of the world squeezed onto the continent.

RankRegionShare of Global PopulationMost Populous Country
#1Asia61.8%🇨🇳 China
#2Africa16.1%🇳🇬 Nigeria
#3Europe8.2%🇷🇺 Russia
#4North America7.7%🇺🇸 U.S.
#5South America5.6%🇧🇷 Brazil
#6Oceania0.5%🇦🇺 Australia

Asia’s lead in population is impressive, but it’s a margin that is unlikely to last forever.

By the year 2100—new estimates show the populations India and China could start to dip. Meanwhile Nigeria, which is already Africa’s most populous country with near 196 million people, could potentially quadruple in numbers in the same time frame.

In this metric, Europe also rises to third place. This is thanks again to the approximately 146 million people within Russia. However, if only the countries located completely within the continent are considered, Germany’s population of nearly 84 million would win out.

GDP: Emerging Wealth Overtakes

Finally, economic output—measured in terms of Gross Domestic Product (GDP)—is the most common way to assess the relative prosperity of countries and continents.

At this, the U.S. dominates with $21.4T according to the World Bank, though it swaps places with China which boasts $23.5T when adjusted for purchasing power parity (PPP).

RankRegionShare of Global GDPRichest Country (both nominal and PPP)
#1Asia36.9%🇨🇳 China
#2North America28.9%🇺🇸 U.S.
#3Europe23.9%🇩🇪 Germany
#4South America5.1%🇧🇷 Brazil
#5Africa3.1%🇳🇬 Nigeria
#6Oceania2.1%🇦🇺 Australia

Source: World Bank for both GDP Nominal and PPP, 2019.

Global wealth share drops sharply between Europe and South America, though it’s worth noting that rising inequality is also hidden under the surface within many high-income regions.

In terms of overall GDP, the Asian continent makes up the lion’s share. Asia is also home to many of the world’s emerging markets—which means there may be an even more pronounced shift of wealth towards the East in coming decades.

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Demographics

The World Population in 2100, by Country

New estimates show that world population may begin shrinking in coming years. We visualize this and how country populations will change by 2100.

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The World Population in 2100, by Country

In 2015, the United Nations predicted that the global population could surpass 11 billion by the end of the century.

Last year, the UN revised these estimates, but the numbers it came up with were still well above 10 billion. These regular projections from the UN have been the status quo—until now.

Plenty of signs have pointed to there being a population plateau, but recent research from the Institute for Health Metrics and Evaluation (IHME), published in The Lancet, suggests that the number of people on this planet may actually start to shrink well before the year 2100.

Here’s a closer look at these complex projections.

UN vs. IHME Population Estimates

According to the UN, the world population is set to steadily rise over the years:

  • 2030: 8.5 billion
  • 2050: 9.7 billion
  • 2100: 10.9 billion

In contrast, IHME paints a different picture. It projects the population to actually peak at 9.7 billion in 2064. Following this trajectory, there could be 8.8 billion people in 2100, approximately 2 billion fewer than previously thought.

Various demographic factors are behind these differences—higher life expectancies, migration rates, and lower fertility rates. For this last factor, independent drivers including contraceptive access and higher educational attainment were also considered.

A shifting age structure is also a key aspect of this transition. By 2100, over a quarter of the world or nearly 2.37 billion will be aged 65 years and above.

The Most Populous Countries in 2100

Amid all these demographic sea changes, which countries will come out on top?

Despite an overall decline in numbers to 1.09 billion people in 2100, India moves up from second to first place on the population leaderboard.

RankCountryPopulation (2017)RankCountryPopulation (2100E)
#1🇨🇳 China1.4B#1🇮🇳 India1.09B
#2🇮🇳 India1.38B#2🇳🇬 Nigeria791M
#3🇺🇸 U.S.325M#3🇨🇳 China732M
#4🇮🇩 Indonesia258M#4🇺🇸 U.S.336M
#5🇵🇰 Pakistan214M#5🇵🇰 Pakistan248M
#6🇧🇷 Brazil212M#6🇨🇩 DR Congo246M
#7🇳🇬 Nigeria206M#7🇮🇩 Indonesia229M
#8🇧🇩 Bangladesh157M#8🇪🇹 Ethiopia223M
#9🇷🇺 Russia146M#9🇪🇬 Egypt199M
#10🇯🇵 Japan128M#10🇹🇿 Tanzania186M

The populations of both India and China will begin to contract after the mid-century—and it’s predicted that China’s total population will drop by almost half to 732 million by 2100.

Led by Nigeria, Sub-Saharan Africa is the only region that will continue to see growth by century’s end. In fact, four of the top 10 countries in the world in terms of population count will be located in Sub-Saharan Africa.

Tightly Packed Together

One final thing to consider is how population density may look in 2100, with many more people clustered in the same areas. For example, Nigeria is dealing with a land area nearly 11 times smaller than the U.S.—but it will have more than double the population.

Country2100 Pop.Area (Millions, km²/mi²)Population Density per km² (mi²)
🇳🇬 Nigeria791M0.92M km² (0.36M mi²)856.3 (2217.7)
🇮🇳 India1.09B3.29M km² (1.27M mi²)331.6 (858.8)
🇵🇰 Pakistan248M0.88M km² (0.34M mi²)281.2 (728.3)
🇪🇹 Ethiopia223M1.10M km² (0.42M mi²)202.7 (531.0)
🇪🇬 Egypt199M1.01M km² (0.39M mi²)197.0 (510.1)
🇹🇿 Tanzania186M0.95M km² (0.37M mi²)196.3 (508.5)
🇮🇩 Indonesia229M1.90M km² (0.74M mi²)120.2 (311.4)
🇨🇩 DR Congo246M2.35M km² (0.91M mi²)104.9 (271.7)
🇨🇳 China732M9.60M km² (3.70M mi²)76.3 (197.8)
🇺🇸 U.S.336M9.83M km² (3.80M mi²)34.2 (88.5)

Regardless of how the future population count shakes out, it’s clear that these heavyweight countries will undergo significant transformation in the coming decades.

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