Demographics

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

Published

4 years ago

November 13, 2019

Ashley Viens

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

Comparing Population Pyramids Around the World

Population pyramids can show a country’s demographic advantages and challenges at a glance. See how different parts of the world stack up.

Published

7 days ago

June 1, 2023

Niccolo Conte

Visualization of population pyramids of China, India, U.S., and Japan compared

Understanding and Comparing Population Pyramids

Demographic data can reveal all kinds of insights about a population, from the country’s fertility and mortality rates to how certain events and policies have shaped the makeup of a population.

Population pyramids are one of the best ways to visualize population data, and comparing the pyramids of various countries and regions side-by-side can reveal unexpected insights and differences between groups.

This graphic uses population data from the United Nations to compare the demographics of some select nations and regions of the world, showcasing how much age distributions can vary.

Three Types of Population Pyramids

Although population pyramids can come in all shapes and sizes, most generally fall into three distinct categories:

Expansive Pyramids: Recognized by their traditional “pyramid-like” shape with a broad base and narrow top, expansive pyramids reflect a population with a high birth rate along with a high mortality rate which is most common in developing countries.
Constrictive Pyramids: With a narrow base and thicker middle and top sections of the pyramid, constrictive pyramids often occur in developed economies whose populations have low birth rates and long life expectancies.
Stationary Pyramids: These pyramids showcase an evenly distributed population across age groups, often found in newly-developed countries which have stable birth and mortality rates.

Each population pyramid is essentially a visual snapshot of a nation’s current demographic breakdown, shaped by fluctuating birth and mortality rates as well as changes to immigration and social policies.

Understanding the inherent risks associated with different pyramid types can help give insight into the challenges these populations face.

The Risks of Different Population Pyramid Types

Each type of population pyramid structure has unique challenges and advantages often characterized by the country or region’s current stage of economic development.

Populations with expansive pyramids, such as the one representing the continent of Africa, have the advantage of a larger youth and working-aged population, however this advantage can be rendered null if job growth, education, and health care aren’t prioritized.

Countries with constrictive pyramids like Japan face the challenge of supporting their outsized aging population with a diminishing working-aged population. While immigration and increasing birth rates can help in both the short and long term, due to the working population being outnumbered, countries with constrictive pyramids must find ways to increase their productivity to avoid potential declines in economic growth.

China and India’s Demographics Compared

After the world’s population reached eight billion people last year, 2023 brought a new population milestone as India overtook China as the world’s most populous country.

When you compare the two nations’ population pyramids, you can see how India’s population has a strong base of young and working-aged people compared to China’s more constrictive population pyramid that also features a higher median age.

This demographic difference is largely shaped by China’s one-child policy which since 2021 was loosened to be a three-child policy. As a result, China’s total fertility rate is around 1.2 today, in contrast to India’s total fertility rate of 2.0.

While India is set to ride the productivity boom of its large working-age population, the country will have to ensure it can keep its population pyramid stable as the majority of the population ages and total fertility rates continue to decline.