Age Demographics

Decent Essays
MGMT 450: Exam 1
Age Demographics and Its Effect on the Global Economy

Humanity as a whole is growing exponentially and this growth is anything but consistent. Many nations will be experiencing population decreases while other experience intense population growth. The impending impact of that fact is scaring a multitude of countries on the international market. In this essay I will answer three of the major pressing questions facing the world as they try to prepare themselves for this drastic change. In developed nations, corporations and governments alike are realizing that with an aging population there will be more stress applied to social programs especially those pertaining to retirement. This stress is stemming from a shrinking labor
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While this decision is logical for the individual, if a large amount of people follow this action it can be harmful to the economy. A shrinkage in the consumer market will lead to a loss in authoritative power in free trade negotiations and it can hurt many corporation’s bottom line. Governments will have to be proactive and make investment more attractive by lowering interest rates. This is easier said than done since many developed nations have barely raised interest rates since the 2008 recession. In this situation businesses have a more viable defense to this potential decrease in disposable income. They can shift their focus off some goods and services and focus on others; for example, technology companies may want to focus research and development on robots that could take care of the elderly.
Unlike its rich counterparts the US will experience a constant if not increasing growth in its demographics. Meaning that while the US will experience the difficulties described earlier it will not be to the same degree as countries like South Korea and Italy. This trend will provide the US more time to reinvent its current social programs and prepare its next wave of workers for the new jobs that will enter the global market. If the US is able to capitalize on this
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One way they can lessen the blow is to privatize their pension funds by encouraging businesses, through tax breaks most likely, to absorb the cost of retirement. As mentioned earlier, these governments may also want to increase the retiring age. Another suggestion would be to assess, the idea of encouraging immigration. While this may be the most politically controversial suggestion it may also be the most effective way to support an aging workforce. An increase in immigrants can compensate for the decrease in the working-age population. This course of action may also be one of the most viable options because those in developing nations see countries like the UK as a place of endless opportunity for social ability and are already motivated to move. While none of these strategies can completely impede the challenges of a shrinking workforce, they will certainly lessen the economic experienced blow experienced by both companies and
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