Population Aging and the Possibility of a Middle-Income Trap in Asia
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This paper analyzes the possibility that Asia faces a middle-income trap due to demographic factors, and explores the link between fertility and the ratio of workers to consumers in the region's economic growth.
What happens to Asia if it gets too old before getting rich? In this paper, the authors explore the possibility that Asia faces a middle-income trap due to demographic factors. They find that many economies in East, South, and Southeast Asia satisfy conditions for a demography-driven middle-income trap. Analyses show that support ratio—the ratio of workers to consumers—matters for economic growth. But as the economy grows, fertility declines, ultimately leading to low support ratios and a lower speed of convergence, creating conditions for economic stagnation.