The relationship between population ageing and the economic growth in Asia Free

Asia has witnessed robust economic growth since the 1960s. Today, emerging markets in Asia have managed to maintain rapid growth even when the world’s main economies suffer from debt and banking crises. However, declining total fertility rate (TFR), increasing life expectancy, continuous change of birth and death patterns, and increasing share of old age population in the age distribution in Asia exert significant pressure on its economies. This paper analyses the relationship between population ageing and economic growth using 7 countries in Asia between 1970 and 2014. The analysis is based on the bound testing approach of co-integration advanced by Pesaran et al (2001). We find a significant negative long run relationship between the old age dependency ratio and economic growth in especially in India and a significant positive long run relationship between youth dependency ratio with economic growth in Japan. This implies that a phase of accelerated ageing to be expected and requires suitable remedial policies to balance the negative effects of ageing.