2A Window of Opportunity

Publication Details

In many countries in Asia, rapid population aging is occurring at the same time as dramatic economic and social developments are transforming much of the continent. Worldwide economic restructuring and the growing interdependence of countries and regions around the world have created a new international economic order, one where the rates of growth of industrial production in Asia surpass those in all other regions.

Increasing urbanization and rapid economic development tend to go hand in hand with higher rates of rural-urban migration, changing patterns of labor force participation, and other major social changes. All of these changes raise concerns about the possible weakening of the traditional family-value system of responsibility that historically has provided care and retirement security for the older population. In addition, the current older population in Asia is very much a transitional generation: with life expectancy rising and fertility falling, future cohorts of elderly can expect to have smaller numbers of living children—and fewer sources of familial support—than the current generation of elderly. In the face of such rapid social and economic changes, there is a clear need to better understand the prevailing social conditions of the older population and the ways in which demographic and economic transitions will affect longstanding societal and familial norms. Yet partly because there were far fewer elderly in the past, in many Asian countries the scientific basis for formulating evidence-based policy for an aging population is relatively underdeveloped.

Within a few decades, steadily increasing life expectancies and lower fertility rates in Asia will produce major increases in the share of populations aged 65 and older. The growth of the population aged 80 and older will be even more rapid. The result will be societies that look much different from those of today. Health care systems will be challenged by the large and growing size of the older population, whose ailments and diseases are much different from those of younger people. Pressure will increase on agencies that offer social services and on pension systems. And traditional family support systems will be stressed both by increasing mobility, as more and more young people move from rural areas to cities or foreign destinations, and by the changing ratio of the elderly to the young.

By historical standards, the demographic transformations are taking place in Asia at a rapid pace. In the United States, for example, it is expected to take approximately 70 years for the percentage of the population aged 65 and older to rise from 7 percent to 14 percent; in comparison, this doubling is expected to occur in only about 25 years in China, India, and Indonesia.1 In contrast to Western Europe and the United States, many Asian countries are “growing old before growing rich.”

Responding to these challenges will be one of the most difficult tasks facing governments in the first half of this century—and the longer they wait, the more constrained their choices will be. For example, in choosing whether to prefund public pensions or fund them through a “pay as you go” mechanism, it is important to recognize that the policies that involve the accumulation of assets (such as through programs that mandate or encourage private saving for retirement or elder health care) will take a long time to mature. More generally, relatively gradual adjustments are much easier for countries—especially low-income countries—than more sudden policy changes. Fortunately, governments still have time to determine the best ways to respond to the unfolding demographic transformation.

International organizations (such as the United Nations2) and national governments in the region3 are increasingly expressing concern over these issues. However, taking full advantage of the available window of opportunity will also require a greater and deeper understanding of important characteristics of the current and future elderly—such as their family relationships and living arrangements, health needs, labor force opportunities, and levels of income and saving. To face the challenges ahead, new data will need to be collected, new research programs designed and undertaken, and greater resources devoted to research that relates to the older population.

Asia is an extraordinarily vast and heterogeneous region whose countries span the spectrum of wealth, economic development, and urbanization. In some parts of Asia, the rates of economic growth have been both spectacular and truly profound. Economic development in Pacific Asia has transformed the region and many of its cities at a speed and on a scale never before witnessed. Yet in many other parts of the continent no significant economic development has taken place. Doubtless, the effects of and the policy responses to population aging will be quite different across these various contexts.

Although an aging population is a matter of interest throughout much of Asia, this report pays particular attention to the challenges that will be faced by China, India, Indonesia, and Japan. These countries encompass the diversity of Asia and contain a large percentage of its total population (as well as a large proportion of the world’s older population). In addition, they represent the range of aging trends that Asia will experience over the next half-century—from a heavily urbanized country with a mature economy and a population that is already relatively old (Japan) to a predominantly agrarian country with a still-developing economy and a population that will stay relatively young for several more decades (India). These countries are also characterized by considerable internal social, economic, and demographic diversity, as, for example, between the northern and southern states of India, the coastal and interior provinces of China, and the eastern and western parts of Indonesia.