What is the Global Aging Initiative?
The world stands on the threshold of a demographic revolution with few parallels in humanity’s past. It’s called global aging, and in the coming decades it will subject nations around the world to extraordinary economic, social, and political challenges.
CSIS established the Global Aging Initiative in 1999 to raise awareness of the scope and magnitude of these challenges and to encourage timely reform. Over the past nine years, GAI has pursued an ambitious educational agenda. We have organized more than half a dozen major international conferences—in Beijing, Berlin, Brussels, Paris, Seoul, Tokyo, Washington, and Zurich—that have brought together world leaders to discuss common problems and explore common solutions. We have also undertaken cutting-edge research and published high-profile reports, including:
- The Graying of the Great Powers: Demography and Geopolitics in the 21st Century (CSIS, 2008) [Major Findings of the Report]
- The Aging of Korea: Demographics and Retirement Policy in the Land of the Morning Calm (CSIS and MetLife, 2007)
- Global Aging and the Sustainability of Public Pension Systems: An Assessment of Reform Efforts in Twelve Developed Countries (CSIS, 2007)
- Long-Term Immigration Projection Methods: Current Practice and How to Improve It (CSIS, 2006)
- Projecting Immigration: A Survey of the Current State of Practice and Theory (CSIS, 2005)
- Building Human Capital in an Aging Mexico (CSIS, 2005)
- Preparing for China’s Aging Challenge: The Demographics and Economics of Retirement Policy in the 21st Century [CD-ROM] (CSIS, 2005)
- The Graying of the Middle Kingdom: The Demographics and Economics of Retirement Policy in China (CSIS and Prudential Foundation, 2004)
- The 2003 Aging Vulnerability Index: An Assessment of the Capacity of Twelve Developed Countries to Meet the Aging Challenge (CSIS and Watson Wyatt Worldwide, 2003)
- Germany and the Challenge of Global Aging (CSIS and Nationwide Global, 2003)
- The Global Retirement Crisis: The Threat to World Stability and What to do about It (CSIS and Citigroup, 2002)
- Meeting the Challenge of Global Aging: Report to World Leaders from the CSIS Commission on Global Aging (CSIS, 2002)
- Global Aging: The Challenge of the New Millenium (CSIS and Watson Wyatt Worldwide, 1999)
Our publications make a difference. The 2003 Aging Vulnerability Index received 150,000 download-hits on the GAI website during the first two weeks after publication—and was the centerpiece of a joint CSIS-European Commission conference in Brussels, where it was widely hailed as a vital new source of information on the dimensions of Europe’s retirement crisis. The Graying of the Middle Kingdom, which was released in April 2004 at a joint CSIS-Chinese Academy of Social Sciences conference in Beijing, has been cited in the Economist, Financial Times, New York Times, and Wall Street Journal, distributed by the U.S. Embassy in China, and studied by the Chinese government as a potential blueprint for reform. GAI's most recent report, The Aging of Korea: Demographics and Retiremetn Policy in the Land of the Morning Calm, received prominent coverage in every major Korean newspaper. GAI remains optimistic that informed leaders and voters will confront the challenge of global aging. But it also warns that the problem is worse than is generally supposed—and that the time for corrective action is running out.
What is Global Aging?
For most of human history, until about a century ago, the elderly (people aged 65 and over) never amounted to more than 2 or 3 percent of the population. Today, in the developed world, they amount to 15 percent. By the year 2030, they will be around 25 percent. As recently as 1980, the median age of the oldest society on earth (Sweden) was 36. By the year 2030, the median age of the entire developed world is projected to be 45. In Japan and much of southern and eastern Europe, it will be over 50. As a whole, the developing world will remain much younger for the foreseeable future. Yet it too is aging—hence the term "global aging." Several major countries in East Asia and Latin America, including China, South Korea, and Mexico are projected to reach developed-world levels of old-age dependency by the middle of the century.
What Causes Global Aging?
Global aging is the result of two sweeping forces: falling fertility (fewer births per woman) and rising longevity (longer lives). The first decreases the relative number of young in the population, while the second increases the relative number of old. Worldwide, the fertility rate has fallen from 5.0 to 2.7 since the mid-1960s. In the developed countries, it has fallen to 1.5—far beneath the replacement rate needed to maintain a stable population over time. Meanwhile, since World War II, global life expectancy has risen from around age 45 to around age 65, for a greater gain over the past 50 years than over the previous 5,000. In the developed countries, life expectancy has risen from the mid-to-high sixties to the mid-to-high seventies, and in a few countries, including Italy and Japan, it has passed age 80. Other forces are also compounding the economic burden of rising old-age dependency: earlier retirement, rising health-care costs, inadequate personal savings, and declining levels of family support.
What are the Challenges of Global Aging?
The most predictable challenge posed by global aging is the mounting fiscal burden. Over the next thirty years, GAI projects that the rising cost of pay-as-you-go pensions and health-care benefits to the elderly is on track to push up government outlays by roughly 10 percent of GDP on average in the developed countries—the equivalent of an extra 25 percent of worker payroll on top of payroll tax rates that often exceed 25 percent already. Increasingly, governments will face the choice between economically ruinous tax hikes and politically impossible benefit cuts—or else be compelled to run widening fiscal deficits that undermine national savings and economic growth.
As workforces age and shrink, the developed countries may experience widespread labor shortages, which in turn will give rise to extraordinary new immigration pressure. At the same time, demographically contracting societies may have to invent new macroeconomic policy tools to manage a "no growth" business cycle in which total output declines from one normal year to the next. Global aging could also threaten the stability of the world financial system if some of today’s fast-aging capital exporters (like Germany and Japan) become deficit-ridden capital importers.
Beyond economics, the social and cultural consequences are even wider-ranging. How will public policy deal with the rapidly changing shape of the family (often, with fewer grandchildren than grandparents)? Will fears of population decline lead to a new pro-natalism? Will the rising average age of voters block effective political reform of public benefit spending? Will the rising average age of savers and investors affect risk-taking and entrepreneurship? In what way, finally, will global aging transform geopolitics—through its differential impact, by region, on population growth, average age, migration patterns, fiscal balances, capital flows, voter attitudes, and military spending? |
