The Relationship between Population Ageing and the Economic Growth in Asia

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, 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 2 different panels of countries; one Asian and another the from the oldest countries worldwide between 1970 and 2014. The analysis is based on the Auto Regression Distributed Lag models. The MG (Mean Group) and PMG (Pooled Mean Group) estimations are applied in this analysis. The Hausman Test is conducted to decide between the MG and PMG estimators. We find that ageing will negatively affect the economy in the long run. The growing number of youths will initially have a negative effect on the economy but would eventually lead to a positive growth in the future. The old age dependency ratio has yet to have affect the Asian economy but is expected eventually to impose a negative effect as seen in the oldest nations of the world.