Constructive Thoughts for the Day

Constructive Thoughts for the Day
Permalink : http://blog.nationmultimedia.com/kriengsak

Tuesday , June 3 , 2008

Asia’s window of opportunity is closing

Posted by Kriengsak , Reader : 2694 , 16:40:40 | Category : Economy

picture form - http://www.phuketgazette.com/thirdweek/images/p39-Barnett.jpg

I was invited to speak in Los Angeles, United States, at the Milken Institute Global Conference 2008, held by Milken Institute, April 28^th – 30^th. Milken is an independent research Institute focusing on research, ideas and innovations proposed for the business sector and for policymakers. Their research is aimed to improve the life quality and economic status of United States residents, as well as people the world over.

More than 3,000 people, including investors, businessmen, policymakers and leading scholars, from 50 countries worldwide participated in this conference. I was invited to be a guest speaker addressing the subject of, “An opportunity market analysis for Asia’s market in the future.” (Asia this time referring only to East Asia, South East Asia, and South Asia). My lecture focused on the demographic factor, and was part of an overall discussion on economic development in an unstable world.

Many decades ago, Asia’s economic expansion, otherwise known as “The Asian Miracle,” was a phenomenon that has since been widely analyzed. Population was one factor leading to economic expansion, and is what we call the “Demographic Dividend.”

From past to present, economic expansion in East Asia and South East Asia has been proportionately higher than for any other region of the world, due to falling birth rate and extending life expectancy which have changed the population structure, proportionally increased those of work-force age and decreased the dependency ratio. In addition, political and economic situations were then able to support an incremental increase to the number of employments. The per capita earnings of individual workers were also higher.

The application of the Chinese government’s One-Child Policy during the 1970s, for example, decreased the birth rate very quickly. In effect, this greatly increased the number of Chinese of work-force age, since many Chinese people were born before the policy came into effect compared to those born after the advent of the One-Child Policy. Moreover, the female labour force increased due to fewer child rearing tasks and responsibilities being performed at home. In addition, an economic policy revolution occurred in China, enhancing more investment and employment, and thus stimulating the expansion of China’s economy to reach highest growth rate in the world.

However, the demographic dividend is not a permanent phenomenon. It happens at just one moment of time. It is what we call a “Window of Opportunity,” a window that opens only to close at a future time. In other words, a wide proportion of the current work-force is becoming a population group that, as it gets older, will definitely expand the old age bracket, even though a replacement work-force age group will be coming up in the child/youth bracket of the population. The ratio of the work-force age group to the rest will decrease however, thus slowing productivity or an increase of income revenue per head.

The Window of Opportunity differs from country to country, depending on the speed of change to the population structure. In East Asia, the years of highest proportion for those of work-force age compared to the rest will be in 2010 – 2015. After that period, the proportion will flatten and finally move into an old age era. At any rate, Japan’s proportion of work-force aged population compared to the rest has decreased from the year 2000 – 2005. In South Korea, the highest proportion of population in this group will be in the year 2010, while it will be in the year 2013 for China. The European Community expects its population structure to change from now until 2025. For the countries of East Asia, their GDP will slow around 0.14 – 0.44 percent per year.

For South East Asia, the work-force age group proportion will be highest during the years, 2010 – 2030. In Thailand, this group will be highest in proportion during the years 2010 – 2012; the same goes for Singapore. But for the Philippines, the Window of Opportunity will be open until the year 2030. For these countries in South Asia, the work-force age group will peak to its highest proportion during 2015 – 2030. India and Bangladesh’s special window of opportunity will remain open until 2025 – 2030. (Table 1)

Table 1: The Window of Opportunity for some countries in Asia

Countries	Window of Opportunity	Countries	Window of Opportunity
Indonesia	1975 – 2025	Thailand	1974 – 2558
Malaysia	1970 – 2564	Bangladesh	1984 – 2573
Philippines	1971 – 2573	India	1980 – 2568
Singapore	1970 – 2558	Sri Lanka	1970 – 2559

Source: Navaneetham, Kannan. “Age Structural Transition and Economic Growth: Evidences from South and South-East Asia.” Asian Metacentre Research Paper Series No. 7 (October 2002).

Although the window of opportunity in some countries is closing, Asia still has an opportunity to gain the benefit of the second phase “Demographic Dividend”. This will be the phenomena of an accumulation of capital before entering the retirement years. Due to the increment of nucleus family and the longer life expectancy of the aged, people who are about to retire or even those aged people will be pushed to save as much money as possible for use when they are old and cannot work. For this reason, the economy will expand again.

In some countries, especially Singapore, the government has found the solution to this change in population structure. A long term savings system has been set in place, with the country’s education, public health, and science & technology also undergoing development. Thus, it is hoped that a new generation will be produced composing a better quality work-force, which although smaller in proportion, will be able to expand the economy.

In Thailand, there is not much preparation for this phenomenon. It is easy to foresee that if unstable politics continue, and long term policy still fails to prepare for the change in population structure, there will definitely be a poverty problem among older people. Moreover, this will also decelerate the long term expansion of Thailand’s economy.

Once that time has come, it will be very difficult to find an effective solution as the opportunity will have already passed us by.

Post comment | send mail to friend

Read comment

comment 6
Kriengsak date : 18/06/2008 time : 14.32
http://blog.nationmultimedia.com/kriengsak

Thank you for all good comments.

comment 5
Ebaytips date : 09/06/2008 time : 00.14
http://blog.nationmultimedia.com/ebaytips

What is opportunity? It's pure economics.

comment 4
wch date : 06/06/2008 time : 10.37

Therefore,
Asia's window is NOT closing but more technological adventures, will re-jubinate them.
I wanted to say this.
wch

comment 3
wch date : 06/06/2008 time : 08.33

The demographic change results in various changes as well.

Conventional belief about working age span dramatically changed. In Japan people start trusting 67 years of age is the retirement age.

It calls general overall medical review about human life expectancy and rejubinate biological strength of working agers.
It deals in the elongation of life expectancy as well by way of genetical improvement.

It also generate an new industry, Grey Industry that carters work information, tourism, sports, schooling, etc for the retired generation.
Household apparatus are re-designed to suit the grey generation.

What about Thais ?.

comment 2
wch date : 04/06/2008 time : 11.23

More serious impact by aging society would be the psychological depression that deteriorates the dynamism as well as the creativity.
Such society quickly loses the immunity to external changes and only concentrate on the social security measures that are only to please and comfort people.
So here the policy failures follow.

Japan becomes serious and it will be a good paradigm to watch on.

" We need new blood !"
by Ishihara, Tokyo governor.

comment 1
FelixQui date : 03/06/2008 time : 17.54
http://blog.nationmultimedia.com/FelixQui

I get the feeling that Thailand's time has already passed - sqaundered by ignorant and self-serving "puyai" who cared only about maintaining their own status, not developing education or anything else that lead to an educated and sophisticated population.
A pity.

Comment

"If you are not member, please register to comment.
It take only a few steps."

member sign in | member register

name :
email :
website :
comment :

		back top

<<	June 2008					>>
s	m	t	w	t	f	s
1	2	3	4	5	6	7
8	9	10	11	12	13	14
15	16	17	18	19	20	21
22	23	24	25	26	27	28
29	30