Ageing Asia: A New Challenge for the Region (seminar)

Seminar examines the impact of ageing on Asian economies, urges immediate responses to ageing’s challenges

Despite differences in the speed and timing, many countries in the region are ageing, and critical reform measures need to be taken soon, before ageing takes its toll in developing countries, ADBI’s Dean Masahiro Kawai told participants at a seminar on Ageing Asia today.

"For far too long we have tended to focus on high-income economies in the region like Japan, and the newly-industrialized economies - Republic of Korea; Hong Kong, China; Taipei,China; and Singapore - that are far advanced in the ageing curve. But many of the middle-income developing countries and a few low-income developing countries in the region are on the same demographic path,” he said. He emphasized the importance of bringing these developing countries into the discussion about ageing as soon as possible, as many of these countries are ageing faster than they are developing.

Dean Kawai also urged developing countries to start undertaking critical reforms in response to ageing as soon as possible. "Given the speed at which ageing is occurring in the region, difficult policy choices will have to be made soon, both at the national and regional levels,” he said. While recognizing that many of the policy reforms needed to tackle ageing - such as raising the mandatory retirement age, restructuring pension benefits, increasing taxes, or allowing free movement of goods, services, capital and labor - are fraught with controversy, Dean Kawai cautioned participants against putting off reforms until it is too late. "We start to think about ageing as a "looming crisis,” but I truly believe that ageing only becomes a crisis if we allow ourselves to be caught unprepared, if we lack the foresight and the courage to refashion our policies and institutions to deal with its consequences," he added.

Speaking on the impact of ageing on regional development, Professor David Canning of Harvard University echoed Dean Kawai’s urgent call and emphasized that the underlying message for policymakers is one of change. "Ageing is a good, we’re living longer, healthier lives,” Professor Canning said, "but we need to change what we do as individuals and as societies, so that we can take advantage of ageing.” He warned that unless critical reform measures were taken soon, many developing countries in the region would face the prospect of population ageing at low levels of income.

In addition to discussing policy responses at the national level, panelists at the seminar also explored measures that could be taken at the regional level, as economic interactions are also expected to take place among countries that are economically integrated but ageing at different speeds. Dr. Ralph C. Bryant of the Brookings Institution described how the domestic effects of ageing could be influenced by cross-border transactions. He emphasized that failure to take into account the macroeconomic effects working through exchange rates and cross-border transactions could lead to an inaccurate assessment of the net impacts of demographic change. "Macroeconomic interactions in response to heterogeneous demography can alter the relative sizes of economic activity in nations and regions,” he said, and explained how outputs, capital stocks and consumptions could be "redistributed” across borders. "Such redistributions can have major consequences for the relative welfare of nations,” he added.

Meanwhile, Osaka University Professor Charles Horioka further illustrated the importance of taking a wider perspective in his presentation on the impact of ageing on domestic and regional savings. He noted that while ageing is expected to lead to a decline in national saving rates, the prospects are less worrisome at the regional or global level. He stated that since the population ageing process is proceeding at different speeds in different countries, declines in household and private saving rates can be expected to begin at different times and proceed at different speeds in different countries. "So there is no danger of a region-wide or worldwide collapse in saving rates in the near future,” he said.