New economic challenges are emerging. Population aging will have dramatic effects on social entitlement programs, labor supply, trade, and savings around the globe and may demand new fiscal approaches to accommodate a changing world.
Marked differences exist between regions in the number and proportion of older persons. In the more developed regions, almost one-fifth of the population was aged 60 or older in the year 2000; by 2050, this proportion is expected to reach one-third. In the less developed regions, only 8 per cent of the population is currently over the age of 60; however, by 2050 older persons will make up nearly 20 per cent of the population (UN Department of Economic And Social Affairs, Population Division. 2002).
While today’s proportions of older people typically are highest in more developed countries, the most rapid increases in older populations are occurring in the less developed world (National Institute on Aging 2007).
Most of the more developed nations have had decades to adjust to this change in age structure (Figure 1). For example, it took more than a century for France’s population age 65 and over to increase from 7 to 14 percent of the total population. In contrast, this same demographic aging process will occur in two decades in Brazil (National Institute on Aging 2007).
In response to this “compression of aging,” institutions must adapt quickly to accommodate a new age structure. Some less developed nations will be forced to confront issues, such as social support and the allocation of resources across generations, without the accompanying economic growth that characterized the experience of aging societies in the West. In other words, some countries may grow old before they grow rich (National Institute on Aging 2007).