The impact of population aging on economic growth in Asian countries

Abstract

The study aimed to analyze the impact of population aging on economic growth in Asian countries from 1995 to 2022. The research team employed the Feasible Generalized Least Squares (FGLS) model with panel data comprising 12 countries, collected from secondary sources - the World Bank. The results revealed that the main variables representing the impact of population aging, namely the old-age dependency ratio and the youth dependency ratio, had differing effects on the countries' economic growth. Specifically, the old-age dependency ratio negatively impacted economic growth, while the youth dependency ratio was a driver of economic growth in these countries during the 1995-2022 period. Additionally, control variables such as trade openness, FDI inflows, government expenditure ratio, savings rate, and inflation were incorporated into the model. These variables largely fulfilled their expected roles in the estimation process, satisfying the research hypotheses. Based on the model estimation results, the authors proposed policy implications to mitigate the adverse effects of the increasing old-age dependency ratio on the economies of the studied countries. Specific policies and programs could be implemented to support the elderly in enhancing their health and healthcare access. Government expenditure programs to support their social welfare were also suggested, along with creating conditions for older adults to continue participating in the workforce. This research enhances our understanding of the complex relationship between population aging and economic growth in Asian countries. It also contributes to the academic literature on demographic shifts and economic performance, offering empirical evidence to inform policy development to address the challenges posed by population aging in Asian economies. It highlights the importance of developing comprehensive strategies to address the challenges posed by an aging population while leveraging the potential of the younger demographic for sustained economic development.