Links Between Economic and Population Growth

By September 5, 2007Education and Training

Newspapers and government agencies spew out countless data that measure the economy nearly every day: employment, productivity, wages, inflation rates, GDP and so on. Not so frequently is there a forecast on population growth and what that means for the long-term growth of the economy.

Dr. Tom Duesterberg has recently penned a very insightful essay that discusses some of the linkage between the economy and demographics. He is the president of the Manufacturers Alliance/MAPI, an executive education and manufacturing research group, and also a trustee of The Manufacturing Institute.

In his article, which appears in the September issue of Industry Week, he points out the “indisputable” link between population and the global economy.

The conventional wisdom today is that a country’s long-term potential growth is roughly equal to population plus productivity growth. The United States, for instance, is expected to grow about 3% per year, as population expands at 1% and productivity at 2%. A look at current population trends around the world yields some important insight into future growth patterns.

Dr. Duesterberg’s article summarizes some of the scenarios for other parts of the world in 2030 based on United Nations projections, such as:

  • Europe’s population will be 3.3 percent lower then than it is today;
  • The US population will grow only slightly slower than the world average due to a higher fertility rate here and immigration;
  • Russia’ future is the observe, with a 14 percent drop in population by 2030 due to declining longevity and outmigration;
  • India and China will still run neck-and-neck with 1.5 billion (or nearly so) in 23 years.
  • These patterns are already in place and so the projections to 2030 are based on today’s realities. Take a look at Dr. Duesterberg’s article and the UN data it is based on. It all has implications for the future strength of US manufacturing and the need for the skilled workers to operate increasingly hi-tech facilities.

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