by Joergen Oerstroem Moeller
The problems associated with a global population of perhaps 11bn by 2050 are already beginning to loom large, but Joergen Oerstroem Moeller warns that the real challenges will come when by mid-century populations begin to shrink and economic growth becomes constrained
Most policymakers are becoming aware that by 2050 the global population will be somewhere between 9bn to 11bn; but most are also uncertain as to the implications of this. Asia is set to account for 5.2bn of this, and at the other end of the scale there will be only some 664m people living in Europe. The big surprise, with strong repercussions for Europe, is that Africa with 1.9bn people will be the second most populous continent and the only one whose population will still be growing. European policy analysts tend to bemoan Europe’s shrinking weight in the world, yet when the global population begins to fall after 2050, the fact is that Europe will be exceptionally well placed to derive benefit from its long experience of managing within the constraints of low population growth and limited resources.
If the rise of Asia can be taken as the economic paradigm of today, the population trends for tomorrow augur a shift of much of the world’s low-cost, labour-intensive manufacturing from Asia to Africa, right on Europe’s doorstep. Recent history and contemporary developments have shown that since 1950 first Japan then several smaller Asian countries and then China, India, Pakistan and Bangladesh have profited from moving into the so-called demographic window that favours economic development when a large proportion of the population is aged between 15 and 64.
Assuming that basic economics will not change, this means the world’s engine of growth will move from south Asia to Africa from 2030 to 2040. Such a shift will not only favour Africa, but also neighbouring countries and notably Europe.
Africa’s rich resources will help its rise. For several years China has been buying raw materials from Africa, and recently Brazil began doing the same through its iron ore company Vale. These new investors are seeking either to dominate the global market or to secure supplies for their own manufacturing industries. So far this has brought mutual benefits, but when manufacturing starts to shift to Africa, stimulated by the demographics, Asia and perhaps Latin America too will not need so many raw materials, while Africa may be unhappy to have handed control of its resources to outsiders.
European countries will be well served by a panoply of treaties and partnerships with Africa, while present-day African scepticism, sometimes accompanied by resentment nourished by colonialism will hopefully have been consigned to history, opening the door to a fruitful European-African relationship.
But it is by no means certain that future economic development will follow the pattern we have become accustomed to. The era of plenty that has governed development over the last 200 years seems likely to be replaced by an era of shortages. Scarcities of food, commodities, energy, oil and water, and the world’s newfound awareness of the need to protect our environment, all impose constraints on economic growth. So far these have spilled over into rising prices, but in the future a much more determined effort to cope with scarcities will be needed. Broadly speaking, the world will move from a fairly smooth distribution of benefits, flowing from economic growth based upon cheap commodities, to the need to share the burden of coping with shortages.
This calls for a totally new economic paradigm, because today’s conventional growth and distribution theories all focus upon distributing more. The first case of what to expect on a global scale was seen at the climate change summit in Copenhagen last December, when the world’s national political leaders failed so abysmally to grasp the issue confronting them.
The impact of the new constraints will be felt differently across the globe, depending on population densities and population growth, industrial structures, infrastructure and social fabric. Europe has already experienced some of these problems because of its low population growth. Yet the interesting and encouraging fact is that Europe has nevertheless been doing well in the sense that its annual per capita economic growth over the last 20 years has at about 1.5% been about the same as the United States. The inescapable truth is that higher growth in the U.S. is not due to a more efficient economic structure but almost exclusively to its growing population.
European attitudes towards using resources – as exemplified by the EU’s Lisbon strategy for improving competitiveness and its policies on climate change – display a much stronger awareness of the problems of running an economy with little or no population growth, including Europe’s willingness to focus on quality of growth and the need to squeeze the highest amount of the available resources.
Europe’s social structure is much more close-knit than that of the United States and that makes it easier to implement burden-sharing. People will seldom be attracted by sharing the burden of living within constraints, but their willingness to accept it depends to a large extent upon whether or not they regard it as fair. The United States, with a highly segmented population, is far less suited to this than are European societies, and the growth of the U.S. population from around 300m now to some 400m by mid-century will not make it easier.
Infrastructure in the United States also poses barriers to restructuring the economy. Major U.S. cities are laid out on the assumption that people use their own cars to get to work, making it very difficult if not impossible to introduce taxes on petrol, however necessary they may be. If such taxes were to be introduced, employees would immediately demand higher wages to compensate for higher costs, which would erode U.S. competitiveness.
The shift from an era of plenty to an era of burden-sharing will favour Europe. In fact, the winners in the decades to come will be those countries accustomed to living with a stable population, modest growth and tight control over their use of resources. Europe is the only part of the world that currently fits that description.
This leads to a further observation. It is likely that not long after 2050 populations will start to fall in all major regions, including Africa. The world will then face for the first time face the imperative of managing economies and societies with shrinking rather than growing populations. History tells us that economic growth depends on populations rising, but this is precisely the condition we will no longer be able to count on. Add to this the need for burden-sharing in an era of scarcities and it is not difficult to see that a whole new economic model is waiting to be invented. A simple calculation shows that if consumers around the globe imitate the American and European mass consumption pattern over the next half-century, societies will implode. The resources are simply not there.
Many arguments would lead one to expect that this new economic and social model will be crafted in the large Asian countries under the incentive of strong population pressures. Yet Europe will still have some cards up its sleeve, because along with Japan it is already the first region that has learnt to come to grips with the constraints imposed by a stable population on economic development and social stability.
Many other countries are beginning to look at consequences of having a stable population and they do not like what they see. There are indications that China may abandon or modify its one child policy on the assumption that population growth is necessary for economic growth, but while this may postpone the quandary, it will not make the problem go away. Sooner or later, the global population will stabilise and then begin to fall. This will become the determining factor for mid-21st century society.
Whether we like such a situation or not is largely irrelevant. First, it seems certain to happen. Second, if we try to reverse the trend – supposing we can, which is doubtful – this would trigger a disastrous scramble for resources that will not be there.
Europe’s contribution to future global development, in keeping with its civilisation and cultural heritage, might be to help the world face the coming era of constraints by marshalling the intellectual power and political will be needed to shape an economic and social model that suits the world as it is going to be, rather than trying to force the world to conform to the outdated model of today.
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