To understand how much the demography have counted in economic progress Of the last two centuries, just look at the numbers. At the beginning of the 19th century, there were approximately one billion people on Earth; today, we number over eight billion. This unprecedented expansion has accompanied the Industrial Revolution, increased consumption, the growth of global GDP, and the development of financial markets.
But how much of the economic progress of the last two hundred years was driven precisely by the fact that we were ever more numerous? And above all, what will happen now that this long phase seems to be coming to a close?
This is the question from which the strategist of Kairos Partners Sgr starts Alessandro Fugnoli in the latest episode of his podcast “On the 4th Floor,” dedicated to the topic of demographic decline.
According to Fugnoli, demography belongs to the category of “large slow forces": those phenomena that don't cause immediate shocks, but which over time end up profoundly changing the economic landscape. A financial crisis explodes, a war shifts the balance of power in a matter of months, while a demographic shift takes decades to become evident. Precisely for this reason, however, when it reaches a turning point, it becomes difficult to ignore.
After two centuries of growth comes a demographic reversal
Il decline in fertility Globalization began in the 1960s, but the population has continued to grow due to the inertia typical of demographic processes: even when births decline, a still young population continues to grow for many years. Now this dynamic is changing. According to the main projections, around the 2050 the world could start to to depopulateSome countries have already taken this path: Japan, South Korea and Russia are examples of economies that have long been experiencing the effects of a shrinking population.
For the strategist at Kairos Partners Sgr, the key issue isn't just how many of us there will be, but the relationship between generations: how many workers will be available to support an increasingly aging society.
Fewer workers, fewer consumers, more pressure on public finances
Fugnoli recalls the reasoning of the American economist Nicholas Eberstadt: how will it be a world with fewer workers, fewer taxpayers, fewer savers, fewer entrepreneurs and fewer consumers?
For decades, advanced economies have benefited from what economists call “demographic dividend”, that is, a population structure favorable to growth: many workers, increasing consumption, and sustained demand for goods, services, and housing. Now that advantage could turn into its opposite.population ageing pressure on pension and healthcare systems will increase: in 2050, the number of people over eighty in the world could reach around 425 million, with significant consequences for public budgets.
More children, more immigrants, or more technology: the three possible answers
Faced with this transformation, according to Fugnoli, governments are attempting three main approaches. The first is birth incentives. This is the most intuitive solution, but also the one that has proven most difficult: bonuses and economic support can help families, but they are unlikely to be able to change profound social trends, such as the postponement of births or changes in family models, on their own.
The second option is immigration, primarily chosen by Europe. The arrival of new workers can at least partially offset the decline in the working population and maintain a more stable labor market. However, this response also has political and social consequences, and not all countries are willing to adopt it to the same extent.
The third path is the one chosen in particular by Japan and China: focusing on technological innovation. And it is precisely here that Fugnoli identifies the most interesting point: technology could become the factor capable of replacing the old demographic engine.
The paradox: Fewer people could mean more productivity
This perspective makes demographic decline less necessarily negative than the traditional interpretation. A recent study by MIT researchers, including the Nobel Prize winner Nobel Prize winner Daron Acemoglu, in fact, argues that a decreasing population does not automatically have to coincide with an economic decline.
History offers some significant examples. After the great demographic gaps caused by the world wars, innovation accelerated and contributed to economic reconstruction. Japan is also an interesting case: despite a declining population, the country continued to develop advanced technologies and increase productivity.
The interpretation proposed by Fugnoli is therefore that of a future characterised by "fewer people, but more productiveA dynamic that could also have important effects on the labor market. When workers become more scarce, their power contractual it may increase because companies have greater difficulty finding qualified personnel.
Here too, history offers a precedent. After the plague of the fourteenth century, the sharp reduction in the European population increased the value of labor and improved the position of workers for several decades. Of course, the current context is very different, because today there is a completely new element: theartificial intelligence.
Artificial intelligence itself represents one of the great questions of the future. On the one hand, it can replace some human activities and reduce the need for labor in certain sectors; on the other, it can become the tool that allows economies to function even with a smaller workforce. This is the crucial balance to be observed in the coming years: will the substitutive effect of automation prevail or the expansive effect of productivity? For Fugnoli, the answer will be crucial to understanding what kind of growth a world with fewer people can achieve.
Markets pay little attention to demographics, but they will have to adapt
As often happens with major structural changes, markets tend to react late. Investors pay close attention to immediate events, while demographics work over the long term. But these very slow forces, Fugnoli points out, are what ultimately shape the economic landscape.
The effects will be different depending on the characteristics of individual countries. Real Estate MarketFor example, economies that manage to offset population decline through immigration could maintain a stronger housing demand. In countries that experience population decline without new arrivals, supply could gradually outstrip demand, with consequences for housing prices. bond market the central theme will be that of sustainability of public debtGovernments with older populations will in fact have to manage greater social and health expenditure, with the risk of resorting to deficit containment policies, financial repression or inflation to reduce the real burden of debt. stock market Some sectors linked to traditional consumption could instead be affected by demographic change, while technology, robotics and artificial intelligence could benefit from new investment flows.
Technology has accompanied population growth. Now it will accompany decline.
Fugnoli's conclusion is less pessimistic than the theme might suggest: the demographic decline it will be a profound transformation, but not necessarily an economic decline.
For two centuries, the world has had more people, more workers, and more consumers. In the next century, it will likely have to rely less on quantity and more on quality, less on the number of individuals and more on each individual's ability to produce value. technology, which has accompanied and made possible the demographic expansion of the last two hundred years, could also accompany the next phase, helping economies to adapt to a different world.
A world with fewer people, therefore, will not necessarily be a poorer world. It will simply be a world with new economic rules.
