Population Aging and the Possibility of a Middle-Income Trap in Asia

What happens to Asia if it gets too old before getting rich? In this paper, the authors explore the possibility that Asia faces a middle-income trap due to demographic factors. They find that many economies in East, South, and Southeast Asia satisfy conditions for a demography-driven middle-income trap. Analyses show that support ratio—the ratio of workers to consumers—matters for economic growth. But as the economy grows, fertility declines, ultimately leading to low support ratios and a lower speed of convergence, creating conditions for economic stagnation.