Demographic & Social Changes

If there is one prediction of the future that is certain, it is the fact that the world’s population is aging. Both developed and developing countries are experiencing aging populations, leading to shrinking populations of young people. Projections show that the majority of people in developed countries will be over 40 years old by 2030 – over 52 in Japan. While China has a younger population (averaging 35.4) today than the United States (37.4), by 2030 these averages will be 42.1 and 39.5 – China’s aging population is ‘catching up’ with the developed world.

With the exception of Japan, South Korea and Cuba, all aging countries are in Europe, and are the result of the combination of very high life expectancy and very low fertility rates. This creates challenges for social security systems and the financing of pensions.

Meanwhile, the most youthful are the developing countries of the Sub-Saharan region, and are the result of very low levels of life expectancy and very high levels of fertility. This creates challenges for educating the population and providing them with employment.

This means that the world’s population will plateau for the first time in human history, creating an insufficient labour force to support old-age pensioners. With the labour pool shrinking, the only way to increase economic growth is through continuous investments. The past shows that productivity significantly increases in industries that are not protected, which means that governments need to introduce more liberal competition prices.

Related to this growth and change are the ways such populations are living, with city and town populations growing – a process known as urbanisation. Greater

urbanisation appears to have a positive effect on GDP development, and countries with the highest urbanisation ratios are showing the greatest GDP per head of the population. This is probably the reason why China, with an urbanisation ratio of 50 per cent in 2010, is keen to push it to 60 per cent in the next decade, giving its cities more importance in economic development.

Megacities – urban areas with populations of 10 million or more – have not been driving growth for the past 15 years, and are expected to account for only 10 per cent of global growth in 10 years’ time, as opposed to 16 per cent today. However, countries with high populations and levels of urbanisation tend to have the strongest GDP growth.

Through our engagements whether in facilitation workshops or consulting work we seek to change the culture in how we work and perform at Alpha plus x. Strategies in organisations ought to be relevant to enable personalisation. We believe if you do not personalise you cannot be meaningful and as a result you are unable to create deep connections between the products and customers.

At present, and importantly for future development, the top-performing middleweight cities outperform most megacities in terms of household growth and long-term income potential, making them attractive prospects for businesses. In all, globally, 577 such fast-changing cities will play a much more important role in terms of economic contributions.

The two major implications for urbanisation are the boost in consumption resulting from the higher populations, which in turn creates more income and fuels further consumption, and the creation of clusters around cities, each with distinct characteristics with regards to wealth, consumption profiles, consumer attitudes and market dynamics, which creates new market opportunities due to the proximity to regional markets, allowing companies to easily reach new customer bases in smaller cities and rural areas. For example, clusters around 14 cities of India will be able to access 40 per cent of the Indian market by 2030.

Questions To Ask

How could the aging of your customers affect your products and services in the near future?

Will your business need to change as the number of major cities and city dwellers increases?

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