Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/203376
Authors: 
Ha, Joonkyung
Lee, Sang-Hyop
Year of Publication: 
2018
Series/Report no.: 
ADB Economics Working Paper Series 536
Abstract: 
We present three conditions for a demography-driven middle-income trap and show that many economies in East, South, and Southeast Asia satisfy all of them. The conditions are (1) support ratio - the ratio of workers to consumers - matters for economic growth, (2) economic development accompanies more investment in human capital and lower fertility due to the quantity-quality tradeoff, and (3) current low level of fertility corresponds to too low support ratios for keeping up with the frontier economies in the long run. The panel analyses for 178 countries, among which 30 are ADB developing member economies, show that (i) and (ii) are satisfied for Asia with higher elasticity than others. As for (iii), we set up a dynamic model for simulations, showing that about two-thirds of ADB members have unsustainable level of support ratios, implying possibilities of a middle-income trap due to demographic headwinds in the future.
Subjects: 
demography
fertility
middle-income trap
national transfer accounts
support ratio
JEL: 
J11
O11
O53
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by/3.0/igo/
Document Type: 
Working Paper

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