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sli governments must address ageing

In the latest edition of SLI’s Global Perspective series, senior international economist Douglas Roberts notes that demographic forces play a significant role in economic development.

Roberts highlights the US, which benefited from a surge in its working-age population following the post-second world war “baby boom”, but which faces increased costs of care for the elderly and lower funding. China, Japan and Europe all suffer from similar rises in old-age dependency.

While it is not too late for governments to “recognise the fault-lines and act decisively”, Roberts argues that politicians often ignore demographic challenges because of their slow-moving nature. In addition, the politically-powerful baby-boomer generation is likely to resist pension reform.

France’s administration, which faces a pension deficit of €20bn by 2020, has already bowed to such pressure, for example. “Nevertheless, they and other governments in similar positions are fighting a losing battle; the demographic tide is not set to ebb any time soon,” Roberts writes.

A PDF of the report can be downloaded from the Standard Life Investments website, here.

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