African countries move toward fiscal consolidation
Stung by falling commodities prices and growing donor fatigue, many African countries are expanding their tax bases. While at first blush this looks like a good move to liberate their economies from aid and resource dependence, it could also be a recipe for reducing investment and tamping down economic growth.
GIS Dossier: How demography shapes geopolitics
Though demographics has always had an important effect on geopolitics, big changes in population structure have become more frequent and had a wider impact as the world has become more globalized. In East Asia, populations are aging, while in Africa they are growing younger. Huge waves of migration are causing political upheaval. In this edition of the GIS Dossier, we review our experts’ analysis of demographic trends across the globe and their predictions for how they could shift geopolitical tides.
GIS Dossier: Shinzo Abe’s Japan
Shinzo Abe is not popular, but this consummate political insider has become just the second prime minister in Japan’s history to win three general elections. He managed this feat by skillfully juggling factions in the dominant Liberal Democratic Party, stirring life into Japan’s stagnant economy, and pledging vigorous leadership in the face of a nuclear-armed Korea. Can Mr. Abe turn around a country widely seen to be in irreversible decline?
Unconventional scenarios for Japan’s demographic future
Recent demographic projections for Japan paint a dark future, with the loss of some 30 percent of the population within the next 50 years. The situation is so grim that unconventional scenarios might offer the only solution.
China’s coming pension crisis
China’s population is aging rapidly, a trend that will put huge strain on its economy and pension system. China is not the only country with this problem, but it is much poorer than many of its Western counterparts facing similar challenges. The government is working on measures to address the problem, but these will ultimately prove to be too little, too late.
Europe’s future depends on investment in innovation
Europe has become very risk averse, focusing on protecting the privileges that have already been accumulated. Regulations meant to provide protection in case of failure sometimes go too far, limiting upside potential. This exchanges freedom for security, and blocks creativity and innovation. But only innovation can help Europe maintain its global competitiveness.
Japan is trying another fiscal stimulus to make Abenomics work. The central bank appears to have given up, admitting in its latest quarterly report that monetary measures will not suffice to get inflation back to the 2 percent target. But the real culprit may be institutional inertia, which has kept the government from following through on promises of structural reform.
Central European states face dual fiscal challenge
By the beginning of the next decade, Central European countries will face two tough fiscal challenges. First is the risk of losing access to generous EU funds, which today support infrastructure investments. Second is the fiscal burden of health-care spending, which will rise rapidly as their populations age. These problems can be solved with gradual reform and careful planning – things that can rarely be counted on in politics.
Central Europe gropes for ways to deal with bad demographics
Central Europe’s population is shrinking faster than any other region in the world. To avert an economic disaster, Poland is trying a bazooka-like blast of cash grants to needy families. Experience suggests it won’t work.