GIS Dossier: How demography shapes geopolitics

A Chinese family with one child shops for lamps
Even though China scrapped its one-child policy in 2015, most urban Chinese couples still find it too expensive to opt for two or more kids (source: dpa)

GIS Dossiers aim to give our subscribers a quick overview of key topics, regions or conflicts based on a selection of our experts’ reports since 2011. This survey is devoted to demographic challenges across the globe, from aging societies, to controversies over immigration, to the difficulties for governments dealing with rapidly increasing, youthful populations.

The compositions of societies and how their demographic structure changes have always had an impact on geopolitics. But as globalization increases and it becomes easier for people to move from place to place, these factors have taken an outsized role in influencing how countries interact with each other. The aging of Japan’s society could both make it more nationalist and more active internationally, while a predicted decline in China’s population could thwart its ambitions to become a wealthy country.

Struggles within and among European countries over immigration have hamstrung the continent and diminished its influence. The Trump administration’s attempt to halt immigration could backfire, while in Africa, many governments will struggle to keep pace with growing populations calling for more economic opportunity.

Japan: resistance to immigration

Japan has become the poster child for demographic decline. It is aging fast: already more than 27 percent of the population is 65 or older, and this share is expected to rise to 40 percent by 2050. As GIS expert Dr. Stefan Lippert pointed out in 2011, the first problem Japan will need to solve is how to care for all of these elderly people. The country is already experimenting with a mix of answers, including building robots that can monitor vital signs and help with daily tasks. But in Japan’s homogeneous society, bringing in foreign elderly care workers is out of the question.

Japan’s resistance to immigration presents a big problem not only because its population is aging, but also because it is shrinking. The country’s total population could fall below 100 million by 2048 from 126.4 million today. The government has implemented policies to try to boost the birth rate, but the only solution that could really make a difference, Dr. Lippert posited, is large-scale immigration.

Most Japanese think a significant number of immigrants would make Japan a less comfortable place for them

However, immigration is simply very unpopular in conservative Japan. Surveys show that between 50 and 60 percent of Japanese do not think their country should accept more foreign workers. “The common line of thinking is that a significant number of immigrants would make Japan a less comfortable place to live for Japanese people,” Dr. Lippert wrote.

Two scenarios follow. In the first, Japan would accept only very few immigrants, and its population would decline to around 43 million within the next 100 years. In the second, Japan would accept about 200,000 immigrants per year and the birth rate would recover to about 2.1 by 2030, remaining flat thereafter. Japan’s population would still shrink, but would level off at about 100 million in the second half of this century.

Japan: social and geopolitical tensions

These demographic shifts are accompanied by some unexpected social and political trends. Younger Japanese, for example, have not grasped the globally minded entrepreneurial spirit of their grandparents and have returned to traditional ideals. For example, they want even more than those who have come before them to work for the same company until retirement. Perhaps surprisingly, young Japanese women have a growing preference for becoming housewives. Their country’s gloomy demographic outlook is one of several factors that have convinced them that the world is far more uncertain than that of their parents or grandparents.

This despondent outlook – taking hold not only among Japan’s youth – could also lead to tensions with the country’s neighbors. In July 2017, GIS expert Urs Schoettli wrote that “there must be a lasting change in the national mood,” before the Japanese will decide to have more children. And now that China is flexing its muscles, “it is certainly not desirable to suffer a crisis of national confidence.” Prime Minister Shinzo Abe has set out to build national pride back up.

Elderly Japanese attend an antinuclear protest in Tokyo
The elderly are making up an increasingly large share of Japanese society. The question is who will care for them. Opening up to immigration is out of the question (source: dpa)

The main danger, Mr. Schoettli said, “is that in trying to shake the country out of its lethargy, the government may play the nationalist card with too much vigor.” Visits by prominent politicians to controversial memorial sites can raise hackles throughout the region. “Every now and then, these geopolitical irritants rise to the surface in the form of diplomatic tensions between South Korea and Japan, or between Japan and the People’s Republic of China.”

Since Japanese companies will increasingly have to go abroad to find employees, its shrinking population is driving a closer relationship with India, which could provide them. In a November 2017 report, Mr. Schoettli pointed out that the countries’ leaders have met repeatedly in recent years, boosting relations. As Japan reaches abroad for economic reasons, it will bolster its position in the region, countering a rising China and filling some of the vacuum left by a withdrawing U.S.

China: growing old before becoming rich

Japan is by no means the only country facing the challenge of a graying and shrinking society. Dr. Lippert pointed out in July 2016 that China’s demographic pattern is following Japan’s with a 20-year lag. By 2030, the number of people in China over the age of 60 is expected to reach 340 million, a rise of 133 million from 2015. Meanwhile, there are fewer young people. Between 2013 and 2014, the working-age population dropped by 3.7 million to 916 million. China’s population is set to peak at 1.38 billion in 2023 and shrink to 940 million by the end of the century.

“This aging population, together with the dramatic decline in the country’s youth, will have profound consequences on the economic and social landscape of China,” wrote GIS guest expert Yuen Sin in March 2015. The shrinking workforce, for example, has meant China must “adjust to the fact that it is no longer a low-cost labor economy.” She rightly predicted that foreign manufacturers may divert production from China to other economies in the region with more competitive labor costs.

China has the advantage of being able to observe how Japan and South Korea manage their aging societies

In October 2015 Beijing announced it was scrapping China’s one-child policy, which restricted urban couples of the Han ethnicity to only a single child. The move showed the authorities’ willingness to tackle the country’s demographic challenges, wrote GIS guest expert Brendan O’Reilly. But, he added, that move by itself will not solve the problem. Economic and social factors are driving the desire to keep families small. Elderly people will therefore probably account for one-quarter of China’s population by 2050. Unlike its aging neighbors Japan and South Korea, China faces the prospect of growing old before it becomes rich. The country’s advantage is that it will be able to observe how those countries manage the problem, before it gets to their stage.

However, unlike those countries, China does not have the economic resources and social infrastructure necessary to deal with a rapidly aging and shrinking population. “China stands out in East Asia because it looks into the abyss of a demographic decline from a position of relative economic underdevelopment,” Mr. O’Reilly pointed out in September 2016. In nominal terms, average incomes of China’s East Asian neighbors are three to five times higher.

A precipitous decline in China’s population is the most likely long-term outcome. “A dark scenario of demographic decline sparking a negative feedback loop of economic crisis, political instability, emigration and further decreased fertility is very real for China,” wrote Mr. O’Reilly.

Central Europe: controversial policies

Aging, shrinking populations are a problem in Europe as well, and the countries of Central Europe provide particularly stark examples.

According to GIS expert Ignacy Morawski, societies in the region are entering a demographic recession that promises to be among the most severe and longest lasting in the world. In three decades, the population of East Central Europe will shrink to 84 percent of what it is now. By comparison, Western Europe’s population will increase by 2 percent, while the world’s will expand by nearly a quarter. According to United Nations data, no other region in the world faces such dismal demographic prospects.

World population growth to 2050, by region
Central Europe’s population is projected to shrink faster than any other region in the world due to very low fertility rates and almost nonexistent immigration (macpixxel for GIS)

That will put huge burdens on Central European pension systems. Pro-family policies have therefore moved up the agenda. In Poland, the government launched one of the most audacious policies in the region – a monthly transfer of 500 zlotys (equivalent to 120 euros, or 13 percent of the average wage) to parents for every child after their first. The total cost of the program amounts to 1.3 percent of gross domestic product (GDP). Authorities hope it will raise the fertility rate from 1.3 percent today to 1.6 percent over the next 10 years. The program has generated so much enthusiasm in voters that even the fiscally conservative opposition has promised to keep it in place.

However, most economists are more skeptical. Spending the money on child-care facilities might be more efficient, and such handouts could further reduce the labor force.

That could increase the disparity between wages and pensions, setting up a conflict of interest between the working and non-working population, creating a potentially socially explosive mix, wrote Mr. Morawski. “This generational clash could define East Central Europe’s politics in the coming decades, prompting the younger generation to simply opt out and emigrate.”

Europe’s migration crisis: something has to give

In other parts of Europe, the difficulties that come with a graying population are being mitigated by immigrant inflows. However, since huge waves of immigrants started heading toward the continent in 2015, resistance to the newcomers has risen sharply. The migration impasse has had a profound political impact throughout Europe.

In March 2014, GIS Founder and Chairman Prince Michael of Liechtenstein predicted the crisis, pointing to a “ticking time bomb” of demographics in Europe: “The population is aging and, in some countries, in decline. Europe lacks robust policies and plans to address the immigration problem or a defined European concept of placing immigrants.” He pointed out that Europe’s overly bureaucratic labor and welfare systems prevent immigrants from immediately taking up useful work.

What makes the migration crisis so hugely important is that it creates sub-crises of its own

GIS expert Professor Stefan Hedlund has covered Europe’s migration crisis extensively in several reports, pointing out in February 2016 that the refugee crisis was tarnishing the EU’s image as a “moral superpower.” As the crisis deepened in August 2016, he lamented how German Chancellor Angela Merkel’s announcement a year earlier that Syrian refugees arriving in Germany via Hungary and Austria would not be sent back. “This voided the EU’s Dublin Regulation, according to which refugees ought to be returned to the country of first entry. That decision, by implication, also dealt a savage blow to the Schengen Agreement on free movement within the union.”

He continued:

“What makes the migration crisis so hugely important is that it creates sub-crises of its own. It fuels right-wing populism. It creates intergovernmental conflict where cooperation is desperately needed. It absorbs resources that are better needed elsewhere. And it has basically spun out of control.”

Most European countries have developed generous systems of social benefits while seeing a drastic drop in the number of low-skilled jobs. “The migration crisis has demonstrated that one cannot have both open borders and a welfare state,” he said, “Something has to give.”

Western Europe: political backlash

In that same report, Professor Hedlund wrote that “A powerful backlash from right wing-populist parties is virtually assured.” And while “populist” parties in the Netherlands, France and Germany did not win power in elections in 2017, they did increase their presence in national parliaments and gain plenty of support for their anti-immigration policies.

In March 2018, Italy will also hold general elections, which could see the Five-Star Movement, also branded as populist, make significant gains. As GIS expert Dr. Alberto Mingardi wrote in October 2017, those elections will hinge on immigration: “Whoever wins the next Italian election is bound to promise to get tougher on immigration. Voters are increasingly concerned about the issue, though it is far from obvious that the country is going through an immigration crisis.” All of Italy’s parties, noted Dr. Mingardi, have been taking a harder line on immigration in response to the public’s view on the issue – the notable and ironic exception being former Prime Minister Silvio Berlusconi.

Oct. 14, 2017: Italians hold up a banner reading “stop invasion” at a demonstration in Rome
Anti-immigrant sentiment is high in Italy, and will have a big impact on its elections in 2018. Above, Italians protest immigration at a demonstration in Rome in October 2017 (source: dpa)

Despite the political mood in Europe and the decision by many countries to put up more walls, fences and restrictions, “Migration’s causes have not gone away, and neither has migrants’ determination,” wrote GIS expert Teresa Pinto. “Tight controls will likely only lead to alternative routes and an increase in illegal migration. Risks will rise, as will the costs of mobility, which directly benefits the smuggling networks. If that happens, African and European security will both suffer.”

The problem comes down to one of weak leadership – a conclusion that GIS experts have come to since the onset of the crisis. This has given rise to a “perfect storm” for the continent, wrote Professor Hedlund in December 2017: “The real reason why Europe’s future is so scary is its lack of leadership, combined with resistance among its political elites to factual accounts and research-based assessments of what is about to unfold.”

“Migration research has given valuable insight into what works, including strictly regulated immigration, scrapping asylum rights, improving integration of newcomers, and developing a better understanding of who is a refugee,” he concluded. “But acting on good advice requires political vision and determined leadership that is nowhere in sight.”

North America: push factors

In North America, immigration is also a hot-button issue. The U.S. does not have to worry about an aging society, mainly because of its ability to attract and integrate immigrants. However, undocumented newcomers, especially from Latin America, have become a political lightning rod. Donald Trump’s promise to build a wall on the Mexican border – and have Mexico pay for it – was his key campaign pledge, and propelled him to the presidency.

However, as GIS expert Dr. Andrew Selee pointed out in December 2016, Mr. Trump’s policy options are more limited than his campaign rhetoric suggests. He will probably find funding for additional fencing on the border, but coming up with ways to make Mexico pay for it – such as through increased fees for immigration processing or additional taxes on money transfers – would have repercussions for people from many other countries.

A map of the Northern Triangle region of Central America
The number of migrants from the Northern Triangle countries of Guatemala, Honduras and El Salvador are rising, due to factors like corruption and violence (source: macpixxel for GIS)

In fact, moves to toughen immigration procedures will have effects throughout the hemisphere – not just in Mexico, since the Northern Triangle countries of Central America are a growing source of the migrants trying to get into the U.S., wrote GIS expert Dr. Joseph Tulchin in reports in December 2016 and February 2017. Moreover, “[f]ewer Central Americans working in the U.S. will mean reduced remittances – a major source of income in those countries,” added GIS guest expert Dr. Ralph Espach in April 2017. “A significant decline would have a brutal impact.”

Such policies also do little to address the “push factors” convincing people in Guatemala (corruption), El Salvador (violence) and Honduras (both) to flee to the U.S. Throughout the region, wrote Dr. Tulchin, “the levels of violence will continue at rates only equaled on wartime battlefields.”

Africa: education’s crucial role

Africa has perhaps the most favorable demographic trends in the world. It is the youngest continent, with nearly 40 percent of its population under the age of 18. The UN estimates that by 2050, it will be home to a quarter of the global population. By 2030, its working-age population is expected to rise to 600 million, from just 370 million in 2010. Africa therefore has the potential to reap a huge demographic dividend, with large numbers of people entering the workforce, bringing increased productivity, rising savings and more consumption.

For this to happen, however, Africa’s youth will need a good education. GIS expert Teresa Pinto wrote in October 2017 that this makes education a crucial factor for shaping Africa’s future.

In sub-Saharan Africa, education is compromised by inadequate infrastructure and scarce resources

Expanding access to, and improving the quality of education will be a tall order. In much of sub-Saharan Africa, education is compromised by inadequate infrastructure, scarce resources, teacher absenteeism and labor unrest. Foreign aid for education has been declining since 2010, and will probably continue to fall.

The scenarios that emerge from this include a continuation of the status quo – the most probable baseline for countries in Central and West Africa. Another scenario would see countries move away from industrialization and begin “leapfrogging,” development stages. This seems especially probable in places like Kenya, Uganda and Nigeria.

Africa: urbanization challenge

Africa’s growing, youthful population is increasingly moving from the countryside to its cities. Though the continent is one of the world’s least urbanized, the number of Africans living in cities is forecast to swell from about 400 million in 2010 to 1.26 billion by 2050. By then, Africa will be home to 20 of the world’s largest cities. Investment, job opportunities and infrastructure are not keeping pace with the growth, leading to poverty and sprawling slums. But governments are hard pressed to dedicate resources to better housing, for example, when they are facing economic crises or engaged in conflict.

According to Ms. Pinto, cities that are plugged into more diversified economies – like Johannesburg, Cape Town, Durban, Tunis and Casablanca – are more likely to be able to handle the challenges that come with growing cities. East African cities like Nairobi and Kigali will benefit from technology investments. In West Africa, Dakar and Lagos will take advantage of strong local governments.

However, the outlook for cities in resource-dependent countries in western and southern Africa is less positive. In the long run, their economies will grow, but the rapid urbanization will bring heavy social and environmental costs. In conflict areas like Juba, Mogadishu, N’Djamena, Kinshasa and Kano, the future is bleak. With governments unable to provide even basic services, economic opportunity and living standards will decline.

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