Political Economics Prof

Tag: Global History

  • The English East India Company (EIC): Trade with Asia

    The English East India Company (EIC): Trade with Asia

    The Mughal emperor Shah Alam hands a scroll to Robert Clive, the governor of Bengal, which transferred tax collecting rights in Bengal, Bihar and Orissa to the East India Company. Illustration: Benjamin West (1738–1820)/British Library

    INTRODUCTION

     

    The English East India Company (EIC) was an innovative new type of corporation. It is a model for the modern limited-liability, stockholder-funded modern corporation.


    The EIC also illustrates that the prototype of the modern multinational corporation was created to develop global trade.

     

    HISTORIC BACKGROUND

     

    The creation of the English East India Company (EIC) and its Dutch equivalent (the VOC) were part of the 400-year expansion of European power, trade, and influence. Much of the rest of the world became colonies, part of imperial empires.


    By 1600, both England and Holland had a wealthy merchant and shipping class, bankers, substantial liquid capital (wealth) not tied up in land, and risk-takers. These categories overlapped.


    Both countries had limited monarchies. In England, the king and Parliament were about to begin a long struggle for power. In Holland, the monarch was mostly subservient to Holland’s powerful and wealthy merchant class.


    THE EIC: STRUCTURE AND STRATEGY


    The East India Company (EIC) was chartered in 1600 by Queen Elizabeth I to promote and monopolize English trade with Asia. England, a poor country in the 1600s but with colonial ambitions after defeating the Spanish Armada in 1588, outsourced its colonial ambitions to the East India Company and other private companies. 

     

    The East India Company was originally privately funded by 218 merchants and other investors. It was the first modern multinational corporation. The EIC was a joint stock company, that is, a company with publicly traded stock bought and sold in a secondary stock market. Like modern companies, the EIC issued financial reports, held annual meetings for stockholders, and had quarterly meetings of the Board of Directors.


    It was also a limited liability corporation. Stockholders’ potential personal financial loss was limited to their investment in the company. Creditors could not go after their personal assets.

     

    The EIC was vertically integrated. The company designed, built and repaired its own ships, built its own docks and warehouses in London and in India. It had a large corporate headquarters in London. The company held sales auctions of its imports in its headquarters. It was a major employer in London. It was an “enlightened” employer, offering fringe benefits, including pensions. It provided a retirement home in London for sailors.

     

    The EIC designed and built a new type of ship, called East India Indiaman. They were built for long-distance trade. Because of commercial rivalry with other European states and local hostilities in Asia, EIC merchant ships were heavily armed and often contained marines.


    East India Company Indiaman Armed Merchant Ship

     ©National Maritime Museum


    The EIC had to build forts to protect its warehouses and trading stations. It hired a mercenary army and develop a navy (Bombay Marine) to protect property and trade routes. It negotiated with local rulers and signed treaties. 

     

    In short, the company built its own self-contained infrastructure and pursued its independent strategies. 

     

    The company ran its own management training programs and military academy. The selection process of employees was highly competitive, including written exams. Many of its recruits were ambitious young men from the lower and middle classes who were barred from the traditional paths of upward mobility and status. It employed “foreigners,” Scots and Anglo-Irish. Later, the EIC employed Asians and Anglo-Indians in secondary positions.

     

    Economists have a warm spot in their hearts (yes, economists do have hearts) because the EIC was the first organization to employ and pay economists – Thomas Robert Malthus, James Mill, and his son John Stuart. John Stuart Mill was effectively the CEO for many years. Contrary to their economic writings, they did not support free trade with Asian countries. 

     

    EIC “officers” and employees were loyal to the EIC. They saw personal opportunities and advancement within the company. They had opportunities for personal power and wealth that were not available at home. Because of their lower class origins and nationality, wealthy returning EIC officers were often resented as upstarts.

     

    The EIC created a powerful lobbying group in England. The company attempted to get the English government to continue to support its monopoly on English trade with Asia. Important politicians and royal officials were bribed.

     

    Unlike other private trading and colonization corporations established in England at about the same time, the EIC was set up as primarily an importing company. The company had the problem of how to pay for products bought in Asia. English exports to Asia such as English woolens were in limited demand. Asian sellers wanted silver. This created a drain of silver out of England, which was a source of friction between the company and the government.


     

    CORPORATE STRATEGIES AND POLITICAL ENVIRONMENT

     

    Besides the English-Asian trade, the East India Company was willing to trade anywhere in Asia, looking for profitable opportunities. Its resources, both ships and men, were highly mobile.

     

    The EIC operated in a violent, insecure environment in Asia. Beside pirates and local conflicts with Asian rulers, England was usually at war with one or more European countries. The conflicts extended to trade rivalry in Asia. The EIC had to fight battles with other national trading companies, foremost of which was the Dutch East India Company (VOC, the initials of the Dutch name of the company). The EIC could not expect much support from England, which was unable to consistently project power in Asia until the 1800s.

     

    The EIC lost out to the Dutch East India Company in its attempts to control the Spice Islands, the source of much of the profitable spice trade. The EIC also lost its footholds in Java and nearly islands, which became the Dutch East Indies (later Indonesia) controlled by the VOC. 

     

    Many early trading stations failed in other parts of Asia. Eventually, operations were centered on trading ports (entrepots) and stations in India, the traditional transit area for Asian products bound for the Middle East and Europe. India was also an important source of pepper.

     

    The EIC was caught up in the Seven Years War (1756-1763) between England and France for dominance in Europe, North America (called French and Indian War in America), the West Indies, and India. The EIC, under the leadership of Robert Clive, was able to defeat the French in India and expand alliances with many local rulers. The company’s well-organized military assets with superior firepower made the company a prized ally for local rulers. In exchange, the company was given extensive privileges including the right to collect taxes.

     

    At the same time, the company was developing what would be its most important trade – importing Chinese tea to England. To support this trade, the EIC established new stations that would grow to be Singapore and Hong Kong.


    They immediately ran into an old problem – China didn’t want any English imports. Chinese merchants only wanted silver, which led to a major drain of silver out of England. The EIC solved the problem by growing and selling opium produced in India to private traders who smuggled it into China. Some of the financial transactions were handled by a bank that eventually became HSBC.  (One the traders was Franklin D. Roosevelt’s grandfather.) 

     

    Chinese attempts to ban this trade resulted in a war between China and England (the Opium War, 1839-1842). China was defeated by superior English warships; the subsequent treaty was the first of many that opened up China to foreign influence and then domination. This would have important long-run consequences.


    The demand for tea exploded in the 1700s. The EIC had trouble fulfilling the demand with tea from China. Growing and processing tea was a closely guarded secret in China. But the company smuggled out plants to start new tea plantations in northern India (Assam). These plantations were successful and an increasing source of tea for the EIC. By 1770, EIC exports of Indian tea to England reached £800,000.



    ORGANIZATION STRUCTURE, CONTROL, AND GOVERNANCE





    Besides the EIC’s legal, financial, and governance structures which were innovative, the EIC had an internal management and control structure very much like a modern multinational corporation. It had to find a balance between home office control and branch management initiative. Given the problems of long distances, slow communication, and changing local operational information, the company was forced into a decentralized structure. 


    The Board of Governors combined the oversight of corporate managers with the setting of governing rules and regulations. Much of their control was financial. There was also detailed supervision and control of the voyages sent out from England.


    While officers of the company often sent detailed instructions about policy to local managers, direct operational control was difficult. It often took over two months for a letter from London to reach India. Local managers had discretion to react to local problems and trading opportunities. They had their own staff and resources. They were similar to “divisional” managers of early railroads and large industrial corporations. Even more similar to corporate presidents and their local staffs of national subsidiaries of multinational corporations.


     

    THE EVOLUTION OF THE EIC FROM A GLOBAL TRADING COMPANY TO A VIRTUAL SOVEREIGN STATE

                                        

    The painting above shows the moment when the EIC began its evolution from profit-making global trading company to de facto sovereign state. The year was 1765. The Mughal emperor was forced to turn over tax collection in Bengal and two other states

    to the EIC.


    It was at this moment that the East India Company (EIC) ceased to be a conventional corporation, trading in silks and spices, and became something much more unusual. Within a few years, 250 company clerks backed by the military force of 20,000 locally recruited Indian soldiers had become the effective rulers of Bengal. An international corporation was transforming itself into an aggressive colonial power.


        William Dalrumple, The Guardian, “The East India Company:  The Original Corporate Raiders,” March 4, 2015.


    The EIC was profitable in its early years. The EIC started its evolution from a purely private commercial company to an organization with its own substantial political and governmental responsibilities. For almost 100 years after the Seven Years War, it governed much of India from Bombay (Mumbai), Calcutta (Kolkata) and Madras (Chennai). The large areas around company headquarters in Calcutta, Bombay, and Madras were also effectively ruled by the company, often through “concessions” offered by regional rulers.

     

    The company performed the major functions of a government – collected taxes, funded a military, made laws and regulations, and established a national bureaucracy. Many of its officers became rich because of IPOs (Indian Political Opportunities – aka bribes, private deals, kickbacks on contracts). Stockholders back in London just wanted profits but EIC officials in India saw the personal possibilities as tax collectors and political administrators.

     

    As the EIC evolved from a commercial venture to ruling much of India, it became unprofitable almost from the beginning. By 1773, low tax revenue partly due to famines contribute to £1.5 million in debt and a £1 million unpaid tax bill owed to the English government. The company asked for a large loan, over £1 million from the Bank of England, but received only £200,000. 


    This began many rounds of negotiation between the EIC and the English government. The company began borrowing large sums of money from the English government. In the early 1800s, the company exchanged loans from Parliament for government over-site and military support. Parliament stripped the EIC of its trading monopolies between Asia and England. Finally, after the 1857 Sepoy Mutiny, the English government took over overall management and supervision of the company and then annexed India as a British colony.  

     

    The EIC also came into conflict with the English government when the government tried to impose mercantilist goals on the company. The government, under pressure from its woolen textile industry and then the new English cotton textile mills, banned the company from exporting competing Indian cotton goods (calicos) into England. India cotton, not cotton textiles, was exported to England. India became a large market for the export of English cotton goods.

     

    The EIC start out as a profit-seeking trading company and ended up ruling much of the Indian subcontinent. The costs of administering India would eventually contribute to bankrupting the company; it was forced to turn over the rule of India to the English government.   

     

    The home nation-states such as England were becoming more powerful and were able to project power and influence globally. They did not need private trading monopolies to further mercantilist or economic goals.

    CONJECTURE

    This conjecture is a bridge to the next essay on the EIC :

    The English East India Company:  Model for Future Multinational Corporations?

     

    In 1765, the EIC took over the running of a large territory in India – policing, military, tax collection, and administration. By 1772, it would deeply in debt and needed a large bailout from the English government. They gave it. It was followed by subsequent bailouts until the English government finally took over the EIC after the 1857 Sepoy Mutiny.  Why? Why not take it over earlier?

     

    Subsidizing EIC was the least bad option.  In 1763, England completed its victory over France. It was the third war with France in the 1700s. England was deeply in debt. As a result of incredible stupidity, England had to commit naval and army assets to control the restless American colonies. The English navy also had to protect the sugar islands in the West Indies, and to its primary task of securing the English Channel. It did not have the military assets to commit halfway around the world to India. It was not necessary – The EIC had a private army of over 20,000 troops that grew to 260,000 in the early 1800s, plus a heavily-armed merchant maring, as the EIC took over governing most of India. This number was far larger than the English army.

     

    Ten years after the EIC became sovereign in Bengal, the American Revolution broke out. England sent a large part of its army and about half of its navy to quell the revolt. After a few years, when English officers realized the cause of subduing the colonies was hopeless, some of the assets were withdrawn but sent to the West Indies. England withdraw its armed forces from America in 1783. Ten years later England was at war with France; the war, mostly with Napoleon, lasted 22 years. At the end, England was deeply in debt.

     

    With the loss of the American colonies, India was the foundation of the British Empire. Although losing money, the EIC was responsible for generating nearly half of England global trade. India was a major market for English exports. Quite simply, the EIC was England’s surrogate colonial masters in Asia. It was cheaper to subsidize the EIC than to take over direct governing of India.

     

    Another reason was that the EIC have bribed government ministers and members of Parliament. Returning EIC personnel, often personally wealthy, also formed a strong lobbying group in England.

     

    But after four decades of peace in Europe and reducing its public debt, England was ready to begin governing India and projecting imperial power throughout Asia.

    ======================================================


    One starting point of reading about the East India Company is:

    K.N.Chaudhuri, The English East India Company:  The Study of an Early Joint Stock Company, 1600-1640, Frank Cass & Co Ltd, London, 1965.

    For the historical background and context on the EIC, and its role in helping England become a global economic and political power in the 1600s, see

    England in the 1600s:  The Beginning of England’s Rise to Global Power and Wealth

    For the argument that the EIC may be a model for future multinational corporations, see

    The English East India Company:  Model for Future Multinational Corporations? 

    Elsewhere in this blog, I argue that the main form of America’s economic competition, and probably geopolitical competition, with China will depend on the success of American companies in developing new technologies and global links. See

     

    American Tariffs and the U.S. Economic War with China

    For a case study of a country that became independent after World War II and illustrates the internal chaos of many countries, see


    Nigeria


    You might also be interested in

    The Stock Market Crash of 1929 and the Beginning of the Great Depression


    In the 1920s, the United States developed new technologies in virtual isolation from the rest of the world. It didn’t end well.

     

    For a list of all the posts on this blog, see List of Posts by Topic

    with links to all other posts. There are posts on Adam Smith, the Beginning of the Industrial Revolution, American Economic History, American History and even economics.



  • The English East India Company (EIC): Model for Future Multinational Corporations?

     INTRODUCTION

     

    The English East India Company (EIC) was an innovative new type of corporation. It was not only a multinational corporations but it was created to exploit the profit potential of global trade. 

    It might be a model for how a multinational corporation (MNC) could survive and prosper in an increasingly chaotic and hostile geopolitical world.

    For a description of the structure and strategy of the English East India Company, see The English East India Company (EIC):  Trade with Asia

     

     

    THE EIC AS A MODEL FOR FUTURE MNCs?

     

    The international political structure is now moving in reverse as the post-World War II economic and political order created mostly by the United States is breaking down. America seems to be less willing to pay for global political leadership, reverting back to its traditional policies of isolationism and protectionism. It hugely expensive military is paid for with deficit financing. Wealthy countries cannot pay for all of their programs; frustrations seem to be expressed in voting for nationalist political parties headed by authoritarian leaders. Most wealthy countries, including the United States, are attempting to limit immigration. Most of the more than 100 new countries created after World War II are dysfunctional or corrupt. Civil wars and local conflicts disrupt the global economy, in addition to terrorist groups, pirates, and criminal gangs.

     

     

    At the same time, the global economy dominated by multinational corporations operating on a global scale continues to expand. Markets, supply chain technology and organization, telecommunications, transportation, and finance are now all global. They all transcend national borders. Multinational companies have stronger economic links with companies in their ecosystem in other countries than with the rest of their national economy.

     

     

    While the East India Company operated in a different era, it may suggest some lessons for our times because it operated in a fragmented Asian environment similar to the global one currently evolving. The global political system constructed by the United States after World War II is breaking down. There are over 200 nation-states and territories. Many are poor or small. Many are autocratic (not democratic). But all are sovereign within their borders, although in many cases this sovereignty is limited.

     

     

    The greatest danger now (2024-25) to multinational corporations, predominantly American, is the American government. President Trump’s pursuit of narrow mercantilist goals — fluctuating tariffs and trade restrictions, attacking universities and greatly reducing research funds, cutting off immigration of technological and scientific personnel, increasing shipping costs, and extorting money from large companies — adversely impact multinational corporations.

     

    No country, with the possible exception of China, protects and supports its companies abroad. (More detail – similarities and differences from EIC. More instruments of Chinese geopolitical projection of power and influence? What about new high-tech companies?) Many are state owned and share some similarities with the EIC.

     

    Maybe multinational corporations, in this environment, will evolve to be more like the EIC. They will need some way to protect themselves from the “extractive” policies of political elites. Governments have power – sovereignty, guns, laws, forms of coercion, corruption and cooptation, “populist” support, that can be used against private companies. They have centralized bureaucracies and armies. But companies control most economic resources (except natural resources like fossil fuels and minerals) and innovate new technology. They have large financial resources. Employees of multinational companies may possibly have alternative loyalties.

     

     

    MORE SPECULATION ON FUTURE MULTINATIONAL CORPORATIONS

     

    For a wildly imaginative vision of a future society (not too future) dominated by powerful corporations similar to the EIC (with advanced technology similar to AI), see Neil Stephenson’s The Diamond Age. The book centers around an English global company much like the EIC. This corporation combines nostalgic Victorian culture and loyalties with advanced technology and political power.

     

    No one seems to be conjecturing how corporate structures and economic organization will be affected by new technologies such as unsupervised AI, AI-driven singularity, and quantum computing. In an environment of shrinking population and labor force, burgeoning national debt, and increasingly dysfunctional (or to be fair, overwhelmed) central governments.

     

    Another vision is in Donald Westlake’s Good Behavior. It argues that the political structures of nation-states are breaking down. The world is becoming more like the feudalism of the Middle Ages. Kings and emperors (central national governments) had limited power. Local areas were controlled by different types of aristocrats – barons, princes, dukes, etc. The people in a barons’ area of control were loyal to the baron, not the king. Local rulers fought each other. To a large extent, barons were independent of kings and their governments.

     

    Multinational corporations (MNCs) have some of the attributes of the medieval barons. Sovereign in their own domains, they demand loyalty, negotiate and compete with other. MNCs are part of a hierarchy of organizations with responsibilities to each other. 

     

    Multinational corporations are increasingly at the whim of national policies, particularly those of autocratic rulers. Autocratic rulers commonly threaten and extort funds from corporations. 

     

    When the political objectives of nation-states begin to seriously reduce and jeopardize the profits, or even the survival of multinational corporations, MNCs might began to take measures to protect themselves. Some of these measures may bring them into direct conflict with nation-states.

     

    Already there are large areas where the national governments’ writ doesn’t run. Many groups besides MNCs avoid national power and control. Companies and wealthy individual avoid national laws and launder money, often gained from illegal activities. The more sophisticated, ones who hire lawyers and specialized financial consultants, use shell companies. Cryptocurrencies are used to avoid the financial system and reporting of income. Drug and criminal gangs control large areas. Other areas are controlled by ethnic groups at war with the central government. “Informal” and illegal economic activity beyond government control or oversight make up a large part of the economies of many countries.

    ==========================================

    For historical background and context on the EIC, see

    England in the 1600s:  The Beginning of England’s Rise to Global Power and Wealth

  • Introduction to Demographics and Global Population Projections

    Photo by Ahmad Shakir Shamsulbadri on Pexels.com

     

     OVERVIEW


    Much of this is taken from the summary of the longer and more detailed

    Global Demographics and Population Projections



    This is a summary and overview of the demographics and population projection essays on this blog (links below). The world is at the beginning of a major shift in population, from large population increases since 1950 to decreasing populations in many countries and, in the long run, in the world as a whole. This historical shift in global and national populations will have a big influence on what happens in the future.

     

    In summary,

    ·      Huge population increases since 1900, especially after 1950.

    ·      Because of a big decrease in birth rates, global population will increase until the 2060s and then start to decrease.

    ·      Some countries are already seeing a population decrease. More will follow in the near future, including the United States. Yearly population decreases will grow larger. At the same time, working-age populations will grow smaller while over-65 population will grow larger.

    ·     These trends will have a big effect on all other changes – economic, political, environmental. 

    Think of the world as divided into Africa and Not-Africa (rest of the world). Between now and sometime in the 2060s, the increase in population in Africa will be greater than the decrease in population in Not-Africa. From the 2060s to 2100, the decrease in population in Not-Africa will be greater than the slowing increase in population in Africa.

     

    DEFINITIONS AND BIRTH RATE PROJECTIONS

    Demographics is the study of populations and how a population breaks down by age, gender, race, and other variables.

     

    There is one concept that is crucial for population projections:

    Total Fertility Ratio (TFR). This is the ratio of the average number of children of women in child-bearing ages. For a population to be stable, women must have an average of 2.1 children each. Any smaller number means the population is “below replacement” and may decrease in the future.

     

    The global birth rate (total fertility rate) is now about 2.3, slightly above the replacement rate of 2.1, and falling. How fast it falls depends critically on how fast it falls in India and in Africa.

     

    The global Total Fertility Ratio (TFR) is forecasted to be 1.7 in 2100, well below replacement. Currently, the lowest birth rates in the world, at around 1.0, are in East Asia – China, Japan, and South Korea. Europe as a whole has birth rates almost as low.

     

    A population may have below replacement birth rates and for some time also have expanding population if in the past it had above replacement birth rates, a large percent of its population were children and young adults, and the adult population is experiencing rising life expectancies. Or, the decrease in population is offset by immigration.

     

    Total populations eventually fall, as the number of children fall, the number of adults below 65 fall, and then the number of senior citizens fall.  A birth rate below replacement will lead to fewer children. Then it will lead to a smaller working-age population (18-65). And finally, a smaller over-65 population.

     

    GLOBAL POPULATION IN THE PAST

    Since the beginning of the Agricultural Revolution (farming and domesticating animals) about 10,000 years ago, demographics meant high birth rates, high infant mortality rates, low life expectancies, and high death rates. The world’s population didn’t change very much until the Industrial Revolution, starting in the late 1700s. Death rates fell faster than birth rates; better health and health care reduced infant mortality rates.

    At the same time, much of the world’s population experienced rising standards of living. Better public health reached poorer parts of the world. Urbanization, which lowers birth rates, greatly expanded. Better education, especially of females, is correlated to falls in birth rates. One consequence was longer life expectancies and rising average ages in industrialized countries and then in poorer countries. The age composition of the global population changed, as the average age of the populations in most countries started rising.

    During this transition period, from the late 1800s to the present, average life expectancies increased from roughly 30 years to 75-80 years in industrializing countries.

    Global population:

    1900 – Approximately 1.6 billion people

    After World War II, the global population exploded:

    1950 – 2.6 billion

    2024 – 8.0 billion (November, 2023)

    The global population has more than doubled since 1970, going from 3.7 billion people to the current (November, 2023) total of 8.0 billion (UN numbers).

    The period from 1950 to 2000 was unusual. Not just in the United States, the global population experienced high birthrates and high population growth rates. In the middle of this period, partly due to more effective and more available birth control, birth rates began declining in the industrialized countries. The growth rate of the world population began to slow.

    POPULATION PROJECTIONS

    The global population is projected to be:

    2064 – 9.7 billion (the peak global population)

    2100 – 8.8 billion

    By the 2060s, the global birth rate will be below replacement. Over the next 40 years (2025-2065), the world’s population will rise by about 1.7 billion and then over the 35 years after that, decline by approximately 0.9 billion (900 million). By 2100, the global population will have fallen to 8.8 billion.

    By 2050, 151 countries (out of 192) are forecasted to have a birth rate lower than the replacement rate (<2.1). 23 countries are forecasted to have population declines greater than 50% by 2100. China’s population is forecasted to decline by 48%, from the current 1.4 billion to about 750 million in 2100.

    Compared to the present, Africa is expected to have about 2.2 billion more people in 2100. The rest of the world is expected to see a decrease of about 1.4 billion people. One billion of the decrease will occur in China (about 750-800) and India (about 250-300). The rest of the decrease will occur mostly in Europe, southeast and southern Asia, and Japan. The US may be at the beginning of the downward population curve if the recent trends of a below (and falling) replacement birth rate and the current decrease in net immigration continue. 

    About 500 million of the African increase will happen in Nigeria. (See essay in this blog on Nigeria) Nigeria’s population growth will be so great that by 2100 the country may pass or equal China as the second most populous country in the world.

    The global population is aging, with the over-65 age group becoming a larger percent of the total. By 2100, there will be 2.4 billion individuals older than 65 years compared to 1.7 billion individuals younger than 20 years.  

    The industrialized and modernizing parts of the world now have low birth rates – mostly below replacement – and low death rates. Birth rates are also falling in much of the rest of the world. 

    Declining population is already true in Japan, China and Russia, and is about to be true for most of Europe and much of Southeast Asia.

    As the population and the labor force of a country decrease, it is possible that income per capita will continue to rise for a generation or two. But in the long run, income per capita will probably fall.

    It is nearly impossible to predict technological and organizational change over the next 25 or 50 years. This will help determine if increases in productivity will counter the decrease in the size of the working population. This raises questions about the role robots in manufacturing and distribution (Amazon warehouses) and AI models in offices will play in the future. Robots are used more in countries with a declining number of employees now or in the near future (Japan, South Korea, and China).

    GLOBAL DEMOGRAPHICS

    Outside of Africa, the global birth rate is already below replacement but longer life expectancies will lead to continued population growth for one or two generations. Many countries already have or are about to have declining populations.

    Countries with over a third of the world’s population and most of the world’s output now have birth rates below or at replacement. They are mostly the wealthy, industrialized countries, including the United States, Canada, Brazil, Western and Central Europe, Turkey, parts of Southeast Asia, Japan, Russia, and China. Collectively, the size of their workforces has stopped growing. India, the exception, has a birth rate that just fell to replacement and will probably continue to fall. This will add another 17% of the world’s population that has a below replacement birth rate.
     
    There are falling birth rates for most of the rest of the world’s population, coming down from very high levels. But total population continues to grow, partly because of lower infant and child mortality rates, public health programs, better medicine, and longer lives in most of the world.

    Regardless of what happens to the size of the labor forces in individual countries, the size of the global labor force after around 2100 will start to fall. An important question may be how it is allocated by migration.

    GLOBAL FORECASTS 

    We are now in a period of a slowdown in total population growth rates. Global population is growing at about one percent per year and the rate continues to fall. But the increase in the number of people is large. 

    Changes in total population may be points on an exponential decay curve. The decline in numbers after achieving the maximum number of people in the 2060s will depend on how fast the African birth rate falls. Countries with birthrates well below replacement and aging populations may experience accelerating decreases in population. 

    The rate of decline could change with changes in the availability and cost of birth control, anti-aging medical technologies and more available health care for an aging population.

    A big unknown is future medical technology that prolongs life expectancies. Technological advances might also decrease medical costs per capita. Regardless of the projections, the fastest growing age cohort in the foreseeable future is 80 years and older.

    Countries with birthrates well below replacement and aging populations may experience accelerating decreases in population.

    POOR COUNTRIES AND RICH COUNTRIES

    Wealthy countries have below replacement birth rates, no growth or declining populations and labor forces, low real economic growth, and aging populations and labor forces. Population will continue to concentrate in cities; the population of a small number of cities will be responsible for technological innovation and economic development. Rural areas will continue to lose population.

    Africa and a few poor countries outside of Africa will have the opposite problem. They will have above replacement birth rates for a generation or two. This will lead to high growth rates in labor force age groups and total population. Whether or not this will translate into high economic growth rates is problematic, depending on many other factors. These countries could be a source of large immigration to richer countries.

    Many poor countries have poor infrastructure, poor education and health facilities, diseases, parasitic and corrupt political elites and bureaucracies, military coups, and internal violence including civil wars for political control. As an example, the next essay I will send you is a quick look at Nigeria.

    All countries will sooner or later face the same challenges:  With declining populations and smaller labor forces, will they be able to invest in economic growth and development (innovation and structural change), deal with environmental costs and climate change, and support aging populations?

     

    (DISCLAIMER:  MY LAWYER FORCED ME TO ADD THIS)

    The posts on demographics contain long-term forecasts. They give the best estimates, given the assumptions. All contain large ranges of uncertainty (standard deviations or uncertainty interval), which is one reason to learn about statistics. Generally, the further out the forecast, the larger the uncertainty interval. It is impossible to forecast major changes in health care and AI technology, immigration laws, and other variables that could change the exponential trends.

    ==================================================

    For more on future demographics and how population trends might interact with economic variables, see


    Global Demographics and Population Projections


    Demographics and Economic Growth


    Demographics, Immigration and Future Economic Growth of the United States

    Demographics and Population Projections of Japan


    For how the expected demographic trends might influence future United States government finances and deficits, see


    Government Finance 101. Fiscal Policy:  Welcome to Alice in Wonderland

  • Demographics and Population Projections of Japan

    Demographics and Population Projections of Japan

     

    INTRODUCTION

     

    Japan gets special consideration because it is further along the demographics declining population curve than any other large country. It has the oldest population (highest average age) in the world. It has one of the world’s lowest birth rates. Unless there are major changes in healthcare technology, immigration, public policy, and birth rates, most industrialized countries will follow Japan down the path of declining and aging populations, and smaller labor forces.


    Japan’s demographics and immigration have become major political issues. In the July 2025 elections, two right-wing parties made substantial gains against the long-ruling Liberal Democracy Party (LDP). Two of their main issues were the rapid rise of immigration and the repeal of a 10% consumption tax used to pay for the rising costs of supporting the aged. Both parties appealed to young voters. The LDP has nominated a candidate for prime minister who also takes a hard line on immigration.

     

    PROJECTIONS

     

    Japan’s current (2024) population is around 122 million people. This is the 15th year of population decline, down from a high of 128 million. The yearly decreases so far have been small, both in numbers and as a percent of the total. This is expected to continue until 2030. Then population decreases are expected to accelerate to a population of 104 million in 2050 and 87 million in 2070. At the end of the century, Japan’s population is projected to be 60-65 million people, about half its current size.

     

    The high dependency ratio (the number of elderly divided by the number in working age groups – 46%, the highest in the world) is expected to rise to about 70% in 2050, about 75% in 2070 and about 80% in 2100. Not everyone in the working age group is in the labor force. Thus, by 2100, there will be almost one Japanese over 65 for every employee in the labor force. Government budgets will find it increasingly difficult to raise tax revenue to meet the rising social costs of an aging society. 

     

    Figures are from The Economist, “Japan’s economic troubles offer a glimpse of a sobering future,” December 5, 2019.

     

    Japan has one of the lowest birth rates in the world at 1.2 in 2023. Also in 2023, the number of deaths was twice the number of births.

    Japan has the world’s oldest population, both as measured as average age and with the highest percent of residents over 65. 

     

    LABOR FORCE AND FUTURE ECONOMIC GROWTH

     

    Over the past 20 years, Japan’s working-age population has declined by more than 10 million workers, about 14% of the workforce. The current labor force (age group 15-64) is 73 million. By 2050, Japan’s working-age population is expected to fall to 53 million. (U.N. World Population Prospects 2022) In 2100, the labor force age group is expected to be about 32 million, about 40 million less than the current size. 


    Japan’s 65 and older population of 37 million is about 25% of the total. As early as 2050, about 40% of the adults will be over 65. Surprisingly, the number of Japan’s elderly is already near the projected maximum.

     

    Current statistics from Japan’s Internal Affairs Ministry, July 24, 2024.


    Projections from:

    Statistica, ”Forecast of the total population in Japan from 2023 to 2120,” November, 2023. https://www.statista.com/statistics/607427/japan-forecast-total-population/


    Statistica, “Forecast of the total population in Japan from 2023 to 2120, by age group,” November 2023. https://www.statista.com/statistics/612575/japan-population-age-group/

     

    Japan admitted few immigrant workers in the past to increase its labor force but the yearly number has been rising, up 330,000 in 2023.  In 2025, there were 3.8 million immigrant workers in Japan. This was over 3% of its labor force. Most are on short-term or work visas (Japan calls them “trainees”) and are not expected to stay. Japan rejects 99% of applications for asylum. Under current law, it is very difficult for immigrants to become citizens or permanent residents.

     

    In Japan, the labor force and the population are decreasing at about 1% per year. Productivity is increasing at about 1.3% per year, giving economic growth of 0.3% per year. But because of decreasing population, output per person is increasing at about 1.3% per year, or about the same as in the U.S. Growth rates are much lower but the increase in output per person is about the same. This may be one reason there is very little call for any economic, political or social reform in Japan despite almost no economic growth. And this has been going on since the 1990s. But the demographic trends may increase tensions between younger workers and retirees.

     

    Japan’s real GDP has been basically stagnant over the last 25 years. Without structural changes to Japan’s political and economic system, Japan’s real GDP in the future will grow slowly at best and eventually decline along with its labor force and population.

     

    As the size of the labor force decreases at a higher rate, and faster than the older age group, it is likely that output per capita will start to decrease.

     

    THE STRUCTURE OF THE JAPANESE LABOR MARKET

     

    The number of employed Japanese has not fallen as much as the decrease in the number of people in the prime labor force age groups. Until recently, this has been due to the increased participation rates of women in the labor force. But the high current female participation rate suggests little if any increase in workers from this past trend.

     

    While female employment rates are high, over 50% of female employees hold part-time positions as seasonal or temporary workers. This means they are not covered under lifetime employment or job security guarantees. Many full-time female workers are classified as temporary to avoid giving them lifetime employment protection. As a group, female workers are probably underemployed.

     

    As in other countries, employment does not stop at retirement age.

    In Japan, as in the United States, many people over retirement ages own or work in small businesses. So the numbers in the prime working ages do not coincide with the number of employees. 


    Japan’s retirement age is 60, although older workers can request to work until they are 65. Many retired Japanese buy or work in small, local businesses such as noodle shops, small grocery stores or other kinds of small stores to supplement public or private pensions. Over 1/2 of Japanese aged 65-69 and more than 1/3 aged 70-75 are employed to supplement small retirement benefits. The percent falls to 12% for over-75. There are about 22 million in the over-75 category. Over-75s in Japan is about the average of over-65s in industrialized countries.


        The Economist, “Japan’s 2025 Problem,” in The World Ahead

        2025, 38.

    As more people work beyond retirement age, countries will have to reassess retirement benefits and taxes on the elderly.


    The Japanese government projects that social-security costs, including pensions, will increase by 60% between 2025 and 2040. A change in the pension system, probably to increase pensions, is scheduled for 2025.

     

    Over 1/3 of the total foreign workers are from Vietnam, China or the Philippines. They tend to work in manufacturing or construction. Many recent immigrants come from Nepal or Myanmar. There is a lack of Korean workers. Japan is now attempting to attract foreign employees with technical skills or higher education.

     

    About half of Japanese employees are between 45 and 54 years old. This indicates that about half of Japan’s current labor force could retire in the next 20 years.

     

    Japan’s unemployment rate is low, between 2% and 3%. There is much discussion about companies finding it hard to hire as many employees as they would like. Government ministries are concerned about a national labor shortage that can only get worse. This would probably contribute to low economic growth in the future.

     

    A peculiarity about the Japanese labor market. The definition of unemployed is more restrictive than in other countries. No one knows what the unemployment rate would be if Japan used the American definition.

     

    The low unemployment rate, a slight decrease in the number of employed Japanese and the labor shortage, combined with higher inflation rates, are putting pressure on wage rates. In 2023, the average wage increase was around 5%, which is high for Japan. Wage increases might continue.

     

    The overall impression is that the Japanese labor market is not very flexible and that workers tend to be less mobile than they might be under different rules and regulations. This may also be obstacle to raising labor productivity and a barrier to higher economic growth in the future. 

     

    JAPAN AS A MODEL – OLD AND RICH

     

    Japan might serve as a model for future demographics of other countries in two different ways. One is as a model for countries with a high per capita income. The other is for countries that have a lower, often much lower, per capita income but are aging rapidly. This includes China and most of the countries of east and southeast Asia. They will grow old before they grow rich.

     

    Most of the countries in east Asia, including China, have a birthrate equal to or lower than Japan’s. They are on a similar demographic curve, only a little behind. The difference is that Japan is much richer, with a substantially higher income per capita. If managed right, Japan has the resources to pay for adequate levels of support for its increasing numbers of senior citizens. The other countries will age before they achieve per capita incomes anywhere near Japan. This will probably put a greater strain on their public finances and they will not be able to provide adequate health and services support for their aging populations.

     

    In economic theory, deficit-financed government spending is expected to make up for weak private consumption and domestic investment spending to ward off deflation and recession. In the future environment, however, demographics can overcome aggressive monetary and fiscal policy to stimulate economic growth. These policies have already failed in Japan. Zero interest rates on public debt, large budget deficits, high levels of government infrastructure spending and the highest national debt/GDP ratio in the world have not improved very low economic growth. A current (2025) rise in inflation rates and wages will put further strain on the Japanese economy.

     

    The large budget deficits are financed by borrowing much of the country’s household savings at near zero interest rates. Japan’s central bank has just raised its equivalent to the Fed funds rate to 0.25%. Other central bankers are not impressed.

     

    There is no chance of balanced budgets in the future. A rise in interest rates would make Japan’s financial problems worse.

     

    Domestic demand is weak even though unemployment is low. Rather than raise wages, Japanese companies export manufacturing to other countries, especially China and other Asian countries. The is accompanied by substantial investment outside of Japan.

     

    Japanese companies are starting to substitute robots for workers in Japan. Japan expects to greatly increase its use of robots, partly in health care services.

     

    An aging population contributes to social and political resistance to structural reforms. The dominant political party substitutes government spending and subsidies, combined with appeals to Japanese traditions, for reforms that might threaten social stability. But there is a political backlash among young voters against the dominant party that they feel represents the interest of older voters.

     

    All of this is before the economic costs of climate change and global warming. Japan in the past has suffered from devastating earthquakes. A recent tsunami destroyed a nuclear power complex.

     

    HOW JAPAN IS DEALING WITH DECLINING LABOR FORCE

     

    Japan is admitting foreign workers to increase its labor force. There are now about 3.8 million foreign workers, about 3% of the labor force. Foreign workers, as in Saudi Arabia, the United Arab Emirates and Singapore, are mostly segregated from the locals. Immigrant workers have no citizenship rights and can be deported at any time.

     

    If Japan makes up the decrease in the size of its labor force with foreign workers, then by 2100 foreigners will make up about half of Japan’s workers.

     

    Japan is a major producer of robots but the number of robots as a percent of employed workers is below China and South Korea but above other industrialized countries. This percentage (robots per 1,000 workers) is expected to rise. Japan is using some of its robots to provide services and companionship for senior citizens.

     

    CONSEQUENCES OF JAPAN’S DEMOGRAPHIC DECLINE

     

    Small number of children

     

    The projection for Japan is that in 2100 there will be five times as many senior citizens over 65 then children aged 0-14. Children will make up less than 10% of the total population. No one seems to be thinking about the social and psychological consequences of this trend. Importing children for adoption? Surrogate mothers from other countries? Robotic pets and children as substitutes? (No joke – there are already robotic dogs and ponies.)

     

    Continued cultural isolation?

     

    Japan has been the most successful country in segregating its culture and moral values from outside influence, first as an island closed to outside influences (1600-1850s) and even now in the global communication world. Despite surface similarities to other modern economies and cultures, Japan remains opaque to outsiders. This might make it difficult to attract permanent immigrants and integrate them into Japanese society. 

     

    More outmigration of Japanese?

     

    As the dependency ratio increases, putting a larger tax burden on working Japanese, it is possible that more Japanese will emigrate. One way might be to work for the overseas operations of Japanese corporations. Or join the Japanese communities in other countries such as Brazil or the United States. Or imitate the strategies of wealthy Chinese who are planning to leave their country. This will further decrease the number of births, the size of the labor force and the tax base.

     

    Family vs. state care of the aged

     

    With more Japanese not having children, the cultural imperative of children supporting elderly parents will be impossible to fulfill for many families, putting more of the burden on the state.

     

    Part of the global economy

     

    It is hard to see what future role Japan will play in the global economy besides as a source of financial capital. Japan might be relatively less important in the future. Already, Japan is not particularly innovative. The country is not a leader in most new tech industries – mostly robotics companies, a few pharmaceutical companies, some legacy technology in consumer electronics and online entertainment. Japan has already outsourced much of its manufacturing to other Asian countries, particularly China.


    ============================================================


    For a other essays on demographic topics, see


    Global Demographics and Population Projections


    Demographics and Economic Growth


    Demographics, Immigration and Future Economic Growth of the United States






     


     


      

  • Global Demographics and Population Projections

    Global Demographics and Population Projections

     

    City Life for Most Residents

    Before reading this essay and related essays on demographics and population projections, you might want to start with an introduction:


    Introduction to Demographics and Global Population Projections

     SUMMARY

    Global population has more than doubled since 1970, going from 3.7 billion to the current (November, 2023) total of 8.0 billion (UN numbers). The Lancet long-term projection is that world population will peak around 9.7 billion in the 2060s and then begin to decline, reaching around 8.8 billion people in 2100.

     

    In the most recent United Nations projection (2024), global population is expected to peak at about 10.3 billion sometime in the 2080s and then fall to 10.2 billion in 2100.

    By 2030, 1.4 billion people will be over the age of 60, with low- and middle-income countries accounting for 80% of older populations. About 25% of the total will be in China. This number is equal to China’s or India’s total population.

     

    Compared to the present, Africa is expected to have about 2.2 billion

    more people in 2100. The rest of the world is expected to see a decrease

    of about 1.4 billion people. One billion of the decrease will occur in

    China and India. The rest of the decrease will occur mostly in Europe,

    southeast and southern Asia, and Japan. The United States and Latin

    America (because of increasing population in Mexico) will see little

    change. But due to recent changes in net immigration, the United States will probably see zero population growth by about 2031 (recent CBO projection) and then slowly decreasing population.

     

    Nigeria’s population growth will be so great that the country will pass China by 2100 as the second most populous country in the world.

    China has reached zero population growth. Between now and 2050, 43% of the world’s population increase will be accounted for by only five countries – India, Nigeria, Congo, Ethiopia, and Pakistan. India’s population is expected to peak in the 2060s and then gradually decline.

    Europe has the oldest average (median) age. Its population began shrinking in 2020. In 2050, its population will be about 40 million people less.

     

    The following is the summary in the Lancet study.

     

    The global population is projected to peak in 2064 at 9·7 billion people and decline to 8·8 billion in 2100. Findings also suggest a shifting age structure in many parts of the world, with 2·4 billion individuals older than 65 years and 1·7 billion individuals younger than 20 years globally in 2100. By 2050, 151 countries (out of 200) were forecasted to have a TFR lower than the replacement level (TFR <2·1), and 183 were forecasted to have a TFR lower than replacement by 2100. 23 countries, including Japan, Thailand, and Spain, were forecasted to have population declines greater than 50% from 2017 to 2100; China’s population was forecasted to decline by 48·0% to around 750 million.

     

    DEFINITIONS AND BIRTH RATE PROJECTIONS

     

    Demographics is the study of populations and how a population breaks down by age, gender, race and other variables. In this post, I will concentrate on trends and forecasts of the future population of the entire world and by regions and countries. Other posts concentrate on Japan and the United States in greater depth. 

     

    There are two concepts that are crucial to population projections:

     

    Total Fertility Ratio (TFR). This is the ratio of the average number of children of women in child-bearing ages. For a population to be stable, women must have an average of 2.1 children each. Any smaller number means the population is “below replacement” and may decrease in the future.

     

    The global birth rate (total fertility rate) is now about 2.3, slightly above the replacement rate of 2.1, and falling.

     

    The global Total Fertility Ratio (TFR) in the Lancet study is forecasted to be 1.7 in 2100. By 2050, 151 countries were forecasted to have a TFR lower than the replacement level and 183 countries (out of approximately 193 countries) were forecasted to have a TFR lower than replacement by 2100.

     

    A country may have below replacement birth rates and for some time also have expanding population if in the past it had above replacement birth rates, a large percent of its population were children and young adults, and the adult population is experiencing rising life expectancies. Or, the decrease in population is offset by immigration.

    For Europe, the birth rate went below replacement in the 1970s and population stopped growing in 2020. For China, an extremely low birth rate started in the 1990s (one child policy), never recovered even when the policy was abandoned. China’s population probably peaked in 2023.


    Dependency Ratio. This is the ratio of the age categories (usually children plus over 65) to the working-age population. In aging societies, it is often the ratio of 65 and older to the working-age population.

     

    MAIN SOURCES OF POPULATION PROJECTIONS

     

    Until 2020, the standard source of long-run population projections was United Nations Population Division of the Department of Economic and Social Affairs, “World Population Prospects 2024.”

    Population.UN.org

     

    A new set of projections was published in Lancet in 2020:

     

    Stein Emil Vollset, et al, “ Fertility, mortality, migration, and population scenarios for 195 countries and territories from 2017 to 2100: a forecasting analysis for the Global Burden of Disease Study,” Lancet, 2020, VOlume 396, ISSUE 10258, 1285–306. 

     

    Published Online July 14, 2020 https://doi.org/10.1016/ S0140-6736(20)30677-2

     

    It seems to me that the methodology use by the Lancet study is preferable to the United Nations study. Lancet authors’ explanation of their methodology is quoted in the appendix.

    The Lancet projections, based on trends into the 2010s, may be too high.

     

    INTRODUCTION

     

    The posts on demographics contain long-term forecasts. They give the best estimates, given the assumptions. All contain large ranges of uncertainty (standard deviations or uncertainty interval). Generally, the further out the forecast, the larger the uncertainty interval. It is impossible to forecast major changes in health care technology, immigration laws and other variables that could change the exponential trends. 

    With low birth rates in many parts of the world, an “exogenous” (outside) event like Covid or the war in Ukraine can affect intermediate (2050) or long term (2100) projections for an individual country, region, or the entire world.

     

    Over the last few years, there has been major changes in global demographic forecasts. Generally, they have forecasted slower rates of growth, earlier dates for maximum population (2060s), and shrinking population from maximum population to the year 2100.

     

    GLOBAL POPULATION

     

    Since the beginning of the Agricultural Revolution about 10,000 years ago, demographics meant high birth rates, high infant mortality rates, low life expectancies, and high death rates. Until the Industrial Revolution, starting in the late 1700s. Death rates fell faster than birth rates; better health and health care reduced infant mortality rates.

     

    At the same time, much of the world’s population experienced rising standards of living. Better public health reached poorer parts of the world. Urbanization, which lowers birth rate, greatly expanded. Better education, especially for females, is correlated with falling birth rates. One consequence was longer life expectancies and rising average ages in industrialized countries and then in poorer countries. The age composition of the global population changed, as the average age of the populations in most countries started rising.

     

    During this transition period, from the late 1800s to the present, average life expectancies increased from roughly 30 years to 75-80 years in industrializing countries. 

     

    After World War II, the global population exploded:

     

    1900 – Approximately 1.6 billion people

    1950 – 2.6 billion

    2000 – 6.1 billion

    2020 – 7.7 billion

    2024 – 8.0 billion (November, 2023)

    This spectacular increase in population, combined with equally spectacular increases in energy-intensive production and consumption, has contributed to the current global warming crisis. This is more amazing because the earth was in a long-term, gradual cooling cycle. For an excellent book that explains the science and history behind long-term climate cycles, see Peter Brannen, The Story of CO2 is the Story of Everything:  How Carbon Dioxide Made Our World, 2025,

     

    Again, the Lancet global population projections are: 

     

    2064 – 9.7 billion (the peak global population)

    2100 – 8.8 billion

     

    The period from 1950 to 2000 was unusual. Not just in the United States, the global population experienced high birthrates and high population growth rates. In the middle of this period, partly due to more effective and more available birth control, birth rates began a rapid decline in the industrialized countries. The growth rate of the world population began to slow.

     

    The industrialized and modernizing parts of the world now have low birth rates – mostly below replacement – and low death rates. Birth rates are also falling in much of the rest of the world. One factor that is seldom discussed is that birth rates continue to fall in countries that are already at below replacement. One example is the United States.

     

    Declining population is already true in Japan, China and Russia, and parts of central and eastern Europe and much of East Asia (including Japan, Taiwan, and South Korea). European countries will see 30-50% decreases in the long run.

     

    It is important to remember, but seldom discussed, that a projection of declining population or shrinking labor force to 2050 or 2100 does not mean that the decreases stop in those years. These are points on an exponentially declining curve. Decreases in total population eventually fall, as the number of children declines, the number of adults below 65 years of age fall, and then the number of senior citizens fall. 

     

    This assumes no technological or attitudinal changes leading to higher number of births, that a higher percent of heathier seniors will not work longer or retire later, that projections of longer life expectancies are not dramatically higher. Also, no speculation about the future possibility of massive migration, the long-term effects of global warming and climate change, or changes in retirement ages, laws, and programs. No speculation on when the research and innovation in health care technology will become widespread.

     

    As populations and the labor forces of a country decrease, it is possible that income per capita will continue to rise for a generation or two. But in the long run, income per capita will probably fall. 

    Some of the more speculative projections are that a world of robots and AI may replace some or much of the future declining labor force and increase productivity. If so, it may be that a shrinking, aging population may also have a rising standard of living. But it is nearly impossible to predict technological and organizational change over the next 25 or 50 years. 

    GLOBAL DEMOGRAPHICS

    Outside of Africa, the global birth rate is already below replacement but longer life expectancies will lead to continued population growth for one or two generations. About 43 countries already have declining populations.

    Countries with over a third of the world’s population and most of the world’s output now have birth rates below or at replacement. They are mostly the wealthy, industrialized countries, including the United States, Canada, Brazil, Western and Central Europe, Turkey, parts of Southeast Asia, Japan, Russia and China. Collectively, the size of their labor forces has stopped growing. India has a falling birth rate that just fell below replacement. This will add another 17% of the world’s population that has a below replacement birth rate.
     
    There are falling birth rates for most of the rest of the world’s population, coming down from very high levels. But total population continues to grow, partly because of lower infant and child mortality rates, public health programs, better medicine, and longer lives in most of the world. 


    Barring catastrophe or economic collapse from increasing population, Africa will probably not reach zero population growth until some time around 2100. Possibly sooner if birth rates fall faster than currently forecasted.

     

    Regardless of what happens to the size of the labor forces in individual countries, the size of the global labor force after around 2100 will start to fall. A global question may be how it is allocated.  

     

    All countries will face the same challenges:  With declining populations and smaller labor forces, will they be able to invest in economic growth and development (innovation and structural change), deal with environmental costs and climate change, and support aging populations?

     

    GLOBAL FORECASTS

     

    The following are forecasts in the Lancet long-run projection. First, a summary of the global forecast.

     

    Region

    2017

    Population in billions

    Projected 2100

    Population in billions

    2017

    Birth Rate

    Projected 2100

    Birth Rate

    Global

    7.64

    8.79

    2.37

    1.66

     

    The total global population in 2024 is around 8 billion. A maximum global population of around 9.7 billion is expected to occur around 2064. The global birth rate will be below replacement. So over the next 40 years (2025-2065), the world’s population will rise by about 1.7 billion and then over the 35 years after that, decline by approximately 0.9 billion (900 million). By 2100, the global population will have fallen to 8.8 billion. 

     

    We are now in a period of a slowdown in total population growth rates. Global population is growing at about one percent per year and the rate continues to fall. But the increase in the number of people is large, about 80 million people a year. 

     

    Changes in total population may be points on an exponential decay curve. The decline in numbers after achieving the maximum in the 2060s may be slow for a few years and then accelerate. The timing will depend on how fast the African birth rate falls. 

     

    The rate of decline could change with changes in the availability and cost of birth control, anti-aging medical technologies, and more available health care for an aging population.

     

    The biggest unknown is future medical technology that will prolong life expectancies. Technological advances might also decrease medical costs per capita. Regardless of the projection, the fastest growing age cohort in the foreseeable future is 80 years and older.

     

    Countries with birthrates well below replacement and aging populations will experience accelerating decreases in population.

     

    POOR COUNTRIES AND RICH COUNTRIES

     

    Wealthy countries have below replacement birth rates, no growth or declining populations and labor forces, low real economic growth and aging populations and labor forces. Population will continue to concentrate in cities; the population of a small number of cities will be responsible for technological innovation and economic development. Rural areas will continue to lose population.

     

    Africa and a few poor countries outside of Africa will have the opposite problem. They will have above replacement birth rates for a generation or two. This will lead to high growth rates in labor force age groups and total population. Whether or not this will translate into high economic growth rates is problematic, depending on many other factors. These countries could be a source of large immigration to richer countries.

     

    Poor countries typically have poor infrastructure, poor education and health facilities, diseases and epidemics, parasitic and corrupt political elites and bureaucracies, military coups, and internal violence including civil wars for political control.

     

    INTERREGIONAL CHANGE

     

    The global figures hide big regional differences. About half of the world’s projected population growth between 2022 and 2050 is expected to occur in eight countries, five in Africa (Congo, Egypt, Ethiopia, Nigeria and Tanzania) and three in Asia (India, Pakistan and the Philippines). Africa recently passed the combined populations of the United States and Europe. In 1980, Africa’s population was one-third that of the U.S. and Europe.

     

    Most of the largest and fastest growing urban areas in the world are in populous poor countries, including Indonesia, Pakistan, Nigeria and India. Over half of the world’s population live in cities and the percent is rising. Almost all of the increased population in poor countries will live in or move to cities, which are already ecological disasters – traffic gridlock, poor air quality, lack of adequate infrastructure, sinking, raw sewage, and power outages. Many are coastal cities that are already experiencing periodic flooding and storm surges; rising sea levels and the increased number and severity of hurricanes will intensify urban problems.  (See the example of Niger in The Economist (July 1, 2023, 15) for the human side behind the statistics. Niger has one of the highest birth rates in the world.)

     

    Starting sometime in the 2060s, the world’s declining population outside of Africa will equal Africa’s population growth. Africa’s population is expected to grow from about 2.7 billion in the 2060s to about 3.5 billion in 2100. The rest of the world will see population fall from about 7.0 billion in the 2060s to 5.3 billion in 2100, or 1.7 billion. Of this total, about one billion of the decrease will occur in China and India.

     

    The forecast is that the world’s birth rate in 2100 will be below replacement, at 1.66. How soon the world reaches zero population growth will depend critically on when the world’s birth rate falls below replacement, which in turn depends on how fast birth rates decline in Africa.

     

    By 2100, Africa could have about as many people as Asia, about 3.5 billion. Together, Africa and Asia in 2100 could have about 80% of the world’s population. Europe and the United States together will have about 10% of the world’s population. Globally, this will be a world with substantially more people over the age of 65 than under 20 – 2.4 billion vs. 1.7 billion.

     

    There will be significantly different population patterns by region and by country. Many countries in Africa will double or triple in population. Many countries outside of Africa will have a lower population. Some countries, 23 in all, including China, Japan, South Korea, Thailand, Spain and Bulgaria will see their populations cut in half by 2100. 

     

    The remaining populations outside of Africa will also be older. Countries with large population decreases mean old populations, with a high percent of over-65 and a low percent of children. Africa will have the “youngest” regional population, which is one reason that the region’s population can continue to grow even as birth rates fall below replacement.

     

    THE DEMOGRAPHICS OF SPECIFIC REGIONS AND COUNTRIES

     

    The Lancet projections for the six most populous countries in 2100 are India (1·09 billion), Nigeria (791 million), China (750 million), the United States (336 million), and Pakistan (248 million). The projections are probably too high for India and the United States if the birth rate in India continues to fall and the current (2025) immigration and deportation policies of the United States continue.

     

     

    SUMMARY OF REGIONAL PROJECTIONS

     

    Region

    2017

    Population

    Projected 2100

    Population

    2017

    Birth Rate

    Projected 2100

    Birth Rate

    Africa

    1,227

    3,504

    4.62

    1.73

    Central Europe

       115

         52

    1.43

    1.35

    Eastern Europe (Includes Russia)

       210

       135

    1.55

    1.45

    High Income East Asia

       187

         94

    1.30

    1.33

    North America

       361

       380

    1.79

    1.54

    Western Europe

       433

       375

    1.59

    1.64

    Latin America

       582

       575

    2.18

    1.58

    South Asia

    1,783

    1,440

    2.27

    1.33

    Southeast & East Asia

    2,159

    1,435

    1.72

    1.61

    Lancet

     

    By the end of the century, every region and almost every country will have a birth rate below replacement.

     

    By 2100, Africa could have about as many people as in Asia, about 3.5 billion. Together, Africa and Asia in 2100 could have about 80% of the world’s population. The United States plus all of Europe (including Russia) might have about 10% of the world’s population.

     

     

    AFRICA

     

    Year

    Millions

    % Increase

    Millions

    Increase

     

    1960

       284

    29%

     

     

    1970

       366

    29%

      82

     

    1980

       483

    32%

    117

     

    1990

       644

    33%

    161

     

    2000

       831

    29%

    187

     

    2010

    1,072

    29%

    241

     

    2020

    1,381

    29%

    309

     

     

    In 2024, Africa’s population was estimated to be 1,515 million (1½ billion). (UN numbers) Current UN projection is that Africa’s population will increase to about 2.5 billion by 2050 and 3.5 billion in 2100. 

     

    Region

    2017

    Population

    Projected 2100

    Population

    2017

    Birth Rate

    Projected 2100

    Birth Rate

     

    Sub-Sahara

    1,026

    3,071

    4.62

    1.73

     

    North Africa

       201

       433

     

     

     

    Africa Total

    1,227

    3,504

     

     

     

    Lancet projections

     

    Between 2010 and 2020, in just 10 years, the African population increased about the same amount as the total population of the United States. The increase in African population in this decade (2020-2030) will probably be greater, despite the impact of Covid. Better vaccines and control methods of malaria, Africa’s health scourge, are being perfected and produced.

     

    Africa is the poorest region in the world. Africa’s population is expected to triple between 2017 and 2100. By the end of the century, Africa will have 40-45% of the world’s population.  

     

    Sub-Saharan Africa’s 2024 birth rate is about 4.3 – 4.4 children per woman past child-bearing ages, by far the highest regional birth rate in the world. This number is expected to fall to about 1.7 in 2100. North Africa’s collective birth rate, dominated by Egypt, might be near replacement.

     

    It will still be the highest regional birth rate in the world. Although below replacement, Africa’s population will still be increasing at the end of the century but may be close to its maximum. 

     

    Family planning, combined with urbanization and more education of females, could lead to birth rates declining faster than projected in high birth-rate countries. In Africa, Ethiopia, Malawi and Rwanda promoted family planning and have seen large decreases in their birth rates. Kenya, after investing in family planning clinics and information, has seen its fertility rate fall from 6.5 in the late 1980s to 2.4, marginally above replacement and half the rate of most African countries.

     

    This is a good example of exponential growth. Although the growth rate remains about constant, around 30% per decade (2.4% per year), the 10-year increase in population gets larger as the base increases over time.

     

    The working age population in sub-Saharan Africa will increase by about 700 million (!) by 2050. This will be roughly equal to the current working-age population of China or India. Although Africa will have a large increase in population, its young population will lead to a small percent increase in senior citizens.

     

    Projected populations for the most populous countries are:

     

    Most Populous Countries

    2017

    Population

    Projected 2100

    Population

    2017

    Birth Rate

    Projected 2100

    Birth Rate

     

    Nigeria

    206

    790

    5.11

    1.69

     

    Ethiopia

    103

    225

    4.79

    1.33

     

    Egypt

      96

    200

    2.66

    2.08

     

    Congo (DRC)

      81

    245

    5.05

    1.75

     

    Tanzania

      54

    185

    4.79

    1.60

     

    Lancet projections

     

    I find the population number for Nigeria in 2100 astonishing. Nigeria’s population is currently around 230 million and is expected to be about 750-800 million by 2100. In that year, Nigeria’s population is expected to be about equal to China’s population and second only to India’s. The populations of the Congo and Tanzania are expected to triple. (For a detailed look at Nigeria, see Nigeria.)

     

    Africa and some poor countries outside of Africa will have the opposite problem of richer countries and regions. They will have above replacement birth rates for a generation or two. This will lead to high growth rates in labor force age groups and total population. Whether or not this will translate into high economic growth rates is problematic, depending on many other factors. These countries could be a source of large numbers of immigrants to richer countries.

    The long-term high birth rates and population growth rates partly explain why from 1970 to 2024 sub-Saharan Africa’s inflation-adjusted (real) GDP per person has not increased. Sub-Saharan population went from 290 million in 1970 to 1.3 billion in 2024, over 2% compounded yearly growth. Real income per person has remained around $1,500. Sub-Saharan’s economic future will partly depend on how fast the current birth rate declines.

     

    RUSSIA

     

    Russia’s population is declining. The UN projection is that Russia’s current population of around 145 million will fall to about 85 million by the end of the century, about a 40% decrease. The Lancet projection is around 105 million, about a 30% decline. Projected future birth rate of 1.43 is about the same as the current birth rate of 1.42.

     

    Russia has avoided a large decrease in its population by encouraging immigration, mostly from former republics of the Soviet Union. While birthrates are below replacement, the decline of the national population has been offset in recent years by immigration. The Lancet projection was made right after a period of large immigration, which has since slowed down. Lower rates of immigration since 2018 have contributed to decreases in population. 

     

    Male life expectancies in Russia have been going down for decades but might have recently stabilized (Russian statistics are suspect). Russia was particularly hard hit by Covid because of low levels of vaccination from an ineffective domestically produced vaccine. Russia has the world’s highest per capita consumption of alcohol and poor health care facilities outside of the major cities. The war in Ukraine has resulted in a large number of deaths and serious injuries. Also a large recent migration among educated young male adults, which might affect future population and economic growth projections. 

     

    CENTRAL AND EASTERN EUROPE

     

    Because of past very low birth rates and high levels of out-migration, central and eastern Europe is looking at population declines in this generation. It is already happening in the Balkan countries. The war in Ukraine has led to millions of emigrants; how many will return is unknown. 

     

    Some UN projections show that many countries in central and eastern Europe might have even larger total percent declines than Japan by the end of the century (over 50%). The region as a whole will probably see a population decline of about 50% by 2100 to less than 100 million people (without Russia). This means that the “borderlands” of Europe, a traditional source of violence and target for conquest, will be depopulated. Total population of all of central and eastern Europe might be less than the population of Russia.

     

    WESTERN EUROPE

     

    Western Europe is further along the population aging curve but because of immigration of younger people, the decline will not be as precipitous. Countries in western Europe draw in immigrants from central and eastern European countries in the European Union and from former colonies. And western Europe, like Japan, currently starts with more resources to support an aging population.  But high structural unemployment rates, low economic growth, restrictive labor laws and generous early retirement benefits will strain western Europe’s ability to grow and maintain current social welfare levels. A few European countries realize that current levels of social welfare are not sustainable and have begun reviews of government retirement and health care programs. This problem is exacerbated by the currently very high unemployment and underemployment rates among younger employees.

     

    Facing the future, a number of Western European countries have set up programs to encourage legal migration from outside the European Union, in addition to migration from central European countries within the EU. But increase in immigrants is currently being met with increasing domestic opposition and the rise of anti-immigration political parties.

     

    CHINA

     

    Demographics Update (August 8, 2025)

    China’s slowly decreasing total population masks rapid and large changes in its age distribution. Between 2021 and 2024, the number of pre-school children (3 to 6 year olds) fell from 48 million to 36 million. The number is expected to fall another 14 million in the next five years as the birth rate of 1.0 is one of the lowest in the world. In contrast, over the same period, the number of people aged 65 and over is projected to  rise from 211 million to 256 million, according to UN projections.

    China, which enforced a “one-child” program from the 1970s to 2015, has one of the lowest birthrates in the world, around 1.1 (2023) and probably falling. Although the “one-child” program has been relaxed and then abandoned in recent years, the national birthrate is below that of the “one-child” period around 1.5 in the 1990s. The number of children is expected to fall about 50 million from around 2020 to 2035. 

    China currently has a relatively young average-age population but the average age is rising very rapidly because of the very low long-term birth rates. 

     

    China’s total population probably has already reached its peak of 1.4 billion people. The Lancet projection is a decline to about 750 million people in 2100. Thus China will account for most of the global decline of population.

     

    China’s working-age population began shrinking in 2012.  By around 2050, the decrease will be about the size of the current U.S. total labor force (170 million).

     

    China has a special problem that could affect future demographics. Chinese youth, ages 19-24, have a very high unemployment rate, probably over 20% and possibly much higher. The government stopped publishing statistics and then came out with a new series with a lower unemployment rate. Colleges graduates in particular are finding it hard to get a decent position; many are unemployed, accepting menial jobs just to earn small amounts of income, or are moving in with relatives. The government’s policy is to tell the unemployed youth to “eat bitterness.” 

    At a minimum, this will probably affect future demographics and economic growth – lower income, later marriages. This is in addition of a dearth of females because of the past “one child” policy that led to tens of millions of abortions of female embryos and female infanticide.

     

    As in the United States, a stagnant or declining population is not spread evenly across the country. Government policies to help rural and inland areas do not seem to be working. Between 2010 and 2020, 1,240 counties and county-cities out of 1,866 saw their populations shrink, many by up to 35%, as birth rates fell to record lows and people continued to go to cities in search of work.

    The Economist, “China’s last boomtowns show rapid growth is still possible,” July 30, 2024.

     

    Next year (2025) the median (half above, half below) age in China will pass that of the United States. China’s over-60 population of over 300 million is already close to the total population of the United States. By around 2050, the over-60 population is projected to be over 500 million, over 35% of China’s total population.

    China’s first reaction to this trend has been to slowly raise their low retirement ages over 15 years. For men, the retirement age is being raised from 60 to 63. For women, from 55 to 58 for white-collar workers and from 50 to 55 for blue-collar workers. A related reason is that the public pension costs are “squeezing” government budgets. (The Economist, “The World in Brief,” September 13, 2024).

     

    A mature, experienced workforce should help maintain high but falling economic growth rates for another generation. After about 2050, demographics will begin working against Chinese economic growth.

     

    This policy will be very unpopular. Traditionally, families were multi-generational and children (daughters and daughters-in-law) were expected to care for aging parents. But hundreds of millions of the working-age population have migrated from rural areas to cities, leaving their children in the care of grandparents. A rising percent of women in the cities are working. If retirement ages are raised and grandparents in both the cities and countryside have to work longer, there may be less baby-sitting. This might lower the birth rate even more. In addition, China has strong age discrimination, so that the older population might have to wait longer between being employed and receiving a retirement pension.

     

    China has massive internal migration. It is governed by hukou system, which has roots in Chinese history. 

     

    In the hukou system, everyone carries a household registration card with the individual’s place of birth. More than half of China’s population have a rural hukou. Individuals cannot legally change their hukou without official approval. But China’s need for large amounts of labor in cities and industrial areas has created a demand for “illegal” migrants. 

     

    The migrants have virtually no rights or legal protection. They have no access to social services, health care or education. Wages are often below the official minimum and they can be “deported” back to their home location at any time.

     

    This creates an exploited underclass similar to illegal immigrants in other countries. The number of rural migrant workers in China is maybe around 300 million, comprising more than one third of the Chinese labor force. Official Chinese 2020 census figures put the rural hukou population at 376 million people.

     

    Rural migrant laborers propelled the extraordinary boom of China’s economy over the last decades but are still subject to discrimination and unfair treatment. Their children are often separated from their parents for years and raised by grandparents. The government is slowly improving the legal status of some rural migrant workers but fears that former rural migrants might lead to higher unemployment in the major cities. 

    The minimum government-funded pension has been raised to about $22 a month. Migrant workers receive lower pension than those registered as city residences. They average about $28 a month. The government is slowly allowing some long-term hukou workers in cities to qualify for the higher pensions of city residents.

     

    Statista, “Migrant workers in China – statistics and facts,” June 3, 2024.

    The Economist, “Sunset Delayed,” September 21, 2024, 38-40.

     

    EAST AND SOUTHEAST ASIA – GROWING OLD BEFORE GETTING RICH

     

    Most countries in East Asia are “middle-income” countries, with per capita income of $7,000 or less. They are becoming “aged” societies (14% of population over 65) with 1/5 to 1/10 the per capita income that Japan had when it reached this level.

     

    South Korea has the lowest birth rate in the world of 0.7, followed by Taiwan with a birth rate of 0.87. Taiwan’s total population has already stopped growing.

     

    Because of low birth rates in the past, these countries are aging rapidly, more rapidly than rich countries like Japan, western Europe and the United States did in the past.

     

    South Korea and Taiwan are looking at demographic futures similar to Japan’s. South Korea’s current population of 51 million is expected to decline to 30 million or less by 2100. Taiwan’s population is expected to fall from 24 million currently to 11 million in 2100 despite a slight increase in the birth rate.

     

    Indonesia, the Philippines and Vietnam are expected to have different trajectories.  Indonesia, with a current population of 260 million and a birth rate close to replacement, might have about the same or slightly lower population in 2100. The Philippines has a high birth rate (3.2) and might see its population go from 105 million now to 170 million in 2100. Against this increase is the probability that the Philippines will continue to have high rates of emigration. Vietnam, with a current population of around 100 million, is expected to experience a decline to about 75 million in 2100.

     

    Looking at Asia as a whole, “Asia will account for 70% of the expected increase in senior citizens in poor countries by 2050.” (The Economist, “Old before their time,” October 14, 2023, 31)

     

    These countries, like China, are transitioning from having mature, experienced labor forces to retirement. A large mature labor force is good for economic growth. It is problematic how a country with a rapidly increasing percent of its population in the retirement ages will continue to experience economic growth.

     

    As in China, families have been a traditional source of care for the elderly. This is starting to break down as children migrate to the cities and more women have entered the labor force. Governments have been slow to provide support for their aging populations, although this is starting to change.

     

    SOUTH ASIA:  INDIA, BANGLADESH AND PAKISTAN

     

    India has a population of 1.4 billion people, about the same as China. The two countries together contain 35% of the world’s total population.

     

    Unlike China, India’s population is expanding. The Lancet projection is that India will reach a maximum population of around 1.6 billion in 2048 and then begin falling to 1.1 billion in 2100. Thus, by 2100, India and China will account for a decrease of about one billion people from today’s total.

     

    India’s birth rate is around 2.1, just at or above the replacement rate. Lancet’s projection is a continuous fall in India’s birth rate, reaching 1.3 in 2100. 

     

    India, like China, experiences massive internal migration. Based on a recent census, India has approximately 450 million internal migrants. They are mostly from the poorer north going to the richer south, replacing the south’s aging labor force.

     

    Bangladesh’s population is around 160 million people. Lancet expects its population to decrease to about 80 million by 2100, a 50% decline. Bangladesh’s current birth rate is just below replacement but is expected to fall to 1.2 in 2100.

     

    Pakistan is another populous country, with 215 million people. It also has a high birth rate, at 3.4. After reaching a peak population of about 315 million in 2062, Pakistan’s population is expected to fall to about 250 million in 2100, with a low birth rate of 1.3.

     

    LATIN AMERICA

     

    Latin America’s population of 582 million in 2100 is about the same as today. But without Mexico, Latin America’s population would decrease by 50 million.

     

    Lancet projections for the largest countries in Latin America:

     

    Latin America

       582

       575

    2.18

    1.58

    Most Populous Countries

    2017

    Population

    Projected 2100

    Population

    2017

    Birth Rate

    Projected 2100

    Birth Rate

     

    Brazil

    212

    165

    1.76

    1.44

     

    Mexico

    127

    145

    2.42

    1.44

     

    Columbia

      51

      47

    2.12

    1.45

     

    Argentina

      44

      48

    2.17

    1.62

     

         Total

    434

    405

     

     

     

     

     

    The following is mostly a summary of The Economist, “Continent of discontent,” September 7, 2019, 81.

     

    Gallup polls reveal that 31% of the population in Latin America want to leave their countries, about the same percent of the people polled in Africa and the Middle East. Latin Americans are fed up with violence and poverty, especially in southern Mexico, El Salvador, Honduras and Guatemala. Over 4 million people – about 13% of the population – have already left Venezuela. There have been recessions in Brazil and Argentina, in addition to 64,000 murders in Brazil in 2017. Drug gangs are a threat in many Latin American cities and countries. Much of the post-war increase in income and wealth has gone to a small percent of the population, a reason for the recent demonstrations in Chile. Overall, Latin America has had little economic growth since 2015.

     

    Corruption is everywhere. 80% of those polled in Latin America think their government is corrupt. According to another poll, “the share of Latin Americans dissatisfied with how democracy works in their country has risen from 52% in 2010 to 71% in 2018.” 

     

    Since 2018, autocratic populists who campaigned against corruption and crime won presidential elections in Brazil (a conservative), Mexico (a leftist) and other countries. Argentina has elected an outsider who promises major changes in a society racked by high rates of inflation.

     

    If voters remain disenchanted and disgusted, more autocratic leaders are likely to be elected. And emigration pressure on U.S. southern borders will increase.

     

    ——————————————————————————————–

     

    APPENDIX

     

    Lancet Methodology (Quoted from the authors of the Lancet study) 

     

    We modelled future population in reference and alternative scenarios as a function of fertility, migration, and mortality rates. We developed statistical models for completed cohort fertility at age 50 years (CCF50). Completed cohort fertility is much more stable over time than the period measure of the total fertility rate (TFR). We modelled CCF50 as a time-series random walk function of educational attainment and contraceptive met need. Age-specific fertility rates were modelled as a function of CCF50 and covariates. We modelled age-specific mortality to 2100 using underlying mortality, a risk factor scalar, and an autoregressive integrated moving average (ARIMA) model. Net migration was modelled as a function of the Socio-demographic Index, crude population growth rate, and deaths from war and natural disasters; and use of an ARIMA model. The model framework was used to develop a reference scenario and alternative scenarios based on the pace of change in educational attainment and contraceptive met need. We estimated the size of gross domestic product for each country and territory in the reference scenario. Forecast uncertainty intervals (UIs) incorporated uncertainty propagated from past data inputs, model estimation, and forecast data distributions.

    ======================================

    For two detailed studies, see

    Demographics, Immigration and Future Economic Growth of the United States


    Demographics and Population Projections of Japan

    Also see

    Nigeria

    China’s Economy, Politics, and Demography 

  • Nigeria

    Nigeria

     

    Lagos – Over 30 Million People 


    POPULATION

    This case study of Nigeria, building on


    Global Demographics and Population Projections

    illustrates the problems that recently-independent countries, especially in Africa, have had. Rapid population growth has made it difficult to deal with these problems in the past; continued large population growth in the future will be even more burdensome. 

    Nigeria became independent in 1960. Its population was 45 million people. In 2024 its population was 233 million people. Nigeria’s capital, Lagos, is already one of the largest cities in the world. In 2050 its projected population will be in the range of 375-400 million people, depending on how fast its birth rate continues to come down. Around that year Nigeria will replace the United States as the third most populous country in the world. 

     

    By 2100, Nigeria is projected to have at least 750 million people, which will be about equal to the projected population of China.

     

    Nigeria’s birth rate in 2023 was 4.5, substantially higher than the replacement rate of 2.1 children per woman. Although the birth rate is down from the high of 6.9 in 1979, it is still one of the highest in the world. Government programs to reduce the birth rate are part of health care programs, which are being cut back because the stopping of U.S. aid for health care, which includes birth control programs.

     

    ECONOMY

    This forms the backdrop for discussing Nigeria’s current problems and prospects for economic growth and development. One conclusion is obvious: Nigeria will need very high and sustained economic growth rates to overcome the rapid increase in population and increase the country’s real per capita income. 

     

    Nigeria’s economy still depends on oil; Nigeria is a major oil exporter. Real per capita income goes up and down with the price of oil. Economic statistics tend to indicate that real per capita income has not increased in decades.

     

    One of the successful areas of economic growth is telecommunications. About 90% of the population has mobile phones and about 25% have internet access. Data center capacity is expanding.

    Nigeria is forming economic ties with China. In June-August 2025, Chinese exports rose almost 60%. The increase was tied to Chinese Belt and Road infrastructure projects in the country, led by demand for equipment to build Chinese-financed railroads and power generation.

    ELECTRICITY

     

    A crucial reason for the lack of economic growth has been the government’s failure to provide enough dependable electricity.

     

    The electricity power grid is owned and operated by the government. Of Nigeria’s 233 million people, over 90 million do not have access to electricity. Nigeria’s electricity production per person is one of the lowest in the world. Long term underinvestment results in frequent blackouts and shortages. Many users, including the government, do not pay their electricity bills; revenue accounts for about 65% of operating costs.

     

    Private gas-powered generators generate more than twice as much electricity as the power grid. Nigerians’ spending on off-grid power is equal to 60% of the government’s entire budget. Cities suffer from noise and air pollution.

    Over half of the country’s manufacturing sector is not connected. New data centers have to provide their own power.

     

    There are plans to build off-grid solar and other renewable energy projects. Even if successful, they will not close Nigeria’s massive electricity shortage. And if successful, there will probably be fewer customers on the grid, making it even harder to expand and modernize it. 

     

    Government energy policy seems inconsistent; it would like to have solar projects connected to the grid, but it is also thinking about banning solar panel imports.

     

         This discussion of electricity is based on The                                     Economist, “A nation in the dark,” May 10, 2025,         38.

    Unless banned, roof-top solar panel installations will probably increase rapidly. The price of Chinese exported solar panels has fallen over 50% in the last three years because of overcapacity and price wars.

    China has built a high-speed rail line between two suburbs.

     

    POLITICAL


    Nigeria’s borders were established by England, Nigeria’s colonial master, in 1898. England combined several kingdoms into an arbritary

    administrative area.

     

    The largest ethnic group – Hausa – makes up about 30% of the population. But there are about 275 distinct ethnic groups and about 500 languages and dialects. The population is about evenly divided between Christians and Muslims. Muslims predominate in the north, Christians in the south. There is resentment in the north that the south has benefited more from the oil wealth. The Muslim population, with a higher birth rate, is increasing its share of the total population.  

     

    Nigeria has had a tumultuous political history since independence. National politics has been dominated by military coups, fighting among top military officers for power, and brutal military governments. Civilian governments have tended to be corrupt. 2023 was the first national election in Nigeria’s history where no “civilian” candidate was not a former military ruler.  

     

    There was a brutal civil war shortly after independence. The predominantly Muslim region in the north is experiencing jihadist terrorism.

     

    Politics has suffered from widespread corruption and the inability to support economic development beyond oil extraction. The country suffers from high inflation and large government fiscal deficits.

    OTHER TOPICS

     

    The oil producing region of Nigeria is one of the most polluted areas in the world.

     

    As farmers attempt to expand food production, the result has been massive deforestation as bad as in the Amazon. Even with this, food production has not kept up with population growth. Nigeria has gone from being a net food exporter to a net food importer.

    According to Doctors Without Borders, there is widespread malnutrition in northern Nigeria.

     

    Global warming has made producing food more difficult. It is one reason for the large rural migration to the cities.

    ===================================== 

    For a discussion of Africa’s demographics and future population, see the essay cited above.

    Global Demographics and Population Projections


    There are other essays on demographics and population projections for the global economy and individual countries.


    Demographics, Immigration and Future Economic Growth of the United States


    Demographics and Population Projections of Japan


    For a variety of essays, with links, on this blog, see

    List of Post by Topics