Great Power Demographics

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Great Power Demographics

Today, the international arena is dominated by one superpower, the United States, and two great powers, China and Russia.  Although conventional measures of economic and military power often receive more attention, few factors influence the long-term competition between great powers as much as changes in the size, capabilities, and characteristics of national populations.  And thanks to modern economic development, demographics are more important now than ever before.

Since the Industrial Revolution, technological innovations and other improvements in human productivity have led to a long-term decline in the price of natural resources and basic commodities such as food.  At the same time, they have greatly increased the returns to skilled labor.  In fact, most global economic growth since World War II can be attributed to two factors: (1) improvements in human capital—a catchall term for education, health, nutrition, training, and other factors that determine an individual worker’s potential—and (2) favorable business climates, which allowed the value of those human resources to be unlocked.  Human capital, in particular, has an extraordinary impact on economies.

Consider the facts.  Today for each year of increased life expectancy, a country sees a permanent increase in per capita income of about four percent.  And for each additional year of schooling that a country’s citizens obtain, the country sees, on average, a ten percent increase in per capita GDP.

Vast disparities between human capital development in different countries have produced gaps in economic productivity that are larger today than at any previous point in history.  For example, in 2017, according to World Bank estimates, Ireland’s per capita GDP was roughly 100 times as high as that of the Central African Republic (when adjusted for relative purchasing power).  Yet such disparities are not set in stone: thanks to technological breakthroughs, nations can now augment their human capital faster than ever before. 

And unlike behavioral or technological forecasts, demographic projections tend to be reasonably accurate for at least a few decades; for instance, most of the people who will be living in the world of 2040 are already alive today.  And although such projections cannot predict the future, they can offer a rough guide to the emerging contours of international politics and economics.  Therefore, policymakers and managers planning for the medium and long term should pay careful attention to demographic realities...

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