Demographic change and long-term economic growth path in Asia

Abstract

Asia faces significant demographic challenges with uncertain economic implications. This study projects the economic trajectories of major Asian economies over 50 years using a growth model focused on demographic change. It provides a practical, tractable growth projection framework that avoids complex dynamic optimization. Utilizing historical data, this framework consists physical and human capital accumulation, technological progress, and labor-capital substitution. While a slowing labor force poses challenges, it does not predetermine Asia's growth prospects. The simulation results highlight the importance of technological progress and physical and human capital investment in mitigating demographic impacts. Projections suggest China's Gross Domestic Product (GDP) growth rate will decline to 0.9–2.5% during 2051–2070. China will surpass Japan in Purchasing Power Parity (PPP)-adjusted GDP per capita by 2050 and approach about 90% of the US level by 2070. India is projected to outpace the US in GDP by 2050 and potentially surpass China by 2070.