DCFR brief complements Series "D." Topics include aging China, US Europe, youth bulges outcomes in Middle East, Africa, etc.

1. ‘
‘ Global Themes
an issues brief series of the Dallas Committee on Foreign Relations
DCFR
Dallas Committee on Foreign Relations
Issue No. 4 November 8, 2011
Mapping Demography: Parsing Global Hot Spots
An Interview with Jack Goldstone, eminent demographer, George Mason University
Demography and growth
“The world as a whole has the same age distribution as the United States had
in the 1970s, just before we had two decades of growth. But the world is divided
Jennifer Warren: Commentators have into countries that are very old and very young. If markets are not integrated,
suggested that Japan’s aging society both are going to have severe problems. ”
will reduce growth prospects. In
light of other developed countries are running out of options. Japan again. Absent a giant new surge
having falling replacement ratios, hasn’t had growth or the prospects that makes people more productive,
i.e. reduced population growth, isn’t for growth for a long time. The result we’re not going to get there. I don’t
there another way to look at this? has been kind of political infighting see slowing population as a minor
and stalemate. A generation of young problem; it changes the game.
Jack Goldstone: There is no
people are growing up not expecting
getting away from the fact that JW: Even with favorable
growth. There is no easy way out.
when population growth ends, many demographics in many developing
factors that are good for economic If you look at the population of the countries, is it really a proper strategy
growth also end. You don’t have world as a whole, the age distribution for the many global firms seeking
family formation. You don’t have looks fine. The world as a whole new markets to simply target growth
people saving as much. Instead, they has the same age distribution as areas, or should they be taking a more
begin to draw down their savings. the United States had in the 1970s, nuanced view of growth markets?
There are fewer young people who just before we had two decades of
are the innovators and leading growth. But the world is divided into JG: Firms have to be careful. The
edge consumers coming into the countries that are very old and very developing world and emerging
market. You can compensate for young. If markets are not integrated, economies vary greatly in the rule
that. There are plenty of people in both are going to have severe of law, reliability and stability of
the world who would love a chance problems. government, and human capital of
to live in developed countries. their workforce. You can’t just pour
But most of the rich countries are JW: There is definitely a need money into poor countries and hope.
hostile to immigration. In Japan, for for novel ways forward and belt There will be convergence, and
example, they consider immigration tightening.
a weakening of their national fiber,
and have ruled it out. The other JG: Again, a country gets rich
On September 28th, DCFR President
alternatives for growth are to borrow, according to the productivity of its
Jennifer Warren interviewed Jack
which Japan has done hand over people. If there are fewer people,
Goldstone, director of Center for Global
fist. They’re more indebted than being more productive results in
Policy, George Mason University.
any other country in the world. growth. However there are no signs
This brief’s content is based on his
Their debt is 200% of GDP, but it’s of a big surge in productivity. We had
comments and complements the
owned internally and not the panic a surge in the ‘80s and ‘90s but in
2011-12 Series “D” programs, a DCFR
situation as it is in Europe. They recent years, productivity has slipped
initiative.
4925 Greenville Ave, Suite 1025 | Dallas, Texas 75206 | 214.750.1271 | dallascfr.org

2. 2
they’ll grow. Some will grow; some Indonesia is the same. Turkey has the we’re not doing that. We’re telling
will have disasters. For example, advantage of a wonderful geographic the best and brightest students among
I would not invest in Northern location for trade. I’m not basing our immigrants and among want-
Nigeria now because it’s very these assessments solely on the fact to-be immigrants: ‘You can’t come
volatile. On the other hand, Turkey that they have many young people. here.’ We’re cutting back on basic
is making great strides. Mexico They’re also well-placed for their research funding. Obama is trying to
still has great potential despite its young people to work and increase improve that a bit. However under
problems with criminal elements. their output. the new climate of discretionary
Much of the economy is undergoing spending cuts, it is hard to see how
a rapid industrialization. With many Safety Nets that will grow. We’re not focusing
investment alternatives, you have to on innovation policy to the levels
be selective, and growth is scattered JW: How drastically must the U.S. necessary to play catch up. America’s
around the globe. change entitlements, given growth not going to be aging as severely as
prospects coupled with an aging Italy and Germany, but we shouldn’t
JW: There has been popular interest population? Can you compare the simply assume that we’re out of the
in the BRICs (Brazil, Russia, India, U.S. to Germany and Italy since they woods. Our health costs will kill us
China) for many years. Is the idea of have slightly worse numbers than us if we don’t get our finances under
the TIMBIs (Turkey, India, Mexico, demographically? control.
Brazil and Indonesia) your own new
concept? What can you say about JG: Germany and Italy have lower JW: Developing countries such as
them as growth markets? fertility rates and so will be aging China and Indonesia have need for
faster. But America has much higher social safety nets. What should be
JG: What they all have in common, rates of health care cost increases. learned from the experiences of the
unlike China, are fast-growing labor In comparing two countries, one of Western world — the U.K., France,
forces. Unlike China, the education which pays twice as
level of their workforce is increasing much for health care
as well. China has already made a and only has half
lot of progress in that regard. The the aging problem,
TIMBI countries are still catching it is going to be as
up. In particular, the quality of troubled as a country
higher education has a long way to that pays half as much
go in Brazil, Turkey, and Mexico to for health care but has
catch up to European and American more elderly. There’s
standards. But it is happening. The no getting around this.
ambitions are clearly there. The Either we drastically
University of Sao Paolo wants transform our health
to be a world-class university. A system to get lower
number of Turkish universities are prices or we have
vigorously pursuing exchange with no real advantage
Europe and the U.S. to upgrade. with regard to aging
So the quality of the workforce is compared to the European countries. Germany, U.S., Italy, and Spain —
going to be increasing fast. And with entitlement issues. Is there any
unlike China, these countries are Even though America has a more
country managing this issue properly
still modest in size relative to their favorable demographic profile
with social safety nets?
export market. China’s economy has than the worst European countries,
become so large that it can’t grow including Japan and South Korea, JG: Yes, they are in developing
simply by substituting its exports for it still doesn’t have as favorable a countries. The number one lesson
consumption in rich countries the demographic profile as it did from is— don’t make promises you can’t
way it used to. 1950-2000. From 1950-2000, the keep. China is doing everything they
U.S. labor force grew by about 1% can to avoid stacking up liabilities
Mexico, Brazil, and Indonesia— a year, as did Europe’s. Europe’s for its aging population. Fortunately,
their economies still have room growth is heading toward zero. those that are going to be elderly in
to grow. They also have better America’s growth, though it will China don’t expect the government to
resource positions. Brazil not only continue, will fall to about 0.75%. take care of them the way we do here.
manufactures, it is a rich commodity If our labor force growth falls by They do want some pensions, but
economy. In Mexico, while oil is 75%, we have to make up for that they still will depend more on their
diminishing, it still is producing. with increases in productivity, but children’s earnings, and they will be

3. 3
able to do that for another generation. “The real key to modern wealth creation is innovation and having a knowledge economy.
China’s labor force growth is slowing China is a long way from doing that successfully; and I don’t believe that in an authoritar-
but their severe aging won’t set in ian, information-controlled context, they can really be successful at it.”
until after 2030, whereas ours is
already starting. So they have about a Rwanda, Burundi, and Ethiopia, with actually produces cars cheaper than
twenty-year grace period to develop strong authoritarian governments, China.
policies. popular support and an emphasis
on economic issues. That has been JW: Did you see India’s Nano car
The other lesson they have also working for a while. However even in decked out in jewels?
learned from us — if you make China, the demands for accountability
promises of future liabilities — then are starting to get stronger. For the JG: Last time I was in China, people
account for them properly. China is next ten or fifteen years, China’s were buying diamond-studded cell
considering their demographic profile influence in the world will continue phones for $10,000 each. There’s a
and trying to determine how to create to grow. But China’s own internal lot of money floating around there.
more balanced growth. conflicts about the degrees of JW: There is a great deal of unrest
democracy, accountability, and about China’s own environmental
China transparency will be increasing. problems. Citizens are becoming
JW: Given Africa’s plight (and JW: You write in your blog, there is more concerned and making
understandably different countries an over-emphasis on China, a sort demands. They’re going to have to
having different scenarios of course), of China-phobia. It’s interesting for start spending money on greening
what might be a better approach for their economy.
writers to write about China, but is
African states that are affected by this China-phobia really warranted?
China’s resource quests? JG: They will spend on the
environment but none of this is going
JG: A lot depends on whether Europe
JG: African countries are learning to shut off growth. They still have
and the U.S. collapse, which was not
to play India against China because considerable modernization needed
in the picture two years ago. If the
India now is starting to follow China internally. At most, the days of 8-10%
U.S. really bogs down to 1% growth
in investing overseas, particularly growth are going to last another few
for five or ten years while China
in land but also in manufacturing years.
keeps going even at 6 or 7%, then
facilities. African countries are they could catch up very quickly.
learning from the Chinese approach JW: It’s just like the stock market
to Western investors: ask for joint returns of 8-10% are now 4-5%, if
The real key to modern wealth
projects instead of China-controlled you’re lucky.
creation is innovation and having a
projects. Seek technology transfer, knowledge economy. China is a long JG: On the bright side, we’ve now
and require long-term commitments. way from doing that successfully; had ten years with no growth in
China is building infrastructure in and I don’t believe that in an the market. The odds are it will be
Africa. That’s good for China because authoritarian, information-controlled another ten years. If you can delay
China needs the infrastructure to context, they can really be successful your retirement for twenty years, you
export goods and commodities at it. I see their growth petering out, should have ten years of good growth
from those countries back to China. in part because they will pay more for after that.
Fortunately, infrastructure cannot be their raw materials. Labor is getting
suddenly withdrawn like financial more expensive, so they are losing
capital. That puts the African their niche as
countries dealing with China in a the low-cost
slightly better position than Latin manufacturer.
American and Asian countries that I don’t see
received considerable financial capital them moving
that was then divested at the sign of up the value
downturn. chain anytime
soon. They
JW: It’s easier to turn the spigot off manufacture
than to stop a road or whatever you’re cars better
building. than in the
past, but India
JG: The Chinese economic model has
been very attractive for places like

4. 4 November 8, 2011
Africa to respect human rights to a greater government, and absorb whatever
degree. They even had a reformer in problems follow. It is not fair to them.
JW: What should the U.S.’s goals be Gorbachev, who wanted a modern But if they had the entire African
to help Africa with its varied security face for Russia. They have moved Union with them and some stronger
issues, failing states, and country-by- backwards a bit now with Putin. The support with other developing
country low-income distributions? human rights situation is horrible countries, they might be able to pull
in Russia if you’re a reporter or that off. Oddly enough, even Burma
JG: The goals are easy to state, but a businessman who wants to be has been giving more freedom to
hard to accomplish. The goals are a independent of the Kremlin. You protesters. There’s hope everywhere.
more democratic Africa with stable have no protections. But for ordinary
governments, good rule of law, Russians, the human rights situation JW: Are there European countries that
and moderate balanced economic is still better than it was for most of could help Africa in ways that the
growth. You want Africa to look Soviet history. U.S. cannot because of proximity and
like Denmark or Switzerland, fine. past influence?
The difficulty is what U.S. policy In Africa, the human rights situation
should be in order to promote that in many countries is improving. JG: Even though France and Britain
goal; we have many disagreements There’s a long way to go particularly are trying to keep up their financial
as to means. Some say: ‘Leave things with corruption and accountability support for activities in Africa, it’s
alone; let the markets grow naturally.’ of rulers. In many ways, the Arab going to be difficult. It is no longer
Others comment that markets can Spring was more about accountability the case that the West is flush with
be very dangerous and divisive, and corruption than it was about cash to spend, and developing
especially when you have corrupt popular sovereignty. People were countries able to absorb it. Frankly,
governments and ethnic conflicts. just fed up with government stealing. that didn’t work out so well anyway.
The African Union was the last The shift in development assistance
My suggestion is to leverage global group to recognize the fall is going to be more in the direction
regional political organizations. The of Ghaddafi’s government in Libya, of technical assistance and trade
African Union can be a force for but they’ve come on board now. agreements and less in the way
good if it starts setting a standard South Africa has been supporting the of loans and direct aid. Technical
for democracy and accountability Mugabe government in Zimbabwe assistance is very important for
among its own members. Frankly, because they don’t want to be dealing with anti-corruption and the
African countries will listen to inundated with potential refugees. But rule of law. Trade agreements are
African rulers much more than they need to be embarrassed more most important for economic growth.
they’ll listen to outsiders. But can about this. They need to be told that There are terrible obstacles for textile
you persuade enough African leaders this Mugabe regime is a human rights exports, for example, from North
that it is in their interest? One has to travesty and South Africa should not Africa to Europe. Pakistan doesn’t
start with human rights, rule of law, have the respect of its neighbors if it’s have favored textile exports status
and fighting corruption, rather than going to prop up this regime. with the U.S. They receive a few
starting with democracy. There are billion dollars in military aid from us,
too many governments in Africa who JW: And South Africa is supposed but what they really need is export
are concerned about democracy and to be kind of a leader in the region markets and we deny them that. We
not willing to push for democracy. and in some respects, one of the should not expect these countries to
On the other hand, everybody wants most advanced
economic growth and development, democracies in
but excess corruption and human Africa.
rights’ violations damage growth and
damage Africa’s reputation. JG: However
with 40%
The U.S. should go back to what unemployment,
worked actually at the end of the it has its own
Cold War, when we didn’t attack problems. I can
the Soviet Union head on, but tried understand its
to bring them into a global human reluctance. You
rights regime that called attention cannot expect
to their problems. They were then South Africa
forced to deal with a larger and more to prop up the
vocal dissident movement and had Zimbabwe

5. 5
do better economically, and expect “I think that Egypt will move into a reasonably competitive election. The Islamists
their young people to look forward to will not dominate the parliament. There will still be problems with corruption and
a future, if we won’t trade with them
as freely as we trade with Europe.
accountability, but Egypt can have a spirited free press, active labor unions, and
political participation.”
JW: That’s a good point…
either democracy or international Algeria should remain stable and
JG: The U.S.-Pakistan relationship governance to move forward. Tunisia slowly follow the other countries in
is just at rock bottom right now. The and Egypt both have pretty large the region. If the other countries look
trade agreement is one of the few cadres of people who have served like their democracies are working
things that could move it forward. in international organizations. Libya out, Algeria will be pressured to
has some, but fewer. They’re relying reform. If there’s a renewed civil
Middle East a more on ex-pats. They can use war in Libya, then things could get
external assistance. If you would complicated. With Algeria, we have
JW: Can you play forward your grade the future of Libya based on to wait and see.
observations about countries of note how well the transitional government
in the Arab Spring? has performed so far, you’d have to Syria is the big question right now.
say they’ve done extremely well. An earlier blog post of mine was
JG: I remain optimistic. I think that “Serious in Syria.” The level of
Egypt will move into a reasonably Compared to what happened in Iraq violence has recently escalated. There
competitive election. The Islamists it’s night and day. In Iraq there was was a young woman whose brother
will not dominate the parliament. looting and sectarian rebellions early was an activist. She was tortured and
There will be some extended power on. Whereas the national transition brutally murdered. The army moved
struggles and there will be some council in Libya has kept supplies, into a suburb of Aleppo. That’s
efforts to shape the constitution food and water available. They’ve new. Aleppo hadn’t been touched
to favor this or that group. The managed to squelch conflict. There before and now it’s becoming part
military will want a special position. is no looting. People say this is of the battleground. That would be
The power of workers, students surprising. It looks good. important.
and professionals will be able to
stand up to that of the military and Morocco is a very important country. A number of defectors from the
the Islamists; you’ll have a wide- It has been under the radar because Syrian army have said they will
open competitive political system. its change has been less violent. start planning for a non-resistant
It will be chaotic. There will still The monarch has moved forward movement using our military
be problems with corruption and with constitutional reform in a way experience. I think we’re reaching
accountability, but Egypt can have that has generally pleased and not a stage now where peaceful protest
a spirited free press, active labor frustrated people. If they can keep has not brought the gains that were
unions, and political participation. that up, they will do well. expected, and people are looking for
new ways. They’re not giving up.
Tunisia should be similar. A lot Jordan has not moved as fast as I would like to see more economic
depends there on whether the Morocco, but I think they need pressure through strikes. It’s difficult
Islamists are able to unify. In Egypt, to follow Morocco and give to organize strikes because Syria
the Islamists are so divided between more support to a constitutional is watching unions and labor so
moderate Islamists, extremists, young government if they want to keep their closely; it’s hard to get messages
and old, that I’m not too worried. But population satisfied. out to organize them. The defections
Tunisia has a more established and from the military remain small. If
unified Islamist party that could be Bahrain is going to remain troubled. they increase, as they could, with
stronger. I still think that Tunisia will They have divisions within the more bloodshed and martyrdom, that
be like Egypt. monarchy and between the monarch, would be significant. The economy
the prime minister, and the crown is continuing to weaken. Europe just
Libya: One has to worry about the prince. They all differ in how sanctioned Syrian oil, and that will
real risk of ongoing conflict because much they’d like to work with the hurt.
the leadership is weakly established. opposition. The Shia opposition
There are many regional ethnic remains very intent on pushing for JW: How much do they produce?
divisions in the country. This is a change although they’re not amassing
country where NATO needs to remain in the streets because they know they JG: It’s about 10% of the economy
involved in peacekeeping, police can’t do it. They’re still threatening to and a larger percent of government
training, and helping a country that strike and protest, if they can. revenues. Ninety percent of their oil
does not have much experience with goes to Europe. That’s a big market

6. 6
grow up in a developing country.
Almost half of them will be in
China and India, the rest of Africa,
Latin America, and other parts of
Asia. Without a decent education
and a solid chance for a future, we
face a world fifty years from now
where 80-90% of the workers are
less productive than the workers in
leading countries today. That will be
deadly for them and for us. I don’t
think enough is being done about this.
There is room for some major
global philanthropy to create a
global campaign. Global literacy is
improving. The younger generation
for them and that’s going to be a strengthened and renewed, and in is 95% literate in China and 80%
significant loss. other respects, changed. We need to in India. But between 5th grade and
act together and determine what we college — where young people need
One of my friends speaks of a silent as a country will do to assure our to acquire technical skills and creative
majority in Syria that hasn’t spoken future. Instead, people are fighting thinking skills — that’s where it’s not
out. If the economy continues to over the pieces. happening. Teaching people to read,
deteriorate, the silent majorities will write, and basic arithmetic is easy
join the protestors and that will put Collectively there is agreement for but it’s not enough for the economy.
the government on the ropes. the need to change but nobody wants If they don’t learn some algebra and
their own benefits cut or taxes raised. how to write well, at this point they
JW: Sounds like what’s happening If everybody thinks that way, we’re in don’t get it. You can teach technical
in our country in a way with deficits trouble. The same thing is happening skills later, and we need those in
and debt. The silent majority is finally in Europe, where they were making the world, too. But the generation
speaking up? progress towards European Union of leaders will be very small, which
and financial integration, but not can suffice, but you’re taking a
JG: Obama is on the ropes. People enough to create a common European tremendous amount of potential off
are definitely fed up. A majority do treasury. No government wanted to the table. That’s my biggest worry.
not support the Tea Party policies, but give up that much control over its
they support the Tea Party attitude. national economy. Now there is a Rich countries have their problems,
European-wide fiscal crisis that can’t and I think the problems of American
Demographic time bombs be solved with seventeen different education are exaggerated. We have
countries, each following their own more of an inequality problem than
JW: What is the most pressing time
policy. No one is willing to budge. an overall quality problem. In so
bomb, in your mind? What’s the one
I worry that in the short term, we’re many American schools, we have
that worries you the most?
heading towards another serious 15% - 20% students who are actually
JG: There’s a short-term time bomb long depression because of political coming from really difficult family
and a long-term one. One that I did deadlock. I call this the “selfish situations and struggling before they
not foresee and doesn’t really have elite syndrome” — rich countries’ even get to the school’s gate. That is a
anything to do with demography, is economies suffer major hits because different problem in education.
the severe dysfunction of European they’re not willing to face up to their
liabilities. Kids are eager to learn in developing
and American governments. We have
countries. Teachers’ salaries are
big problems on the horizon. The
The longer term, the big bomb I stolen at the ministry. They don’t
world is going through a dramatic
worry about, is the quality of the have school books or paper (in India).
change. The policies that worked so
labor force in the developing world. Some will overcome that. The world
well for us in the past will not work
Nine of out every ten children will needs a new set of breakthroughs –
in the future. They may need to be

7. 7
and they won’t all come from the US In Africa, Addis Ababa is a relatively concept vehicles. Paul Romer has
or Europe anymore. safe and pleasant city for Africa. a company that is trying to get
Chinese workers are improving developing countries to turn over the
Urban issues the infrastructure, but it works governance of cities to professional
mainly because the government is administrators. They provide the
JW: What about urbanization and
reasonably attentive to providing technocratic managers for the city in
city-level issues with growth?
security for the city as a whole. a country to make it environmentally
JG: A number of the middle-sized You can walk around without being sustainable but still economically
cities in China, in the 3-5 million accosted. Other cities, not so much. viable.
population range, are doing a very People used to look at Cote d’Ivoire
good job trying to build their cities and Abidjan but the civil war has
up. The model for many developing destroyed that.
world cities is something like
Most cities in China are just going
Pittsburgh, which has gone from a
headlong for growth, same in
rather dirty, productive steel town to
Indonesia and India. Although in
a clean, beautiful, intellectual service
India, some high-tech cities are
medical hub. The model will not be
improving their surroundings. On
New York City or Washington. The
the one hand, you have fast-growing,
goal for many third world cities is to
horribly-polluted, growth-at-all-cost
achieve a balance — have enough
cities like some in China. There are
clean water and open space, keep the
overrun cities that are not coping
workforce employed, and move into
very well like Karachi and Mumbai.
the global service sector or high-value
sectors. A recent case, Rio de Janeiro, There are these pristine
is making an effort to pull itself up demonstration model cities that
from crime and drug problems. It countries build as cities of the
is becoming a pleasant place to live future, but they’re not practical
again. Having some offshore oil may or self-sustainable. These model
give them the revenues to do that. eco-cities are toys essentially or
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