Can Investments in Emerging Markets Help to Solve the Aging Problem?
AbstractPrefunding of pension commitments in OECD economies is increasingly seen as a central strategy to cope with the aging of their populations. This paper argues that investments in emerging markets can help at the margin but are unable to solve the demographic problem. While these investments bring potential advantages through enhanced risk diversification, higher rates of return, and accelerated financial market development, the total effects are likely to be limited. Furthermore, in order to harvest them, capital sending and receiving countries must fulfill various politically and economically challenging requirements. For pension policy, the limited contribution of pre-funding at home and abroad in order to address the demographic problem implies that enhanced emphasis must be given to domestic reforms.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 304.
Date of creation: 2000
Date of revision:
Aging; pensions; international investments; emerging markets; risk diversification;
Other versions of this item:
- Holzmann, Robert, 2000. "Can investments in emerging markets help to solve the aging problem ?," Social Protection Discussion Papers 23070, The World Bank.
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