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Demographic Changes and the Gains from Globalisation: An Analysis of Ageing, Capital Flows, and International Trade

Author

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  • Mérette Marcel

    (University of Ottawa)

  • Georges Patrick

    (University of Ottawa)

Abstract

This paper develops a multi-country overlapping-generations general equilibrium model to gauge the economic impact of demographic changes in the global economy and its transmission effects on different countries. Although severe demographic pressures contribute to significantly lower real GDP per capita across several regions in the world, globalisation through international trade generates an intertemporal gain from trade and a long-lasting improvement in the terms of trade of older OECD countries, which sustains their real consumption per capita (when goods from different geographical origins are assumed to be imperfectly substitutable), while globalisation through capital flows stimulates capital accumulation and growth in younger countries such as India and various parts of the rest of the world. The paper also illustrates that the very distinct demographic projections for China and India might, ceteris paribus, lead to striking divergences in their economic fortune.

Suggested Citation

  • Mérette Marcel & Georges Patrick, 2010. "Demographic Changes and the Gains from Globalisation: An Analysis of Ageing, Capital Flows, and International Trade," Global Economy Journal, De Gruyter, vol. 10(3), pages 1-39, October.
    • Handle: RePEc:bpj:glecon:v:10:y:2010:i:3:n:3
    DOI: 10.2202/1524-5861.1549
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    References listed on IDEAS

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    Cited by:

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    2. Magdalena Zachlod-Jelec & Magdalena Zachlod-Jelec & Anamaria Maftei & Jonathan Pycroft, 2017. "Combining micro- and macroeconomic approach to simulate labour tax wedge cut in Italy," EcoMod2017 10321, EcoMod.
    3. Georges, Patrick & Mérette, Marcel, 2011. "Trade Diversification Away from the U.S. or North American Customs Union? A Review of Canada’s Trade Policy Options," Conference papers 332084, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Lisenkova, Katerina & Mérette, Marcel & Wright, Robert, 2013. "Population ageing and the labour market: Modelling size and age-specific effects," Economic Modelling, Elsevier, vol. 35(C), pages 981-989.
    5. Oyamada, Kazuhiko & Itakura, Ken, 2013. "Population Aging in the Interdependent Global Economy: A Computational Approach with an Overlapping Generations Model of Global Trade," Conference papers 332350, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Sonmez, Yontem & McDonald, Scott & Walmsley, Terrie, 2011. "Augmenting the GTAP Database: Are the Data on Intra Institutional Transactions Important?," Conference papers 332085, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    7. Jonathan Pycroft & Magdalena Zachlod-Jelec, 2017. "Who bears the burden? Tax Strategies to Reduce Long-term Debt in Italy: An overlapping generations model approach," EcoMod2017 10304, EcoMod.
    8. Patrick Georges, 2017. "Canada’s Trade Policy Options under Donald Trump: NAFTA’s rules of origin, Canada-U.S. security perimeter, and Canada’s geographical trade diversification opportunities," Working Papers 1707E, University of Ottawa, Department of Economics.
    9. Michael Graff & Kam Ki Tang & Jie Zhang, 2012. "Does Demographic Change Affect the Current Account? A Reconsideration," Global Economy Journal (GEJ), World Scientific Publishing Co. Pte. Ltd., vol. 12(4), pages 1-26, November.
    10. Georges, Patrick & Lisenkova, Katerina & Mérette, Marcel, 2013. "Can the ageing North benefit from expanding trade with the South?," Economic Modelling, Elsevier, vol. 35(C), pages 990-998.
    11. Hermannsson, Kristinn & Lecca, Patrizio, 2015. "Human Capital in Economics Development: From Labour Productivity to Macroeconomic Impact," 2007 Annual Meeting, July 29-August 1, 2007, Portland, Oregon TN 2015-53, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    12. Thomas Ziesemer & Anne von Gässler, 2021. "Ageing, human capital and demographic dividends with endogenous growth, labour supply and foreign capital," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 20(2), pages 129-160, May.
    13. Gindra Kasnauskiene & Karol Michnevic, 2017. "Contribution of increased life expectancy to economic growth: evidence from CEE countries," International Journal of Economic Sciences, International Institute of Social and Economic Sciences, vol. 6(2), pages 82-99, November.
    14. Kazuhiko Oyamada & Ken Itakura, 2013. "Population Aging in the Interdependent Global Economy: A Computational Approach with an Overlapping Generations Model of Global Trade," EcoMod2013 5672, EcoMod.

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