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Can Investments in Emerging Markets Help to Solve the Aging Problem?

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  • Robert Holzmann

Abstract

Prefunding 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.

Suggested Citation

  • Robert Holzmann, 2000. "Can Investments in Emerging Markets Help to Solve the Aging Problem?," CESifo Working Paper Series 304, CESifo Group Munich.
  • Handle: RePEc:ces:ceswps:_304
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Erik Lueth, 2008. "Capital Flows and Demographics—An Asian Perspective," IMF Working Papers 08/8, International Monetary Fund.
    2. Börsch-Supan, Axel & Ludwig, Alexander & Winter, Joachim, 2001. "Aging and International Capital Flows," Discussion Papers 605, Institut fuer Volkswirtschaftslehre und Statistik, Abteilung fuer Volkswirtschaftslehre.
    3. Cai, Jie & Stoyanov, Andrey, 2016. "Population aging and comparative advantage," Journal of International Economics, Elsevier, vol. 102(C), pages 1-21.
    4. Holzmann, Robert, 2005. "Demographic Alternatives for Aging Industrial Countries: Increased Total Fertility Rate, Labor Force Participation, or Immigration," IZA Discussion Papers 1885, Institute for the Study of Labor (IZA).
    5. Narciso, Alexandre, 2010. "The impact of population ageing on international capital flows," MPRA Paper 26457, University Library of Munich, Germany.
    6. Asher, Mukul G., 2002. "The Role of Global Economy in Financing Old Age: The Case of Singapore," Discussion Paper 79, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    7. Barry P. Bosworth & Ralph C. Bryant & Gary Burtless, 2004. "The Impact of Aging on Financial Markets and the Economy: A Survey," Working Papers, Center for Retirement Research at Boston College 2004-23, Center for Retirement Research.
    8. Eichhorst, Werner & Gerard, Maarten & Kendzia, Michael J. & Mayrhuber, Christine & Nielsen, Conny & Rünstler, Gerhard & Url, Thomas, 2011. "Report No. 42: Pension Systems in the EU – Contingent Liabilities and Assets in the Public and Private Sector," IZA Research Reports 42, Institute for the Study of Labor (IZA).
    9. Forum Franco Allemand, 2001. "EU Labour Markets," Working Papers 2001-05, CEPII research center.
    10. P. R. Lane, 2001. "The National Pensions Reserve Fund: Pitfalls and Opportunities," Trinity Economics Papers 20017, Trinity College Dublin, Department of Economics.
    11. F. Landis MacKellar, 2000. "The Predicament of Population Aging: A Review Essay," Population and Development Review, The Population Council, Inc., vol. 26(2), pages 365-404.

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