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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.
  • Handle: RePEc:ces:ceswps:_304
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    References listed on IDEAS

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    Cited by:

    1. Christine Mayrhuber & Gerhard Rünstler & Thomas Url & Werner Eichhorst & Michael J. Kendzia & Maarten Gerard & Connie Nielsen, 2011. "Pension Systems in the EU. Contingent Liabilities and Assets in the Public and Private Sector," WIFO Studies, WIFO, number 43938.
    2. Cai, Jie & Stoyanov, Andrey, 2016. "Population aging and comparative advantage," Journal of International Economics, Elsevier, vol. 102(C), pages 1-21.
    3. 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.
    4. Axel Boersch-Supan & Alexander Ludwig & Joachim Winter, 2001. "Aging and International Capital Flows," NBER Working Papers 8553, National Bureau of Economic Research, Inc.
    5. Mr. Erik Lueth, 2008. "Capital Flows and Demographics—An Asian Perspective," IMF Working Papers 2008/008, International Monetary Fund.
    6. P. R. Lane, 2001. "The National Pensions Reserve Fund: Pitfalls and Opportunities," Trinity Economics Papers 20017, Trinity College Dublin, Department of Economics.
    7. 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, June.
    8. Holzmann, Robert, 2005. "Demographic Alternatives for Aging Industrial Countries: Increased Total Fertility Rate, Labor Force Participation, or Immigration," IZA Discussion Papers 1885, Institute of Labor Economics (IZA).
    9. Narciso, Alexandre, 2010. "The impact of population ageing on international capital flows," MPRA Paper 26457, University Library of Munich, Germany.
    10. 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.
    11. Forum Franco Allemand, 2001. "EU Labour Markets," Working Papers 2001-05, CEPII research center.

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