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Asian Demography and Foreign Capital Dependence

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  • Matthew Higgins
  • Jeffrey G. Williamson

Abstract

Ansley Coale and Edgar Hoover were right about Asia. Rising fertility and declining infant mortality have had a profound impact on Asian savings, investment and foreign capital dependency since Coale and Hoover wrote in 1958. We argue that: Much of the impressive rise in Asian savings rates since the 1960s can be explained by the equally impressive decline in youth dependency burdens; Where Asia has kicked the foreign capital dependence habit is where youth dependency burdens have fallen most dramatically; Aging will not diminish Japan's capacity to export capital in the next century, but little of it will go to the rest of Asia since the rest will become net capital exporters, at least if demography is allowed to have its way. These conclusions emerge from a model which rejects steady-state analysis in favor of transition analysis, and extends the conventional focus of the dependency rate literature on savings to investment and net capital flows.

Suggested Citation

  • Matthew Higgins & Jeffrey G. Williamson, 1996. "Asian Demography and Foreign Capital Dependence," NBER Working Papers 5560, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:5560
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