Population aging and economic growth: evidence from ASEAN countries

Abstract

Numerous recent empirical studies underscore the adverse impacts of an aging population on economic growth. This could stem from reduced labor force participation and productivity among older workers, or the potential for aging to result in an imbalance between savings and desired investment, consequently leading to a state of secular stagnation. This study employs the fixed effect model (FEM) and utilizes data from 7 ASEAN countries during the period 2001–2021 to assess the impact of population aging on economic growth. The results clearly indicate that an old-aged dependency harms GDP per capita growth, while the productive young workers in the ASEAN region remain a significant resource for overall economic development and GDP per capita growth. Alongside demographic variables, institutions, investment rates, and trade openness also serve as driving factors in promoting GDP per capita growth. The data also demonstrates that more developed countries will experience population aging at a faster rate. Therefore, the socio-economic development policies of ASEAN countries need to consider changes in population age structure in order to propose appropriate economic strategies for development.