Multiculturalism and Diversity. Immigration patterns. Women. Shifting family structure. Shrinking middle class. Religion demographics. Worldwide aging population. These were among 8 demographic trends that are shaping the US and the world that I wrote about in 2016, driving cultural changes, social orders and business models.
Since then, I’ve continued my research on how world demographics continue to change profoundly and what that means for our near future. Everything I wrote about is still significant and continues to be widely documented, so be sure to read my previous blog if you haven’t done so (click here) ….but here’s a summary of 4 more major global demographic shifts that caught my attention, which will have major impact on all aspects of human life.
Nearly all global population growth taking place outside of developed countries
The world population currently at 7.6B is projected be reach 8B by 2023, 9B by 2037, and 10B by 2055. What most people don’t realize is virtually all of the growth (~96%) is taking place in developing countries. Which ones? India leads with 18%, followed by China (6.7%), Nigeria (6%), Pakistan (4.6%), Indonesia (3.4%) and Congo (3.2%). US is the top leading country in developed countries with 2.8% growth driven by non-white population increase. It is no wonder that McKinsey reported that by 2025, more than half the companies worldwide with $1B in revenues will be headquartered outside of developed countries.
In contrast, population of more than 50 countries are expected to decline between now and 2050, at the current fertility/mortality rate and immigration….lower fertility rate (below replacement rate of 2.1 kids per woman), and higher mortality/life expectancy. This is causing the demographic aging crisis that I wrote abut in my previous blog. Many countries with large economies — including Germany, Italy, Japan, Russia and South Korea — are projected to be substantially smaller by mid century.
Don’t let the current political rhetoric fool you….many developed countries (including US, UK & France) are dependent on future international migration for future population growth and sustaining labor force. According to Pew, in US alone, immigrants are projected to play the primary role in the growth of working-age population, increasing from 33.9M in 2015 to 38.5M by 2035. Absent these new arrivals, US working-age population would fall, negatively impacting GDP.
Used to be all about China and India….now it’s all about Africa
In recent years, the population of Africa has had the fastest growth among all regions. This UN report projects that more than half of the anticipated global growth between now and 2050 is expected to occur in Africa. Asia is expected to be the second. We all have heard a lot about the sheer magnitude of population size of India and China, but not much has been said about the growth in Africa.
According to an Exxon report, Africa is not only the fastest growing, but it also has the largest working-age population across regions by 2040. India is likely to replace China as the most populous nation by 2025, with a significant increase in working-age population. And, China’s population will gradually trend down post 2030; its working-age population has already peaked, and its share of population age 65+ increasing rapidly.
More urbanization and larger cities
While nearly all global population growth taking place is less developed countries, what’s noteworthy is that population growth will be in urban areas of those developing countries. In the past, majority of world population were rural dwellers throughout history, but that is rapidly shifting to urban dwellers. It is projected that population in these regions will double (from 1.9B to 3.9B) in the next two decades.
Women as global economic power
Worldwide women now outnumber men in college attendance and graduation. In most countries, for every 2 men attending and graduating from college, 3 women are. Women globally continue to seek higher education and gain professional, political and social leadership.
Women are the largest global market opportunity with $20 trillion global spending power. Women are also key in unlocking GDP growth. In the US alone, more women in the workforce could easily add 5-10% to GDP. In fact, if the US has kept pace with similar developed countries, our economy would be $1.6 trillion larger than it is today.
A new McKinsey report finds that $12 trillion could be added to global GDP by 2025 by advancing women’s equality and closing gender pay gaps in public, private, and social sectors. Another new report from them clearly demonstrates correlation with higher number of women in leadership to profitability and value creation….
“top-quartile companies on executive-level gender diversity worldwide had a 21 percent likelihood of outperforming their fourth-quartile industry peers on EBIT margin, and they also had a 27 percent likelihood of outperforming fourth-quartile peers on longer-term value creation, as measured using an economic-profit (EP) margin.”
To put it in simpler terms, having more women in leadership roles puts more money in the bank for companies….likelihood of 21% more….!!!
In the face of an overall aging labor force coupled with skill gap in existing economy, women have better chances of today’s occupational demands. Education levels among women who are not employed are much higher than for men….half of the women who are not in paid work have at least some higher education. Not to mention that while manufacturing jobs are being outsourced and/or replaced by technology, growth in middle-class jobs are occupied where women are concentrated.
Here’s something you don’t hear much about….Muslim women worldwide (~800M) are taking a fast track to big cultural changes. Changes that took half a century in the US are compressed into a decade with Muslim women, and likely to accelerate. Nearly 40 million Muslim women have joined the labor force. Clearly, there will be more and the next wave of change is under way. And for marketers, we are talking about unprecedented consumer power. According to McKinsey, in the next 15 years, even if muslim women participation in the workforce reaches two thirds of men (or around 60%), it has the potential to spike regional GDP by 20% or more. Also noteworthy is that muslims are projected to be the world’s fastest growing religious group in the decades to come.
We experience a lot of unpredictability in different aspects of our personal and professional lives — future economic growth, financial markets, politics, climate/environmental change, business performance — but demographics is likely to be one of the most predictable patterns we can measure with high impact on business strategies, social/political policies, and long term planning. There is no other reason than protecting old orthodoxies and biases that hold leaders and businesses back from connecting these major demographic shifts to future growth and success.