A South Korean Time Bomb Is Ticking

Key Points

• South Korea’s population collapse is a major issue
• Attempts to reverse the slide have been unproductive
• The outcome will affect the country for decades
• Also: Top analyst names ‘The Next Nvidia’ ready to soar

Summary:

Austin Smith and Michael Muir discuss the critical issue of declining birth rates in East Asian countries, specifically focusing on South Korea. They highlight the potential long-term economic and societal impacts of a shrinking population, such as an increased burden on the younger generation to support an aging population and a potential decline in innovation. The conversation explores the driving factors behind these low fertility rates and the possible consequences for future conflicts and economic stability in the region.

Transcript:

Let’s shift away from the rosy and cheery topic of military and conflict to something that is maybe equally consequential but is happening much more slowly.

And I’m not sure that everyone is aware of it.

And that is what is happening in China, Japan, South Korea, and Taiwan as far as population growth and fertility goes.

I’m thinking specifically about the birth rate imbalance between North Korea and South Korea and what that could mean for future conflicts.

But broadly speaking, what is happening in these countries, population-wise?

Sure.

Well, the most striking thing about these sort of four East Asian countries that you mentioned, these are highly developed economies, is the fertility rate has plummeted in the last 30, 40 years.

Excuse me, South Korea has amongst the lowest fertility rate in the world.

And it’s even more pronounced in Seoul.

Fertility rate is about 0.7 children per woman.

To maintain a population with sustainable growth, the fertility rate needs to be two point one.

And most of the developed nations in the world don’t have that rate anymore, which is actually just a natural consequence of economic development.

Women entering the workforce as they have more options, they have fewer children, but they’re most pronounced in South Korea, Taiwan, China and Japan.

Yes, I see.

So there’s a couple of things that are driving these lower birth rates, right?

So you’ve got women’s choice and urban migration.

What we’ve seen is that developed economies typically have much lower birth rates for a lot of reasons, but that when you fall below the replacement rate, it can create almost like an economic and population time bomb as you have a much larger older population that now needs to be supported economically by a much smaller younger population.

And it has all of these knock-on effects that might not be obvious.

Things like innovation can retrench as it just becomes harder to be an innovative economy when you have a much older population and your younger population is further disincentivized to have children if they’re now caring for the elderly or they’re having a challenging time themselves.

I see.