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Hi everyone , my name is kim. I’m a faculty from my business school. Today we’re going to run through some materials , specifically in the issue of aging and impact on the economy. The term silver tsunami is a phrase that many of you would have heard before in major newspapers and in popular press....

Hi everyone , my name is kim. I’m a faculty from my business school. Today we’re going to run through some materials , specifically in the issue of aging and impact on the economy. The term silver tsunami is a phrase that many of you would have heard before in major newspapers and in popular press. So what exactly is the service ? It is a combination of phenomena that developed countries around the world have experienced. And what are these two first form of ? In the last twenty , thirty or forty years , many countries around the world , different countries have reduced or dropped their rates significantly. The second phenomenon , that’s also contributing to the silver tsunami , is just right after world war two , the world sees a search , the number of birds , right , and that’s what we call baby boomers and when you combine these two impacts together , what you get is that we see larger proportion of the country being represented by. In singapore , for example , in twenty ten , we have nine percent of our population above the age of sixty five , and that’s the typical retirement age in countries. We fast forward that a little , ten years later , twenty twenty. We have about fifty percent of the population , and again , if this trend is to continue by twenty thirty , many individuals expect that the population of singapore would have about twenty five percent of the residents older than age sixty five , and that has a profound impact on the economy. So let us take these statistics and superimpose that onto singapore and have a discussion on it. If you look at the graph on the slide over here , you will see the distribution of the elderly in singapore. In two zero zero one , the colors that are shaded in different parts of the country represents the proportion of elderly above the age of sixty five. The doctor : the shape of color that you see on the different parts of the island represents the larger proportion of the elderly in the area. Ten years later , in two zero one one we start to see more of the elderly population moving towards the outskirts of the country , right in the north and towards the eastern part of the country and parts of the western part of singapore. Again ten years later at twenty twenty one , we start to see even more elderly population all over the country. So what is the impact ? What is the economic impact that one could distill from these demographic shifts to develop a generic understanding of the economics of aging it is important to come up with a framework whereby one can apply to different contexts that you will see in the years to come. And what i’m going to pause here is actually to look at the economy in two key areas : first , in the area of production and second , in the area of consumption. In any economy , the residents within the country or the economy would have to produce outputs that will be consumed eventually by the residents or by the economy. So with that in mind , let us look at how aging impact these two key areas of a country. Production. Production economics is a very traditional body of work that has developed over decades , and specifically , this body of work that we’re going to talk about today spells out how economies combine inputs and , in the process create outputs has been consumed by any country or by an economy. Production economics in the last decades have proposed three key areas of production , and over the years they have been adding more and more factors that are important , and i’ll run through them with you in this particular slide. The three traditional aspects of production are labor , land and capital. So these are the three most traditional forms , and let us run through this tree. And , of course , we’ll add additional factors very , very shortly. Labor , as the name suggests , will be the labor or workforce in any economy , you need labor as a form of input to produce any output , services or products in a country. Land. Land has been a very traditional input that production economies i’ve talked about largely in the past when agriculture base. But today land spends more than just that , right ? You will also spend the natural resources , like oil , which is below the land , and so on. And then we have capital. And what exactly is capital ? All businesses will require funding , right ? Be funding from banks or capital markets and so on. So capital is like a lifeblood for most businesses , right ? So these are the three traditional. In the last two decades , we start to see individuals or scholars introducing other aspects of production. Specifically , businesses need to be led by business leaders with the right mindset and the right entrepreneurship spirit to combine these inputs that we’ve mentioned earlier and produce the outputs that businesses need. And finally , the technology , technology over here , it is more than just it or information technology that most of you are well aware of , right ? Technology here represents the ability to harness production capabilities from all these inputs and convert them into outputs in the most efficient manner. So this framework is a traditional framework that has been proposed in production economics , and any disruption to this would have profound impact on the economy. And then let us talk about two examples over here before we get into , for example , in eight , oh nine , when you have your great financial crisis , we see disruption in two key inputs land and capital. So in the years leading to that , there’s asset bubbles being generated across the wall and during the crisis , it led to meltdown financial markets , and this has a profound impact on the economy. Fast forward ten plus years later , we have the covid nineteen pandemic and that is a disruption on labor , right ? Because i think most of you would have heard of terms like the great vaccination that we are experiencing recently , and this has immense impact on any economy. So whenever we influence or impact the inputs that would have a profound impact on the economy. So let us look at aging and see how aging actually impacts this tree or these five inputs right ? If you take a broader view of it , as the population ages , labor force is the first to be affected , right ? In two ways. First , in economies that rely a lot on physical labor , economies that have a large proportion of it represented by manufacturer , for example , the aging economy has a direct impact on that , because you need physical labor , and that puts a toll on the human right. The elderly , individuals in the sixties and so on typically will not fare very well that way. But of course , in some economies whereby you rely a lot more on services , the impact will be less , but nevertheless it still exists. At the same time as the economy , it also has an impact on the effective size of the labor force , and as a result , you would have less sources of income tax revenue , which has an implication on the countries in terms of the collection of taxes , and so on. Next , let’s look at that. Traditionally , as the population ages , land use for agriculture societies reduces and of course , today , in the case of singapore , there’s probably less relevant. Next , let’s look at capital. Most of us will say , hey , how aging has the impact on capital ? It has an impact on capital in a very interesting manner. And specifically the way businesses requires capital. And capital typically comes from the general masses in the society , right ? Individuals with excess funds to deposit the funds in the banks , for example , the banks would give out loans to businesses and so on. Right ? As the population ages , you would have a larger proportion of the funds being held up in pension funds , retirement funds and so on , and such funds have specific regulations and rules on their investment strategy. In order for capital preservation , they have to be more so. As a result , we typically would not be able , or other economies would not be , that we tap into those funds for high risk projects that they hope to get into next , let’s look at entrepreneurship the results of aging on entrepreneurship are a little bit less. Studies have shown that as the population ages , there is actually an increase in order to it to a certain extent , because businesses started by individuals in their fifties for example , which are a bit older , tend to be more successful because of all the years of experience that they have done it. But beyond a certain point , when individuals in the areas of sixties and seventies actually has a negative impact , already is being impacted negatively by. Finally , we have technology , and for technology , it’s not so much of the impact of aging but rather how aging can be moderated by technology. And for that , let’s look at the next slide , technology. If you look at technology , most of us would say , hey , you know what’s the relationship between technology and aging as most of you would have sort of hypothesize based on what you discussed earlier as economies each with the residents , the economy , we would expect the vibrancy of the economy to come down , gdp , job and so on and so forth. But , however , this is not the case. Based on a relatively recent study , a study was published in p. R , which is one of the top journals in economics. What they have done was that they found that , specifically , if you look at all the oecd countries over the span of approximately thirty years , as economy age with gdp actually increases , which is what’s the reason behind that. So the researchers have validated right through a series of data collected from all countries over a span of thirty years , and they found that as economies aged , the proportion , or rather the growth of gdp actually increases. And this is quite interesting , is because they are arguing that the greater use of technology in these economies even though its aging is helping to moderate the effects of it. So in a way , technology plays a critical role , specifically in boosting efficiency , especially when the general masses at home , is a very important point that i hope everyone will be able to learn from this. Let’s look at the second part of the economy , which is consumption , right ? In order to sort of understand consumption in a more generic sense , i’m putting forth a framework here that divides the type of goods the residents of any economy will consume and this framework has two parts first , public goods , second , private goods and why this dichotomy is based largely on the producer of the goods. Public goods are goods produced by the government from the receipt of taxes , whereby the funding they provide essential services to benefit the residents and a very simple way to look at it , i have four different aspects of how we over here , but the very simple way to look at this is to look at the ministries in singapore , right each ministry is in charge of a part of popular aspect of public. So for example , moh ministry of health is in charge of the healthcare , right as economics age , the burden on healthcare goes up that’s natural i think that’s something that what you recognize at the same time as current age , you do see a greater need for social security and social news that’s typically handled by our msf over here. You will need to have better management of the retirement funds. You also need better elderly care services , day care services for the elderly , and the list goes on. At the same time , we also see as age , there is a burden on the environment where individuals live and specifically within the environment itself. You will have built environments by the housing , for example , which is headed by , all right , your http , which is a step of , essentially , we need to build apartments which are elderly friendly , and accessibility has to be also made into the environment where individuals get into the apartments and out and around the city. At the same time , transportation networks would have to be designed to be elderly friendly. If you look at some of the towns in singapore , those with a larger proportion of the elderly , we are slowly seeing that the roads in these areas are being modified to become narrower and more winding roads. For the cars specifically right the past , not the pedestrians why is it the case so that cars would have to slow down when pedestrians are right ? Finally , defense , right ? I mean that as the population ages , the proportion or the absolute numbers , even the absolute numbers of individuals who can serve the military reduces as well. So there will have to be changes in the way we utilize the military resources that we have in any goods provided by the government. If there is an economic value to be extracted markets will manifest itself , market participants in forms of businesses coming , and they create their own version of the group , and these are what we call private goods over here. Commercial entities , space , provide certain goods or services for the population or for the recipes in any environment. So let’s look at some services and products. So for services , for example. Again , these are illustrative examples. We have private health care. Private health care would meet the needs of a certain segment of a population , which will want health care to be delivered at the different sets of standards , for example. Similarly , in private healthcare , the reliance on insurance will be immense as well. Specifically in cities or economies whereby you have a large proportion of elderly , you will see that the mix of social activities will be very different compared to economies and societies where you have a larger crowd of young individuals. So , for example , major cities like new york city , where you see a large proportion of the society you have working adults relatively much younger , you will have more vibrant nightlife right , more vibrant social activities , and so on and so forth. Economies which are a bit much older in some cities , less. As a result , businesses who provide various types of services to the economy will have to adjust based on the demographic base that they’re working with. Next products , products. One way to look at it is to divide them into two different buckets first , durable. Durables are products which we purchase and we reuse them again and again , right ? So as the name suggests , they last for a long time , or at least we hope it lasts for a very long time , right ? Electrical appliances for example , mobility aids and so on for the elderly , and they have to customize for the elderly as we are moving into a society which is rapidly aging finally , consumables as the name suggests , these are products the individuals would have to purchase and consume and because of the act of consumption , they would have to be repurchased again over an extended period of time. So items like food for example , that are typically consumed and they are a big class of consumables that we see They have to also be customized to the elderly , repopulation health supplements for example , medication and so on. With this framework of consumption , i hope you are able to solve c how the impact of aging has impacted or will potentially impact the consumption of any economy. And with that , i urge you to take a little bit deeper in the two aspects of any economy , production and consumption , and hopefully that will help you in coming up with greater creative ideas as you move along with this cost. Thank you.