DEMOGRAPHIC TRENDS, INTERNATIONAL MIGRATION, AND EXTERNAL IMBALANCES: A REGIONAL ANALYSIS

James Yango Wabenga and Kevin Moran

MPRA Paper from University Library of Munich, Germany

Abstract: This paper presents an empirical analysis of the impacts of global demographic changes and international migration on external balances. It categorizes countries into advanced, emerging, and developing economies and conducts the analysis region by region. The results are obtained from panel models that estimate the impact of demographic trends on macroeconomic aggregates. This analysis is conducted region by region, examining one demographic factor (such as aging, fertility, life expectancy, or immigration) and one macroeconomic aggregate (consumption, savings, investment, trade balance, or current account balance) at a time. The results notably report that larger proportions of older adults have a detrimental effect on the trade balance in advanced and merging economies. Additionally, aging in emerging and developing economies is associated with lower savings rates and current account balance to GDP ratio, while in advanced economies, savings rates tend to rise with life expectancy, aging, and net migration. The results suggest that the trade balance is positively associated with the change in the working-age population share in advanced economies, while it is mostly negatively associated with the trade balance in emerging economies. Changes in life expectancy have a negative impact on the trade balance in both advanced and emerging economies. Finally, net immigration increases saving rates in advanced economies and investment in emerging and developing economies. This paper highlights the importance of regional conditioning when examining how demographic trends affect economic decisions, consumption, investment, labour markets, external balances, and public policy. Regional analyses of the effects of demographic changes on the macroeconomy are essential. Although all regions face demographic changes, their scale varies. Therefore, this paper examines the impact of demographic factors on the macroeconomic performance of each region.

Keywords: Demographic trends; International migration; Consumption; Savings; Investment; Trade balance; Current account. (search for similar items in EconPapers)
JEL-codes: E21 E22 F16 F22 F32 F41 J11 J21 (search for similar items in EconPapers)
Date: 2024-09, Revised 2025-03
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