Longer lives and fertility far below the replacement level of 2.1 births per woman are leading to rapid population aging in many countries. Many observers are concerned that aging will adversely affect public finances and standards of living. Analysis of newly available National Transfer Accounts data for 40 countries shows that fertility well above replacement would typically be most beneficial for government budgets. However, fertility near replacement would be most beneficial for standards of living when the analysis includes the effects of age structure on families as well as governments. And fertility below replacement would maximize per capita consumption when the cost of providing capital for a growing labor force is taken into account. While low fertility will indeed challenge government programs and very low fertility undermines living standards, we find that moderately low fertility and population decline favor the broader material standard of living
In all societies intergenerational transfers are large and have an important influence on inequality and growth. The development of each generation of youth depends on the resources that it receives from productive members of society for health, education, and sustenance. The well-being of the elderly depends on familial support and a variety of social programs. The National Transfer Accounts (NTA) system provides a comprehensive approach to measuring all reallocations of income across age and time at the aggregate level. It encompasses reallocations achieved through capital accumulation and transfers, distinguishing those mediated by public institutions from those relying on private institutions. This paper introduces the methodology and presents preliminary results emphasizing economic support systems in Taiwan and the United States. As the two economies differ in their demographic configuration, their level of development, and their old-age support systems, comparing them will shed light on the economic implications of population aging under alternative institutional arrangements.
Relative to Korea, Taiwan's semiconductor sector combines high value-added, low risk, and an innovative mode of virtual integration, which is adapted to the new world of "fabless" and "chipless" operations, away from the older style of integrated device manufacturers. The rise of this owes much to the catalytic government role which overcomes market failures to launch institutions in each of the five stages of the industry's evolution, introducing pre-commercialization research, nurturing industrial clusters, providing venture capital, and spinning off world-class, privately managed firms as well as attracting the interest of traditional business groups, without ever micro-managing the development as bureaucratic state enterprises. The state operates in a manner which is both distinctively different from the practice of Brazil, India, Japan, Korea, or Singapore, and also apparently replicable elsewhere.
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