In my last blog post I said that we are living longer, the world is getting older, and more of us are living in cities. These are huge shifts, unprecedented in the history of mankind, and pose serious challenges.
Today I would like to look at the opportunities arising from these two demographic shifts.
Urbanization creates new consumers
The move to urban living is lifting the income of millions of people around the world. In cities, one billion people will join the global consuming classes by 2025. This means that they will have discretionary income – after buying the basic necessities – which will drive the demand for many goods and services.
Of the one billion people, 600 million will live in cities in emerging markets that are expected to generate growth close to half of global GDP growth between 2010 and 2025. Also by 2025, urban consumers will likely inject around US$20 trillion a year in additional spending into the global economy.
The growth in consumption together with the expected investment in physical capital (infrastructure and construction) could inject more than US$30 trillion of annual spending into the world economy by 2025. This will be a welcome boost to global economic growth and jobs creation.
On the basis of these figures (from a McKinsey Global Institute report), the global economy will continue to grow – notwithstanding many views to the contrary. This is good for the world. When the “economic pie” expands, many more millions will be lifted out of poverty and there will be more opportunities for all.
The “silver-hair” market
Population age 60+, who will increasingly live in cities, will require many resources, especially those linked to social security, pension and healthcare. These present serious challenges. As this is not an unforeseen “black swan” but an obvious and inevitable trend, we can plan ahead so that opportunities can be created out of the challenges. It just requires new thinking and approach.
Here are some opportunities
Firstly, the elderly are also consumers and many of them have high purchasing power. Their impact will be felt largely in emerging market cities that will contribute the most to global growth.
According to the same McKinsey report, of the 20 cities showing the highest growth in elderly higher-income consumers (age 65+ with household income over UD$20,000 at PPP by 2025), only five cities are in advanced economies – Tokyo, Osaka, New York, Los Angeles, and Toronto. With the exception of Sao Paolo and Seoul, the rest are in China – Shanghai, Beijing, Tianjin, Chongqing, Nanjing, Guangzhou, Hong Kong, Wuhan, and Shenyang; and In India – Mumbai, Delhi, Kolkata, and Ahmedabad.
Secondly, it is acknowledged that additional resources will have to be allocated to the elderly who have special needs. However, given the large and growing size of the ageing population and the rapid development of science and technology on all fronts, there are unlimited opportunities for innovation, especially in the area of healthcare and urban planning. I have written on how 3D printing technology is being used to print human organs for transplant. The availability of 3D printed organs will benefit everyone, not just the elderly.
As cities will be investing trillions of dollars in developing new urban services and facilities to cope with the influx of people, innovation can be use to create cities that are age-friendly e.g. safe environment, clean air, convenient transport, basic healthcare, community facilities etc. ‘Age-friendly cities’ is a program sponsored by the World Health Organization with the support of several cities around the world. An age-friendly city does not mean that it is only elderly-friendly – it benefits the whole society.
Thirdly, the elderly are very often an asset – to their family, community and society, notwithstanding the common assumption that they are only a drain on resources and have to be supported by a declining proportion of the younger working population. Many of them continue to work – paid or as volunteer – and contribute to society with their experience, knowledge, wisdom, and in so many other ways.
The key for going forward is to create more opportunities for the elderly to contribute even more widely to society in the coming decades. To achieve that, we will have to ensure that the elderly today and in generations to come maintain their functional capability for as long as possible. This is the concept behind ‘active ageing” about which I will write later.