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United States on the downhill side of world trade outlook

No matter how you count them, the numbers don’t look good for the United States on the population front, says Bruce Scherr.

Most industrialized countries, including the United States, are not growing in terms of population, said Scherr, president and CEO of Informa Economics. In fact, some countries — Japan, the United Kingdom, Italy and Russia — are shrinking.

“For the population to replace itself, it’s required that you have 2.1 children per female in the population,” he said. “The United States has a birth rate of 2.0 children per female, which is higher than that of Italy (1.2), the Netherlands (1.7) and the UK (1.7), but not enough to grow the population.

“In the developing parts of the world, the G-20 countries that are the big players in the cotton debate are growing like crazy. Those are China, India, Indonesia and so on.”

At the same time, the U.S. population is getting older with the average life expectancy in the industrialized world increasing to 79 to 80 years of age, primarily due to improvements in health care.

“When you combine aging populations and low fertility rates, you have a new phenomenon in global demographics that we have never seen before,” said Scherr, who spoke at a recent meeting of the Mid-South chapter of the National Agri-Marketing Association.

Traditional population distributions look like a pyramid, he said. The pyramid starts out wide at the bottom because of all the young people and gradually narrows as older people age and die.

“In work we did in the last two years with the Center for Strategic International Studies, it was predicted that, based on current fertility and life expectancy rates, the traditional population pyramid will begin to change shape, narrowing at the bottom, bulging in the middle and becoming less narrow at the top.

“If you carry the trends out, you reach a point around 2050 where the pyramid almost flip flops. You have more people at the top than at the bottom. If that proves to be correct, it has incredible ramifications for society and for economics.”

Such a reversal has implications for all levels of society. “It puts strains on your economy; young people tend to be more productive and able to sustain better; older people are retiring and becoming less productive; that means younger taking care of older; armies begin to look different….”

Informa Economics, which came into being in 2003 following the purchase of the Memphis, Tenn.-based Sparks Companies by T&F Informa Group, a large publishing, information and consulting company, has been studying such trends regularly for a number of years, according to Scherr.

Declining or stagnant populations can have a serious impact on a country’s economy. One measure of economic growth, a country’s GDP or gross domestic product, is defined as the population times the productivity per individual.

“If you don’t have a growing population, you had better be very, very efficient. If you don’t have a growing number of people and high productivity, then the only other way you can grow your economy is by exports.

“If you just let population drive your thinking, consider who the powers of the world have been, who they are today and who they may be tomorrow,” he said. “From a purely numeric standpoint, tomorrow’s powers are China, India and other developing countries.”

The World Trade Organization Doha Round discussions in Cancun nearly two years ago provided a “wake-up” call for the industrialized countries.

“The United States and the European Union countries basically thought they had a deal,” said Scherr. “When the G-20 countries — Brazil, China, Mexico — said it’s over, the talks stopped.”

Leaders of those countries said, “We have traditionally been viewed by the United States, the European Union and Japan as competitors for your agriculture and manufactured goods. We have been able to compete with you more or less because we have cheap labor costs and less regulatory costs.

“But we want you to begin thinking about us in another way,” he said. “We’re the markets of the future for you because we’re the only places in the world that are growing. We’re the places in the world that if you give 30 million people $100 a month more to spend, that’s a heck of a lot of money.”

The G-20 countries have also begun demanding that the United States, the European Union and other industrialized countries make changes in trade policy and, in the case of Brazil, in farm policy.

“The reality is we’re dealing in a whole different environment,” said Scherr. “Our farm bill debate over the next year will reflect some of that new thinking and influence. I say new because, while we may have been cognizant, I don’t think we’ve been drawing a tangent to these issues as clearly as we could have or should have in the last five to 10 years.”

Scherr said he is optimistic that the United States can meet the challenges brought on by the changing world demographics.

“What other country in the world has the intellectual capacity that we do?” he asked. “The real question is whether we have developed the stomach for the competition. We need to work hard to develop a strategy to sustain being a top, if not the No. 1 power in the world.”

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