Global Demographic Change: Tackling Business and Society Challenges in 2030 and Beyond.”

WDA Forum ProjectProject PPapersapers 201 20154 on Demographic Challenges MegMegatrendatrend „“GlobalGlobal Demogr Demographicaphic Chang Changee“” TTacklingackling Business Business and and Socie Societyty Challenges in 2030 and Challenges in 2030 and beyond Beyond Masterclass Seminar by Dr. med. Hans Groth, MBA Master Class Seminar by Dr. med. Hans Groth, MBA atat the the University University of St.St. Gallen,Gallen, Switzerland Switzerland FallFall 201 20154 Page left blank intentionally. i TABLE OF CONTENTS I. FOREWORD .................................................................................................................. iii II. INTRODUCTION AND RATIONALE ............................................................................... v III. PAPERS OF THE 2015 MASTER CLASS ........................................................................ 1 Country & regional case studies all across the globe A. United States of America: The role of demography for the political, economic and societal future of the largest economy in the world ............................................................. 3 B. China: The role of demography for the political, economic and societal future of the biggest country in the world ..............................................................................................32 C. Japan – what can we learn from the world’s “most aged” society? ............................61 D. Iran’s population dynamics in the light of the potential “post-sanction” period. What are the lessons for investors? .................................................................................................90 E. Cuba – what should we know about this country’s demography? ............................ 123 F. Ethiopia: Draw a demographic road map of this country and compare Ethiopia with other countries of similar size. ......................................................................................... 161 G. The demography of the Sahel zone: Facts and implications ................................... 186 Geopolitics & Financial Markets H. Past, current and future population dynamics across the 5 continents: Different qualities, different quantities, different impact ................................................................................ 215 I. Flying low – Managing elderly income in a world devoid of risk-free returns ........... 251 Opportunities arising from demography for business & society J. Beyond replacement fertility rates: Are low fertility rates an irreversible phenomenon in modern societies – and if so, could there be new roles for families, partnerships and labor force participation of women to help compensate for this? .............................................. 282 The unique population dynamics of Switzerland K. Generation Y’s knowledge and perception about the sustainability of Switzerland’s three pillar retirement scheme. How should this generation plan for their retirement? ..... 308 III. CONTACT DETAILS ................................................................................................. 341 ii I. FOREWORD Demographic shift, ageing, pension system performance and challenges – topics like these are omnipresent nowadays. The World Ageing and Demographic Forum, a foundation established in St. Gallen has for many years been a platform to enable dialogue, support research, develop positions and generate understanding across generations, across economic and academic sectors and in public policy, both nationally in Switzerland and Internationally. In recognition of the complex, multidimensional and interconnected nature of the topics ageing and demography, the Forum is developing and supporting a series of activities to ensure better understanding and the promotion of new viewpoints and ideas. The respective master course offered at the University of St. Gallen is one of these activities. No social science study track can or should be pursued isolated from the parameters around ageing as they cut across almost all of study objects in one way or another. It is important to promote an analytical, scientific evaluation of inherent issues, the development of theories and hypotheses and finally the critical evaluation and constructive discussion of facts, proposals and theories. The paradigm shifts to be expected will challenge our world in a way never seen before. Resulting population movements, rising healthcare cost, retirement financing, behavioral impact within cohorts emerging and voicing their expectations will lead to difficult conflicts in need of answers. Promoting concepts to deal with the issues at hand requires mastering tools, the analytic processing of information and an open but critical mind. The papers included herein are the result of the masterclass taught by Dr. Hans Groth during the 2014/2015 semesters. They represent a good example of the range and the scope dealt with as much as they provide an indication of the approach taken to deal with the subject chosen. Each paper, while not at the same level as a thesis, has to meet formal and scientific standards standards. All of the papers were developed in a course held during the previous semester under the supervision of Dr. Hans Groth, who also teaches the program. The program also includes discussion, debate and presentation by experts in the field. The papers are shedding light on various aspects of ageing, such as summarizing status and prospects of a region, a critical evaluation of concepts, characteristics of change and dynamics, all seeking to contribute a constructive perspective, a critical assessment or plain analytical and quantitative overview. Such a paper, submitted by a student or a team of students, is usually read by the reviewing professor and maybe tutors but the interesting end results and the nature of the entire discourse led us to the decision to provide a platform and publish the papers for a broader public. We find that the papers cover a span that well represents the extent and complexity of questions around ageing and we also find that the entirety of these papers is useful to explore the subject matter and to serve as a basic reference. iii Our gratitude goes to the University of St.Gallen, who understands the relevance of such an important master program; to(Name) who prepared and reviewed the papers, to (Name) and Regina (full name) from the WDA for coordinating everything behind the scenes and of course Dr. Hans Groth for the cooperation and the exchange that led to this publication. I am of course particularly grateful that the compilation of last years papers as a publication was made possible by the support of the Galenica group. The Galenica group has supported the WDA for some time based on the conviction that the subject of ageing is of utmost importance particularly in healthcare and that the discussion is either not getting proper attention or is not anchored sufficiently on facts but rather often on preconceptions, interests, and existing frameworks. Galenica is proud to participate in the work of the Forum and is also proud to support the endeavors of students in this field. Galenica has high hopes that all this may be a small but important step, helping to develop solutions, prioritize activities, engage in dialogue and fundamentally provide services needed in tomorrow’s health-care world. Enjoy the reading and do get back to us if you have comments and insights. We have only started the first steps of a long journey. The journey of ageing and what it means to our life, society and the balance of our social systems. Christian Köpe, Dr. iur, President of the WDA Foundation iv II. INTRODUCTION AND RATIONALE Since 2009 I have had the privilege to teach a master class at the University of St. Gallen entitled “Megatrend Global Demographic Change: Tackling Business and Society Challenges in 2030 and beyond.” The concept of this class is based on case studies, discussion rounds and interactive outside- the-box conversations on global population trends in the 21st century and their impact on business & society. The case studies elaborated each year by the students focus upon three categories: Demography and geopolitics across the globe Demography and business & society Demographic challenges in Switzerland But what is my motivation to offer such a lecture with both a changing content and a very interactive style? The coming decades will expose us to demographic dynamics that history has not equipped us to manage / to cope with. It forces us to focus on the future, a period of time which we are not accustomed to reflect upon. This is why the megatrend of demographic change is so intimidating and makes it all the more crucial to be permanently prepared for innovation and creativity as well as openness for change. However, this will only be achievable if appropriate education/training and thus knowledge/skills are provided for those who have to lead and manage this challenge. My response as a member of the 60+ generation is to provide a unique platform for academic thinking and exchange for HSG students who want to broaden the scope of their studies in terms of demography and its impact on business, governance and society – both as managers and as responsible members in the communities they are living in. In this year‘s autumn semester 30 students from 12 different nations (Bulgaria, China, Ecuador, France, Germany, Hong Kong, Italy, Netherlands, Singapore, Sweden, Switzerland and the U.S.) and from 8 different HSG Master Programs (SIM, MIA, MAccFin, MSc CEMS

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