How population trends will shape emerging and frontier markets

For me, the vastly changing world economy is so obvious. That’s why we focus on global megatrends that explain just how the future will play out. This century will see a powerful shift in economic power as well as a greater balance of power for one key reason: population trends.

One look at a world age chart will tell you everything you need to know. The west is getting older while emerging markets have population projections that almost perfectly mirror their varying degrees of emerging status.

It’s not surprising when you think about it but it shows why being geographically open will be so important going forward.

Moreover, the opportunity exists to profit in more economies than ever before, with technology that didn’t exist in past boom markets as the great equalizer.

Take Africa for example. Only in the last year did the continent as a whole reach a median age of 20 years old for the first time (it’s currently 20.1).

Mauritius and Seychelles, two of the most free economies there aren’t even on the continent, and represent the oldest countries with median ages of barely 32. In more than a dozen countries, the median age doesn’t reach the age to vote in most places.

Africa’s population trend has been young for over sixty years, dipping most during the AIDS crisis of the 1980s. It shows the most consistent growth over this century, barely reaching 30 years old by the end of the century. While the continent will certainly have plenty of growing pains in its forthcoming development, it is trends like this that offer great promise for new business development there.

More importantly, the population there, now just under one billion, is expected to explode to over two billion within just 37 years. That’s three times the growth rate expected in the US.

Microsoft and Chinese company Huawei, for example, recently teamed up to help provide a digital infrastructure for one million small and medium enterprises in Africa.

This newfound efficiency has the potential to unleash great things, considering barely 13% of the population has internet access now.

As technology increasingly penetrates the continent, the youth dynamics there will play out in what I believe will be a favorable way.

Africa is followed by Latin America, where populations are nearing 30 now. While there is undoubtedly plenty of activity in this region, populations will catch up to western levels and actually become the oldest in the world by the end of the century. That’s an important trend to watch.

Asia, which is barely older than the Latin world, will continue to grow rapidly. Ironically, some of the most middle-class emerging markets in Asia, namely China, are currently the oldest and represent the greatest risk of suffering from an “aging cost”.

Thailand, for example, offers less promise in my opinion simply because it is older than the continent as whole.

Lastly, Oceania offers the prospect of the youngest part of the developed world. While Europe and North America have gotten old quickly, Oceania will maintain a median age under 40 years for most of the rest of the century.

While I believe that places like Australia have shown a tendency toward big government authoritarianism like in the west, I’d rather bet on Australia and New Zealand than Spain or the United States in the decades to come.

Oceania’s youthful population trends mixed with first world status make it a great place to plant your residence or banking flags.

After all, European and North American governments will need to grab more of your money to keep their promises to the negative population trends that come with an aging population.

When it comes to your investments, youth should be thought of as a huge megatrend going forward. Japan has set the stage for a rapidly aging population in Asia and has been written off after two decades of economic stagnation. Europe, with its huge welfare monster, is already crumbling, and the hurt will continue to move to the other side of the pond.

Remember that – in addition to paying attention to things like population trends – you need to plant flags in stable jurisdictions that promote economic freedom.

Find a combination of a young population, developed status, and governmental understanding of economic freedom and the need to keep talented people, and you’ve got a great place to position yourself to take advantage of the new economy that’s unfolding.

Profiting in what I call the New Golden Age means accepting new realities and population trends are a simple but powerful example.