Can Investments in Emerging Markets Help to Solve the Aging Problem?

22 Pages Posted: 21 Mar 2001

See all articles by Robert Holzmann

Robert Holzmann

University of Malaya; IZA Institute of Labor Economics; CESifo (Center for Economic Studies and Ifo Institute); World Bank

Date Written: June 2000

Abstract

Prefunding of pension commitments in OECD economies is increasingly seen as a central strategy to cope with the aging of their populations. This paper argues that investments in emerging markets can help at the margin but are unable to solve the demographic problem. While these investments bring potential advantages through enhanced risk diversification, higher rates of return, and accelerated financial market development, the total effects are likely to be limited. Furthermore, in order to harvest them, capital sending and receiving countries must fulfill various politically and economically challenging requirements. For pension policy, the limited contribution of pre-funding at home and abroad in order to address the demographic problem implies that enhanced emphasis must be given to domestic reforms.

Keywords: Aging, pensions, international investments, emerging markets, risk diversification

JEL Classification: F21, F30, G15, G23, J14

Suggested Citation

Holzmann, Robert, Can Investments in Emerging Markets Help to Solve the Aging Problem? (June 2000). Available at SSRN: https://ssrn.com/abstract=263784

Robert Holzmann (Contact Author)

University of Malaya ( email )

University of Malaya
Kuala Lumpur, Wilayah Persekutuan 50603
Malaysia

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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