Crisis of Ageing in Less Developed Countries: Too Much Consumption or Too Little Production?

The age structure in many developing countries is changing—the population is ageing. There is increasing concern over the social and economic costs of caring for this ageing population, and the capacity of the state to finance the expected rising social expenditure has come to dominate the debate on the economics of population ageing. In this context the elderly are considered primarily as consumers and ‘dependent’ on the working population. Following the Keynesian and post‐Keynesian literature, this article argues that such a view of the elderly is incorrect, for several reasons. Firstly, empirical evidence shows that the aged do not consume (relative to their income) more than the rest of the population. Secondly, the issue of ‘dependency’ of the aged should be put in the broader context of the dependency of the unemployed and under‐employed in a market economy. Thirdly, the focus of the debate should move away from consumption and towards production; and finally, since the old make claims on the national output on the basis of their accumulated assets, savings and pensions, the distributional issues (with regard to assets as well as incomes) have to be an integral part of any pension system in order to alleviate poverty among the elderly.