• Investment Management

Immigration Could Hold the Key

The world is facing a shortage of working-age people, says Ruchir Sharma, at Morgan Stanley Investment Management.

For years the popular belief has been the world is heading for population overload. Recent reports by the United Nations suggest another 2.4 billion babies will be born over the next 35 years, leaving the earth teeming with 9.7 billion people. Where will they all live? Will there be enough food?

The concerns are misguided, according to Ruchir Sharma, head of emerging markets and global macro at Morgan Stanley Investment Management.

In his latest Wall Street Journal op-ed, “How the Birth Dearth Saps Economic Growth,” Sharma says it’s no coincidence that global GDP growth has been trending lower this decade, at the same time as the growth in the work-age population, ages 15-64, has been slowing. Since 2005 the growth of working-age people has slowed from about 1.8% to 1%.

Fewer Children

That’s because women globally are having fewer children. Since 1960 the average number of births per woman has dropped to 2.5 from nearly 5.

“For much of the post-World War II era the world’s population grew at an average annual rate of almost 2%. But growth started to plummet in 1990 and is now running at about 1%—the lowest level in the postwar era,” says Sharma.

This means that countries like the US and Europe need to increase the number of working-age migrants they’re taking in if they want to ensure long-term economic growth.

“This collapse is seriously undermining potential economic growth…and goes a long way toward explaining the sluggish recovery from the crisis of 2008,” he argues.

Ruchir Sharma has been included in this year’s Bloomberg Markets 50 Most Influential list.

Get Your Career Started At Morgan Stanley