With the constant debate over which countries are actually emerging and which aren't, it may be best to take a step back and look at some fundamental aspects of a nation in order to determine whether or not it is a contender or not. One indicator that gets overlooked when figuring this out is the population's age. This isn't of much consequence to investors with short investment horizons, but I feel that it can give good insight to where the country will be going over the next decade or so.
Below is a small sample gathered from the CIA's World Factbook:
First of all, I understand that age is only one factor when determining the outlook for a country. Even looking at the table above, there are non-age related issues. For instance, the astute reader might mention that of all the countries portrayed, the four western countries fall to the bottom of the GDP growth ladder for 2008. Fair enough, but they also hold 4 of the bottom 5 positions when ranked by age. Or the fact that Russia and China have high GDP growth but their median age is in late 30s. I would argue that Russia shouldn't have ever been considered an emerging market. Yes they've grown quite well lately, but they also were a major world power only two decades ago which thankfully hiccuped. And China, well there isn't much defense I can give my age thesis besides the fact that they've supplied the largest economy in the world with merchandise for a while know the planners of the economy have done a good job.
So now that you've stopped reading due the fact that this a bunch of hooey, the fun can begin. In the sample above, the top 4 countries all have median ages below the world average except for Brazil, which is a scant .2 over. Brazil is already a BRIC country and with Russia's recent volatility, the case has been made for Malaysia to take its place, but that argument has ceased recently with the inability to find a suitable acronym. Regardless it is clear that Malaysia is slowly coming to the forefront. India is probably the closest of any emerging market to get world recognition as an emerged market for obvious reasons. Rwanda has a median age of 18.7 years old and Africa has a median age right around 19 years old as a continent. It is clear that no real country in Africa is ready for status among the world's largest economies, but that is the entire idea behind this article. It may not be ready now or in 5 years, but it could very easily in the 10-15 years become a continent that has stability and is ready for investment.
There are many reasons for this. As a young man, I feel I should bring this up first – as the population ages, the burden on the economy grows. More people need care, less people are working - these are two very simple ideas but their weight should not be discounted. These take away from the country's ability to grow as the contributing workers retire and working-age people are shifted from growing the economy to taking care of the older generation.
Another simple idea is the fact that there simply are more consumers in the market and this isn't to be taken as there are more people who want Fruity Pebbles...well kind of. Without a doubt there are more consumers for everyday items, but a young population means that more and more people will be leaving their parents domicile and seeking there own permanent shelter. And without solid growth in real estate it is hard to think that there can be good growth in the overall economy. A fact that Americans (including me) understand far too well. It should also be pointed out that countries with younger populations are going to have a more intelligent better educated population. This is very important for countries that want to quickly become economically strong and why Africa is obviously still a ways out.
So in closing, there clearly are other reasons why a country will grow and prosper in the future, but I think its clear that countries with younger populations are poised for longer-term growth.
Disclosure: 21 years old, no positions