Pension systems in EMEs: implications for capital flows and financial markets

First, the stage in the demographic transition. Since around the mid-1960s, lower EME fertility rates have meant lower dependency ratios, which has tended to boost saving, and also a rise in the working-age population, which has tended to boost investment. The transition has worked out as predicted in some countries but not in others. In particular, in the aftermath of crises (eg Asia in the late 1990s), saving and investment have tended to fall, and current account balances to rise. Nevertheless, current account surpluses are expected to fall or turn to deficits as populations age in coming decades. In some countries, this process has already begun.