Aging Populations and FDI Outflows - Exploring the effects of increasingly older populations on present and future levels of foreign direct investment

Abstract: Most of the world’s rich countries are experiencing increasingly high life expectancies and low fertility rates. Fewer people of working age need to somehow support the many elderly, which puts pressure on the economy to reprioritize and change. This study investigates what possible effect this may have on international capital movements, and particularly foreign direct investment (FDI). The literature review suggests that FDI outflows may increase, due to the rich countries wanting to find higher returns on capital abroad. A panel data analysis is performed, and it does not prove a statistically significant correlation between aging populations and FDI outflows.