Over the past two years, Central Asia has emerged as a promising destination for international businesses looking to establish or strengthen their presence in the Eurasian region. The region's allure is particularly heightened by two standout factors: high birth rates and a younger median age compared to broader emerging markets.
There are numerous advantages of having a youthful and expanding population, making it a compelling argument for corporations to shift their strategic focus toward the region. Uzbekistan, with a population nearing 40 million, and Kazakhstan, surpassing the 20 million threshold, have positioned themselves as attractive markets in their own right, as well as potential gateways to other countries in the region.
We explore key demographic indicators, including median age, birth rate, and population size, for Central Asian and Caucasus nations, and Mongolia using data from the latest CIA World Factbook edition. Acknowledging that the World Factbook figures may not align precisely with official national statistics, and tend to be rather conservative, they nonetheless provide a consistent basis for comparison and we examine these crucial parameters to ensure a consistent evaluation.
There are numerous advantages of having a youthful and expanding population, making it a compelling argument for corporations to shift their strategic focus toward the region. Uzbekistan, with a population nearing 40 million, and Kazakhstan, surpassing the 20 million threshold, have positioned themselves as attractive markets in their own right, as well as potential gateways to other countries in the region.
We explore key demographic indicators, including median age, birth rate, and population size, for Central Asian and Caucasus nations, and Mongolia using data from the latest CIA World Factbook edition. Acknowledging that the World Factbook figures may not align precisely with official national statistics, and tend to be rather conservative, they nonetheless provide a consistent basis for comparison and we examine these crucial parameters to ensure a consistent evaluation.
The median age and birth rates of a population can have significant implications for the economy, influencing various aspects such as labor force dynamics, healthcare costs, social welfare programs, and overall economic growth. Here's a breakdown of how these factors interplay:
Labor Force
Older populations (higher median age) lead to a shrinking labor force just as the growing number of retirees puts additional pressure on the nation’s economy and budgets. In most countries in our region, this is often offset by the elderly parents continuing to live with their adult children in extended families where they play an important role in raising kids and running households. Nonetheless, in countries with a higher median age, economically active adults may find themselves ‘sandwiched’ between two generations, having to provide for the needs both of their elderly parents and younger kids, resulting in even lower birth rates (see Armenia and Georgia).
Higher birth rates (and lower median age) contribute to a larger future labor force, however, the question of whether the domestic economies can provide employment opportunities for young adults remains critical. Currently, the excess labor force is absorbed by labor migration, and in Kyrgyzstan, Tajikistan, and Uzbekistan – countries with the lowest median age and highest birth rates - remittances from labor migrants play a significant role in the national economies.
Health and Social Welfare
In countries with universal healthcare coverage (UHC), healthcare costs will rise along with the median age and will continue to put additional strains on medical systems and state budgets. For instance, in Georgia, which introduced UHC in 2013, the healthcare expenditure rose 72% in ten years while the total population remained stable at around 3.7 million people.
According to WHO, Central Asian nations have seen progress in improving life expectancy and reducing child mortality in the last decade. However, rising OOP expenses and limited accessibility of health services, especially in remote rural areas pose notable challenges to local families’ well-being. The governments now have to simultaneously address the shortages of education facilities and programs for younger generations and expand pension payments and social welfare programs for elderly citizens.
Income and Economic Diversification
Central Asia's appeal, fueled by a young demographic profile and growing population, presents a unique opportunity for international businesses, especially in the production sector by offering cheaper labor. However, bigger populations do not necessarily transform into bigger markets for goods and services. That would require dynamic economic growth and a greater GDP per capita, especially for the lower middle-income nations of Central Asia (with the notable exception of Kazakhstan).
This growth can only be achieved by economic diversification towards more complex and more productive export-driven sectors. Whether seeking to benefit from the younger population of Central Asia or to bypass the limitations of the smaller middle-aged populations of Caucasian republics, countries in the region would need to further expand their investments into human capital, providing greater access to education, healthcare, and social services. The government’s efforts in this area are evident but only time will tell whether they are sustainable and sufficient.
(Photo by Xomidov Photo)
Labor Force
Older populations (higher median age) lead to a shrinking labor force just as the growing number of retirees puts additional pressure on the nation’s economy and budgets. In most countries in our region, this is often offset by the elderly parents continuing to live with their adult children in extended families where they play an important role in raising kids and running households. Nonetheless, in countries with a higher median age, economically active adults may find themselves ‘sandwiched’ between two generations, having to provide for the needs both of their elderly parents and younger kids, resulting in even lower birth rates (see Armenia and Georgia).
Higher birth rates (and lower median age) contribute to a larger future labor force, however, the question of whether the domestic economies can provide employment opportunities for young adults remains critical. Currently, the excess labor force is absorbed by labor migration, and in Kyrgyzstan, Tajikistan, and Uzbekistan – countries with the lowest median age and highest birth rates - remittances from labor migrants play a significant role in the national economies.
Health and Social Welfare
In countries with universal healthcare coverage (UHC), healthcare costs will rise along with the median age and will continue to put additional strains on medical systems and state budgets. For instance, in Georgia, which introduced UHC in 2013, the healthcare expenditure rose 72% in ten years while the total population remained stable at around 3.7 million people.
According to WHO, Central Asian nations have seen progress in improving life expectancy and reducing child mortality in the last decade. However, rising OOP expenses and limited accessibility of health services, especially in remote rural areas pose notable challenges to local families’ well-being. The governments now have to simultaneously address the shortages of education facilities and programs for younger generations and expand pension payments and social welfare programs for elderly citizens.
Income and Economic Diversification
Central Asia's appeal, fueled by a young demographic profile and growing population, presents a unique opportunity for international businesses, especially in the production sector by offering cheaper labor. However, bigger populations do not necessarily transform into bigger markets for goods and services. That would require dynamic economic growth and a greater GDP per capita, especially for the lower middle-income nations of Central Asia (with the notable exception of Kazakhstan).
This growth can only be achieved by economic diversification towards more complex and more productive export-driven sectors. Whether seeking to benefit from the younger population of Central Asia or to bypass the limitations of the smaller middle-aged populations of Caucasian republics, countries in the region would need to further expand their investments into human capital, providing greater access to education, healthcare, and social services. The government’s efforts in this area are evident but only time will tell whether they are sustainable and sufficient.
(Photo by Xomidov Photo)