Countries in East and Southeast Asia are currently undergoing unprecedented double shocks: globalization and demographic transition. To tide the economies over the globalization shock, some efforts have been made, especially in the wake of the Asian crisis in 1997, strengthening the social safety nets. However, significance of the demographic transition and its impact has been barely recognized, and not many discussions have taken place on the policies and safety nets against the risks generated by it. Moreover, a wave of new world-wide economic crisis, engendered by the sub-prime mortgage incidents in the U.S., has been looming on the horizon. East and Southeast Asian countries have to undergird themselves to institutionalize adequate social safety nets for those adversely affected by the shocks. This paper attempts to highlight the nature and magnitude of the impact of the shocks, especially the demographic transition shock, and discuss policy needs, challenges, and issues in institutionalizing the social safety nets in the region. The paper concludes with recommendations including the role of international development cooperation. (The rest is omitted.)

Executive Summary

I. Double Shocks in the Region

II. Globalization and Social Safety Nets
1. Globalization and Economic Growth
2. Globalization and Inequality
3. Social Safety Nets

III. Demographic Transition in Developing Countries
1. Global Ageing Trend
2. Implications

IV. Demographic Transition in East and Southeast Asia
1. Transition
2. Domains of Development Cooperation

V. Social Safety Nets against the Demographic Transition
1. Coverage
2. Benefit Adequacy
3. Alternative Safety Nets
4. Financial Sustainability

VI. Financial Products and Labor Market Policies against the Demographic Transition
1. Complements to Social Safety Nets
2. Financial Market Products
3. Labor Market Policies

VII. Conclusions and Recommendations

References