Demographics have presented important considerations for investors for the past 100 years, and they’ll be important for the next 100 years—because much can be anticipated by looking at demographic shifts.

That’s because there are two key ways to influence economic growth: via productivity and via the labor force.

Improving productivity is difficult in an environment where central bank activity was preventing normal asset pricing (currently, central banks are starting to unwind some of the extreme elements of their rate manipulation). Still, when the government manipulates market prices, it inhibits corporations’ ability to properly assess capital expenditures, which is their form of investment.

Because they can’t accurately determine the price they want to pay for an asset, it is difficult for companies to invest, so they sit on cash. That restrains productivity.

That means we’re forced to look to the labor force for economic growth, and that is where demographics come into play. If a population isn’t growing, the labor force isn’t growing. And if the labor force isn’t growing, it’s difficult for the economy to grow.

The chart below shows the projected population growth of different countries as a percentage of what it is today. For 2016, the diamond in the middle of the chart, it’s 100%. Looking back from there, you can see that population growth in emerging markets, excluding China, has been steep. The United States and Spain have also been growing relatively rapidly.

What I find more interesting is what happens from here. Germany and Japan are anticipated to experience a very significant decline in their populations. By the end of this century, if these countries maintain the same birth and death rates and maintain the same policies and migration rates, their populations will be only 40% of what they are today.

Said another way, Germany and Japan have more people leaving their population (through death and emigration) than entering (through birth and immigration). That’s a difficult situation for Germany and for Japan.

Just above Germany and Japan on the chart are Italy and Spain. Their situation (rapidly declining populations) is not quite as bad as Germany’s and Japan’s, but it still represents a difficult environment for growth.

The United States fares better, with the population growing until about 2050. Faring best of all are emerging markets, excluding China. At the end of the century, their populations are anticipated to be above current levels.

I have excluded China to provide a sense of what the population growth looks like without that behemoth’s influence. Its growth over the rest of the century will likely be slower than what you see for the other emerging markets.
I find it interesting that at the end of the century the world population will end up at about where it is today.

We should see a 20% increase in population growth from now until 2050, after which it will decline.

What does all of this mean? Countries with declining population growth are likely unable to provide benefits for their populations. Germany, for example, cannot maintain the social welfare contracts it has with its citizens if only 40% of its current population is working and paying taxes.

For that reason, we can very confidently say that something has to change—and what is most likely to change across all of these markets is migration of people and the flow of goods, services, and capital across borders.

We look for countries that are making legal and regulatory changes that allow for migration, trade flow, and capital flow, because these changes will help drive economic growth.

The latter is very important because wealth is being created globally. Even if you live in a country with low population growth, you can maintain your standard of living.

In fact, over the coming years, we believe we’ll see regulatory changes that integrate the 17% of the world’s population living in the developed world with the 83% of the population living outside the developed world.

That 83% is younger and more capable of moving into a low-skilled labor environment. In other words, it will be providing labor, as well as goods and services, to the developed world.

From an investing perspective, we look for countries that are making legal and regulatory changes that allow for migration, trade flow, and capital flow, because these changes will help drive economic growth. When those developments occur, economies typically change gradually, while asset markets tend to respond more quickly.

And given that asset markets respond more quickly, we’re tracking these medium-term developments for investment opportunities where we see the free(er) flow of goods, services, capital, and labor.

Singer is the Head of the Dynamic Allocation Strategies Team at William Blair, a Chicago-based investment banking and asset-management firm.