The Effect of Age Structure of the Population on Iran's Economic Security

Economic security is one of the most important aspects of national security. It is a basic pillar of the economies for achieving economic development and improving social welfare, too. The demographic changes may widely affect the development and trend of target variables of the economy. The identification of the effects of demographic changes on economic security can help policy-making and planning of economic development. The purpose of this paper is to investigate the effect of age structure of the population on economic security in Iran during the period 1981-2016. In this regard, the economic security index (ESI) is firstly estimated using fuzzy logic. The findings indicate the instability of this index. Then, the impact of demographic model of Iran along with other variables affecting Iran's economic security is evaluated using generalized method of moments (GMM). The results show that age structure of the population has a negative and significant effect on Iran's economic security. Population growth, capital stock, financial development, trade openness, and saving rates have positive and significant impacts on the ESI. However, the inflation rate has no significant effect on the ESI. Iran’s population is rapidly aging, and if the current trend continues, the limited economic resources should be assigned to meet the needs of the elderly instead of investing in productive sectors. Therefore, there is a need for planning to tackle this problem.