In almost every developed country, as well as key developing nations like China and Brazil, the birth rate has dipped below the replacement level. As a result, the population is aging and shrinking.

Because of its significance, several leading experts have explored this trend. Ken Dychtwald calls it the "Age Wave," Harry S. Dent, Jr. proclaims it as the "Generation Wave,” and Peter Drucker refers to it the "The Collapsing Birthrate." Regardless of its name — and regardless of whether or not you even see it coming — this trend promises to reshape our world.

Let's examine the facts, and some of the major implications:

As the CIA reminds us in its July 2001 report entitled Long-Term Global Demographic Trends: Reshaping the Geo-Political Landscape, "The rise and fall of civilizations are linked to demographic trends." To highlight the immediacy of this statement, the agency's analysts identify three major trends that are emerging with serious consequences:

1. Working age populations will be declining in most major industrialized economies during the next 25 years, and beyond.

2. The whole population on average is aging throughout the developed world.

3. Rapid population growth is continuing in the developing world.

This trend will catch many businesses unprepared because it explodes a basic, unquestioned assumption: Populations always rise. As Peter Drucker points out in Management Challenges for the 21st Century, for the last two centuries, businesses and governments have made every decision based on this assumption, which has held true for 600 years. Now, suddenly, shockingly, this trend is about to reverse. Before long, there will be fewer workers, and fewer consumers, in the world's wealthiest nations.

Why is this happening? A country's population dynamics is determined by three variables: the birth rate, the death rate, and net migration. Ignoring for a moment the impact of migration, the maintenance of a stable population requires, on average, a birth rate of 2.1 children per female. The birth rate for the EU is now 1.8, and it is just 0.8 in Japan.

During the period 2000 to 2025, the working age population is expected to decline steadily in Europe and Japan, according to UN estimates. Worse yet, the decline will accelerate in the following 25 years between...