Somewhere in the 1970s the world’s population growth began slowing down. Thirty years later, we are witnessing a reduction in the amount of young people that hasn’t happened since the Black Death arrived at the shores of Italy.

According to the US Census Bureau, half of the world’s population now lives in countries with fertility rates lower than what’s needed to keep the population from shrinking.

“The developed world is in the process of committing collective national suicide,” warns Peter Drucker, the father of modern management. And a quick look at a country like Italy shows why.

In the mid 60s Italy gave birth to a million babies each year. Today this figure stands at 500,000. The result is that Italy, with a fertility rate of only 1.3, is the first country in the world with more people over the age of 60 than under the age of 20. To paraphrase a famous movie title, Italy has moved from being a country with four weddings for each funeral to having four funerals for each wedding.

And Italy is not alone. Consider the following:

- As you read these lines, Japan, the world’s second largest economy, has stopped growing. Its population of 127 million is now beginning to shrink.

- By 2007, the number of Britons aged over 65 will exceed the number of those aged under 16 for the first time.

- By 2030, a whopping 50% of Germany’s population will be over 65.

Developed countries aren’t the only ones experiencing a fertility crisis: China, Algeria, Turkey, Lebanon and even Iran, all suffer from fertility rates that are below 2.0.

What’s causing this shift in the population’s structure and, more importantly, why should you care?

Let’s start with the causes. One explanation for the falling birth rates is the integration of women into the work force in the developed world. Demographers also note that women are marrying later and are getting better at family planning.

Then there’s AIDS. AIDS, which broke out in 1981, has grown to become the fourth leading cause of death on a global basis and the leading cause of death in Africa. The impact of AIDS in Africa is simply staggering. The US Census Bureau estimates that “among countries in Southern Africa that would have approached or exceeded life expectancies of 70 years of age by 2010 in the absence of AIDS, several are likely to see life expectancies fall to around 30.”

Now that we understand that the proportion of children in the developed world (as well as parts of the developing world) is rapidly decreasing, it’s time to ask a simple question: So what?

The simple existence, let alone prosperity, of any country, depends on its economic output. If there are less and less people to do the work, and less and less people to serve as customers, the economy as a whole will shrink.

There are only two ways for a country with a dwindling working population to continue growing. The first is to improve the productivity of its workforce, so that the same, or a smaller amount of people, can produce the same amount of work. Indeed, the last two decades have brought unprecedented improvements in employee productivity, much of them assigned to innovations in information and communications technologies.

But it isn’t clear to what extent this productivity rise can continue unfettered, or whether every country can adopt technology as skillfully as the US and the UK have done, for example.

The second way a country with a dwindling working population can avoid Drucker’s “national suicide” is by importing people into the country. But immigration, as we have seen in the last decade, is one of the thorniest topics the developed world has to deal with.

Take Germany, for example. By 2030, Germany’s workforce will have shrunk by 25%. This means that starting from the year 2020, Germany will have to import a million immigrants each year just to maintain the size of it workforce.

Such a move is highly unlikely to be accepted with open hands. A recent attempt to establish a progressive immigration law for the country was rejected by the German parliament, echoing a wave of public opposition.

And Germany isn’t the only country with mixed feelings about immigrants.

France, Belgium, Italy and Austria, all have strong anti-immigration movements, which will make it increasingly difficult to bring in the very people these countries need to sustain their quality of living.

The tectonic shifts in the population structures of the developed world don’t necessary spell bad news. Indeed, some of the trends associated with the population changes can spell opportunity, if you know where to look. Consider the disappearance of the mass market.

Ever since World War II, companies such as Procter & Gamble, Unilever and Coca Cola have built themselves on the ability to appeal to the tastes of a young mass market. But in many countries the mass market is gone, and is now split into two or more age groups, such as the above 50s and under 50s. In reaction, companies are finding that they have no choice but to cast smaller and smaller nets to get the right message (and develop the right product) to the right people.

Just because the young population in many countries is dwindling, doesn’t mean it doesn't represent a lucrative market. In China, where the government’s one-child policy has created a country of single-child families, some parents spend more on a single child than they would have spent on 3 or 4 children combined.

What will the impact of this population shift mean for you and your company? To begin with, it’s safe to assume that the youth will no longer be the fastest growing segment of your market (I’ll tell you who will be in next month’s newsletter). Then there’s the question of how your company will find enough people to work for it and whether it has the capability to employ people who are past their retirement age.

But what you should really keep in mind is that unlike futuristic predictions that may or may not happen, the demographical changes described here have already happened. After all, the people that will enter the workforce in the next two decades have already been born.