comparison, one judgment looks to be a reasonably sure proposition : the ratio of retirees to those still working will rise precipitously starting at the end of this decade and will continue to climb through the first third of this century and remain high thereafter. in part, this projected development owes to the retirement of the baby boomers. but the phenomenon is broader than that and reflects the aging of our society. importantly, according to the social security trustees, the demographic challenge will not go away with the passing of the baby - boom generation. this ever - larger retired population will have to be fed, clothed, housed, and serviced by a workforce growing far less rapidly. the retirees may have accumulated a large stock of retirement savings, but the goods and services needed to redeem those savings must be produced by an active workforce assisted by a stock of plant and equipment sufficiently productive to meet the needs both of retirees and of a workforce expecting an ever - increasing standard of living. though from an individual household ’ s point of view, saving reflects financial claims adequate to meet future needs, the focus for the economy as a whole, of necessity, must be on producing the real resources needed to redeem the financial assets. the role of finance is to channel saving into investment in the physical capital assets that assist in the production of the gross domestic product, which, in turn, serves both retirees and active workers. clearly, an efficient system of finance can more effectively deploy a given stock of capital and thus maximize its contribution to supporting the population. any analysis of the amount and type of saving required to finance the bulge in retirements that is just over the horizon clearly needs to project ( 1 ) the number of retirees, ( 2 ) the size of our workforce, and ( 3 ) the productivity of that workforce. of the three, productivity is most directly affected by the level of investment, which, of course, is financed by saving. the size of the future workforce, excluding immigrants, and the size of the future retired population are relatively simple to project from today's age distribution. the level of immigration, both legal and illegal, will be dominated by public policy decisions and by economic forces, both in the united states and in the countries from which our immigrants are drawn. this forecast is more problematic, and its level matters : over the past decade, for example, immigration accounted for approximately one - third of the increase in our workforce. the larger our workforce in 2010 and beyond, the

segment of the financial services industry within the same country, while domestic mergers involving firms in different segments of the overall financial services industry were the second most common type of transaction. cross - border mergers and acquisitions were less frequent, especially those involving firms in different industry segments. still, all types of mergers and acquisitions, whether within one country or cross - border and whether within one industry segment or across segments, increased in frequency and value during the 1990s. joint ventures and strategic alliances provide an interesting contrast with some of the patterns in outright mergers and acquisitions. as with m & a activity, the number of joint ventures and strategic alliances increased during the 1990s, with especially large increases in the last two years. in the united states, which accounted for nearly half of all joint ventures and strategic alliances, the arrangements were overwhelmingly domestic. however, in the other twelve countries studied, crossborder joint ventures and strategic alliances overall exceeded domestic deals. our research shows that financial consolidation substantially decreased the number of banking firms during the 1990s in almost every nation studied, and measures of the national concentration of the banking industry have tended to rise. still, at the national level, the structure of the banking industry continues to differ greatly, ranging from very unconcentrated in a few nations – the united states and germany – to highly concentrated in about half of the nations in our study. in contrast to banking, there are no consistent patterns across countries in changes in the number of insurance firms or concentration in the insurance industry during the 1990s. within the securities industry, several specific activities, such as certain types of underwriting, are dominated by a small number of leading institutions. it is unclear, however, whether this pattern changed much over the 1990s. one of the most important conclusions of our study is that financial consolidation has helped to create a significant number of large, and in some cases increasingly complex, financial institutions. in addition, these firms increasingly operate across national borders and are subject to a wide range of regulatory regimes. these observations have several important implications that i shall return to in a moment. our work finds that the most important forces encouraging financial consolidation are improvements in information technology, financial deregulation, globalization of financial and nonfinancial markets, and increased shareholder pressure for financial performance. because we expect these forces to continue, we expect financial consolidation to continue as well, even though the pace may be interrupted by swings in the macroeconomic cycle and other factors. the study considers few possible future scenarios but concludes that the likelihood of