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Old Monday, June 22, 2009
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Demographic change and windows of opportunity


By Shahid Javed Burki
Monday, 22 Jun, 2009


ECONOMISTS have yet to fully recognise the impact demographic changes play in economic development – both retarding or promoting it.
If population has figured in their work, it has done so mostly as an inhibitor rather than a promoter of growth. This was the focus of much attention in the earlier phase of development thinking when high rates of population growth were seen as hurting the prospects of many developing countries.

In the early post-World War II period, as health and hygiene improved in developing countries, there was an immediate impact on the rate of population increase. Mortality rates declined rapidly. In India (which has better statistics than most other developing countries), the death rate fell from 42 per thousand per 1000 at the start of the century to 15 by the early 1970s. There were similar changes in other parts of South Asia.

For decades, this decline was not compensated by reductions in the rate of fertility. There was a belief among many economists that the strong male preference and high rates of infant mortality was the reason why parents chose to have large families. In most developing countries, parents wish to have at least two sons to survive to adulthood and that meant having six to eight children. But the families didn’t seem to notice that decline in the rates of mortality had increased the probability of survival of boys. Inertia and hard-to-break habits made them opt for large families.With the families not reacting on their own, there was a broad consensus that the state had to intervene to reduce family size.

Population explosion became a great worry for development economists in the “60’s and ‘70’s. Governments – in particular those in the crowded South Asia – were encouraged to adopt family planning programmes. The World Bank created a new department to aid this effort in the developing world. Many countries took the advice offered by the bank and other development institutions.

In the mid-sixties, President Ayub Khan ignored the objections of the religious parties and launched an ambitious Family Planning Programme and appointed Enver Adil, a civil servant known for his energy and dynamism, to head the effort. Foreign assistance came pouring into the programme.

It is hard to say whether these programmes worked or whether the de clines in the rates of fertility happened because of other factors. Be that it may, there have been significant declines in the rates of fertility in the developing world including the countries of South Asia. Fertility will continue to decline but at different rates in different parts of the region. In South Asia, the process began in Sri Lanka several decades ago. It started in India in the 1980s, in particular in the states in the south of the country where the level of human development was relatively high, the rates of economic growth were better than in other parts of the country, and that had high rates of emigration. It started in Bangladesh at about the same time as India but for different reasons.

The rapid development of the garments industry resulted in the improvement of the social and economic status of women. Women entered the workforce, had sources of income not dependent on their husbands or fathers and also began to look for opportunities to acquire education. Husbands no longer had the decisive say in determining the size of the family. The move towards fertility decline has also begun in Pakistan. The trend became perceptible in the early 2000s but still has a way to go before Pakistan catches up with other coun tries in the South Asian region. Fertility rates are still high in Afghanistan, a trend seen in other countries experiencing conflict. For obvious reasons a feeling of insecurity leads families to seek larger sizes.

One important consequence of this declining trend in the rates of fertility is that it will create a window of opportunity that will last a few decades during which the number of active workers would far outnumber those who are dependent on them. During this time, the states don’t need to carry the burden of caring for those who can’t be looked after by the working members of the families. The accompanying Table provides estimates of the duration during which the window will remain open. Since the decline in the rates of fertility are slower than other countries that have gone through the same kind of transition, periods of opportunity available to the South Asians are much longer. For India, it will remain open for 60 years--1975 to about 2035-- when the number of people reaching the working age will begin to decline.

Using the same methodology as applied by the World Bank for determining the time over which the windows will remain open for Pakistan, it appears that the duration for the country will be 50 years.The window opened in 1995 and will not close until 2045.

Could Pakistan, using this window of opportunity, build a future for itself and create some space in the evolving global economy by concentrating on the development of, say, modern serv ices? Countries with large and young populations have a comparative advantage in this area of economic activity. Another set of numbers helps us to answer this question.This is on the median age of the population. Pakistan has by far the youngest population of all large countries. As population growth rates increase, the median age of the population – meaning the age at which the number of young is the same as the number of older people – begins to decline. This is what has happened in Pakistan. The median age in 1950 was 24.2 years. By 1990 it had dropped to only 18.2 years, a decline of five years.

The population had become much younger. The median age in 1990 was almost three years less than that of India which was 21.1 years and almost the same as that of Bangladesh which was 18.2 years. The rapid demographic transition that has occurred in some parts of South Asia, saw significant increases in the median age. Between 1990 and 2005, it increased by 1.8 years in Pakistan, by two years in India and by an impressive 4.4 years in Bangladesh.

If the changing character of the economies of today’s rich countries is any guide, much of the future growth in the global economy will come from services. These are labour intensive to produce and provide, and some of the more modern ones need highly developed skills.

Both the state and the private sector will need to invest in the youth to draw the most benefit from the widows of demographic opportunity that have opened up in recent years in many countries. Those that have serious resource constraints – as is the case in Pakistan – the private sector will need to play a more active role.

But the state needs to take the lead in factoring this development into the making of public policy. As the Planning Commission turns its attention towards the preparation of another development plan, it would do well to use this window as an opportunity to bring growth back to the economy and to alleviate poverty and improve the distribution of incomes.

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