Category: China

Demographic Dividend: Which Countries Are Next?

SAMI J. KARAM

Sub-Saharan Africa is nearing a historic opportunity, but most of its nations are not ready.

Published on Africa Day 2023.

The population of India will have surpassed that of China by the end of this year, with each country counting 1.43 to 1.45 billion people. This milestone has led several observers to wonder whether the Indian economy can achieve a demographic dividend in the same way that China did after 1990. There is however widespread misunderstanding around the question of what constitutes a demographic dividend. This recent statement from a leading Indian daily is typical but inaccurate:

“A high population, especially in a younger age cohort, is generally seen as an asset rather than a liability for the economic fortunes of a country. The simple reason for this is that more people also means more working hands.”

The Financial Times similarly published “Can India Unlock the Potential of its Youth?” in which it discussed India’s prospects of deriving a demographic dividend from its youth bulge.

“More people” or a “youth bulge” could in theory mean “more working hands” but only if there is a sufficient number of jobs being created. The fact that tens of millions of new young cohorts will come of age every year and will need to take jobs to make a living does not automatically mean that those jobs will be there for the taking. A benign economic outcome cannot be taken for granted merely because of a shift in demographics. If for example investment is weak or if literacy is low, having more people may result instead in greater poverty and other deteriorating conditions. In addition if there is a too-large “younger age cohort”, there may be new headwinds slowing the economy in cases where the number of dependents (the young and elderly) overwhelms the number of workers. All of this is to say that while the sheer total number of citizens is important, it is less important than the age distribution of the population and other non-demographic factors.

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Update: Working Age Population Around the World 1960-2050

SAMI J. KARAM

This is an update of a similar post from 2015. The UN projections have changed but only by small numbers. The main observations are the same as six years ago (click table to enlarge in a new tab).

The working age population (WAP, those aged 15 to 64) of sub-Saharan Africa continues to grow rapidly. It has more than doubled since 1990 from 252 million to 609 million, and is expected to more than double again by 2050 to 1.3 billion. If the reality turns out to be anywhere near these projections, it will be a significant challenge for African economies to absorb and to employ productively this enormous amount of new human energy.

India faces a similar challenge with its WAP growing from 928 million now to 1.1 billion in 2050. Though daunting, this represents a slowdown in the rate of growth from the previous thirty-year span 1990-2020.

The WAP of Europe, China and Japan have already peaked and will be declining for the rest of the century, per UN projections. Europe’s decline from near 500 million in 2005 to a projected 407 million by 2050 is mainly due to eastern and southern Europe. The WAP of France and the United Kingdom will flatline to 2050 while those of Germany and Russia decline.

In the United States, the steady growth in the WAP between 1960 and 2005 combined with a falling dependency ratio to fuel strong economic conditions. Growth in the WAP is expected to be more muted in the decades ahead.

Compared to the late 20th century and the first decades of this century, the future growth in the WAP will taper off or even turn negative in several regions and countries. Sub-Saharan Africa stands out as the exception that will maintain strong WAP momentum through at least 2050.

De-Politicizing Climate Activism

Editors

Or how Greta Thunberg can create more converts.

“Nature is not a temple. It is a workshop, and a human being is the worker in it.”                               _                                                                                                         Ivan Turgenev

Item 1: The outbreak of coronavirus that threatens to create a global pandemic and the tragic sudden death of basketball star Kobe Bryant both remind us that the unexpected can happen quickly and that we humans live in an environment that can at times be ruthlessly hostile.

Nature, fate, providence, or whatever one chooses to call it, works in inscrutable ways. The virus will spread and endanger millions, if humans do not stop it. It has no will or conscience and would inexorably destroy those who are dearest to us, in a matter of days. And, before downing Bryant’s helicopter and killing him, his young daughter and seven others, fate or gravity did not pause for a millisecond to ponder the sadness that it would inflict on hundreds of millions all over the world through such a senseless death.

Modern society is generally free of deadly viruses and helicopters are generally safe to fly. But it took centuries of human progress to get there in both instances. And it will take more human progress and ingenuity to seal the cracks in our vigilance that allowed the coronavirus to emerge and spread, and the helicopter to crash .

Screen Shot 2020-01-27 at 2.29.15 PM
CDC photo by Dr. Fred Murphy.

Item 2: Last week in Davos, US Treasury Secretary Steven Mnuchin volunteered that climate activist Greta Thunberg ought to get an economics degree before preaching her message to grown-up policy makers. That is more confidence in university economics departments than most of Miss Thunberg’s critics would be willing to concede. It is true that Miss Thunberg’s message is incomplete, but that is not for lack of economic pedigree. The building blocks that are glaringly missing from her campaign are 1) a better understanding of Turgenev’s aphorism on nature and man, and 2) a trip or two to China, India or other fast developing countries.

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Fertility and Literacy in India’s States

Editors

Higher female literacy is a reliable predictor of lower fertility and improved prosperity.

In a previous article, we highlighted a clear connection in sub-Saharan Africa between a country’s total fertility rate (TFR = average number of children per woman) and its young female literacy rate. The data showed that higher literacy may set off a chain reaction that results progressively in lower infant mortality, improved health for women, and lower fertility. While literacy rises to 90%, fertility falls gradually. Above 90%, it falls precipitously.

800px-Exams_in_Jaura,_India
End of the year exams in Mahatma Gandhi Seva Ashram, Jaura, India. © Yann Forget / Wikimedia Commons.

In turn, this lower fertility can, under the right conditions, open a window of opportunity for the economy to realize a demographic dividend. Read more →

Africa: 800 Million Jobs Needed

Editors

African economies are in a race to get ahead of the demographic boom.

“Let us share without fear the journey of migrants and refugees.” Pope Francis (@Pontifex) tweet on 27 September 2017.

While some people in the United States are sweating the presence, against the backdrop of a demographically stagnant white population, of the 11 million undocumented immigrants or of the 30+ million other foreign-born residents, there are far bigger numbers brewing in other parts of the world, numbers that are so large that they could affect, decades from now, the life of an American citizen far more than would the rare determined Mexican or Guatemalan who manages henceforth to scale President Trump’s purportedly impenetrable border wall.

In the next decades as was so often the case in history, the future shape of the world could once again be decided in Europe and by Europe’s and the West’s handling of Africa’s incipient demographic boom.

In fact, if you are a generous-minded European who shares the Pope’s noble sentiment and who views the ongoing wave of migrants coming into your country as a benign and positive development; or, if you believe that borders are outdated constructs and that all refugees and other immigrants should be welcomed into the rich world; indeed, if it is your view that anyone who stands in the way of this openness is misguided by racist and nefarious motives, then it behooves you to test the strength of your belief by examining the larger demographic data coming out of Africa and Asia. Read more →

The Economics of Dependency

SAMI J. KARAM

This article first appeared at Foreign Affairs.

How countries hit the demographic sweet spot.

Demographics are among the most important influences on a country’s overall economic performance, but compared with other contributors, such as the quality of governance or institutions, their impact is underappreciated. Demographic factors, such as the age structure of a population, can determine whether a given economy will grow or stagnate to an even greater extent than can more obvious causes such as government policy.

One of the most consequential aspects of demographics as they relate to the economy is a phenomenon known as the “demographic dividend,” which refers to the boost to economic growth that occurs when a decline in total fertility, and subsequent entry of women into the work force, increases the number of workers (and thus decreases the number of dependents) relative to the total population. The demographic dividend has contributed to some of the greatest success stories of the twentieth century, and countries’ ability to understand and capture this dividend will continue to shape their economic prospects well into the future. Continue reading at Foreign Affairs >>> or read the pdf below.

The-Economics-of-DependencyDownload

The Futility of Annual Top 10 Predictions

Editors

In every recent year, a black swan event has made top 10 lists appear quaintly naive and unimaginative. Our list is probably no better.

This time of year, top 10 predictions are all the rage. These lists can be interesting and entertaining but how useful are they really?

This question goes to the heart of forecasting. How futile or how useful is an attempt to forecast the economy, or technology, or world events for the next twelve months? There are three answers. Read more →

How Demographics Explain the Economy

Editors

Aaron M. Renn, a senior fellow at the Manhattan Institute and a contributing editor at City Journal, invited founder Sami J. Karam to discuss populyst and the populyst index. Topics include the economies of America and China, Europe’s demographic stagnation and Africa’s population explosion.

TO HEAR THE PODCAST, CLICK HERE OR ON THE TIMELINE BELOW:

Portfolio 019 – Manhattan Ultra-Luxury ‘Battling the Serpent of Chaos’

SAMI J. KARAM

The deceleration of China and resulting commodities crash have created a problem for developers of ultra luxury condominiums.

The ancient Egyptians believed that the sky was a solid dome, the belly of the goddess Nut who arched her body from one side of the horizon to the other. Every day, the sun god Ra emerged in the east and sailed in his boat across the sky until dusk when he disappeared in the west by dipping below the surface of Nun, the ocean upon which the whole flat earth floated. Read more →

The Relationship Between Fertility and National Income

SAMI J. KARAM

We all heard that “demography is destiny”. But how many of us truly believe it? If demography was destiny, the world would look very different today. The two demographic giants China and India would be uncontested economic and military powers. The United States would be a regional power struggling to keep up. Larger European nations such as Britain, France and Germany would barely register on the economic map, while smaller ones such as Switzerland and Finland would be invisible. Nigeria and DR Congo would be African powerhouses. Brazil, Indonesia and the Philippines would be the shining stars of their continents. Read more →