Tuesday, November 13, 2007

Demographic Dividend and Faith in the Philippines

At the start of 2005, Jaime Augusto Zobel de Ayala gave a speech where he professed his faith in the Philippines based on three emerging trends. One of these is the demographic dividend::
"Philippine population has shifted structurally where those of working age – from 15 to 64 – will considerably dwarf those of dependent age (children and the elderly). In 2005, our working age population is projected to constitute 61.8% of the population. This is projected to rise to 63.9% by 2010, 65.6% by 2015, and 68% by 2025."
As basis, he cited a Study by Dr. David E. Bloom on the Demographic Dividend: New Perspective on Economic Consequences Population Change which correlates the rapid per capita growth in East Asia to such a change in the population structure:
"East Asia created its economic miracle in part because of this. Rapid demographic transition from 1965 to 1990 was matched by real per capita income growth averaging 6% per year during the same period. The demographic alone is estimated to account for approximately one-fourth to two-fifths of this growth. The same transition is pushing China and India into the forefront of economic development. Dr. Bloom believes that the next 10 to 15 years could be the turn of Southeast Asia, particularly Indonesia, Thailand, Malaysia and the Philippines."
In a related paper Contraception and the Celtic Tiger, Dr. Bloom together with David Canning describes a similar economic takeoff by Ireland that coincided with the legalization of contraceptives. This Paper talks about the dependency ratio and asserts that:
"Contrary to the neutralist view, the emerging evidence indicates that population does matter to economic growth, with age structure playing a central role. As the dependency ratio falls, opportunities for economic growth tend to rise, creating what is now referred to as a 'demographic dividend'."
Ratio, Working-Age to Non-Working-Age Population

True enough, a separate paper by Rodrik, Pritchett and Hausmann on Growth Accelerations shows that Ireland's annual per capita GDP growth in the decade after 1985 accelerated to an annual average of 5.0% as compared to the previous eight years where the figure was at 1.6% (a difference of 3.4%).

For their part, Bloom and Canning takes pains to stress that change in age structure within a population alone does not account for the entire growth acceleration. Rather,
"It is important to note that Ireland, like the 'miracle' economies of East Asia, had in place economic and social policies that favoured its taking advantage of the demographic shifts it experienced. Two key policies were at work in Ireland. First, in the late 1950s, there was recognition that the 'closed economy' model of development had failed in Ireland. This led to new policies with an emphasis on encouraging direct foreign investment in Ireland and promoting exports. Second, from the mid-1960s, free secondary education was introduced, leading to a large increase in school enrolments and subsequent expansions in higher education. The resultant high levels of education, combined with export-oriented economic policies, seem to be powerful factors in ensuring that the benefits of the demographic transition are realised. As discussed in the introduction, there are a wide range of policies that have contributed to Ireland’s economic growth. We think these policies also made the Irish economy more flexible and capable of absorbing, and profiting from, the demographic dividend. In our empirical study we use 'openness' as a measure that affects the impact of the demographic dividend, but we see 'openness' more as a proxy for good economic policies in general and not an
endorsement of export orientation alone...
"
In the case of the Philippines, the improvement in the dependency ratio that Zobel de Ayala mentioned in his speech is indeed taking place although at a somewhat slower pace.

Ratio, Working-Age to Non-Working-Age Population
[Sources: derived from "Zobel de Ayala's speech and NSCB Estimates]

I'm not sure why the above NSCB estimates are lower than the figures quoted by Zobel de Ayala in his speech. Perhaps these other people of faith have something to do with it.

Update Nov-15-2007 3:06am: In the comments section, Urbano de la Cruz points to the role of cities as population sinks. This means that greater urbanization contributes to the decrease in the birth rate.

4 comments:

AdB said...

Hi Chuck,

Off topic here:

I've just posted a comment in Charles Bremner's franco-anglo webblog in The Times about your proposal that there should be entrance exams in unis for baccaulaureat graduates (French high school). Very timely because the topic is being debated on hotly by commenters.

I thought your suggestion was excellent and picked up from there.
Here is the link:
http://timescorrespondents.typepad.com/charles_bremner/2007/11/story-from-toda.html#comments

I signed as The 3rd Column and comment is found under topic France readies for the Sarko showdown.

Urbano dela Cruz said...

cvj,

I'm right there with JAZA, Bloom and Canning. Part of me strongly suspects we've reached a tipping point.

there is another driver worth watching: urbanization. I think our urban population is close to, if we haven't surpassed it already, 60%.

"premature urbanization" notwithstanding, urban environments tend to encourage entrepreneurial activities. They also provide greater opportunities for women.

Cities are also population sinks, and could be the natural structural antidote to the anti-contraception/moralist agenda.

cvj said...

Hi Anna, that's an interesting exchange you have going there. I think the French Left should seriously reconsider whether their advocacies like retirement with full benefits at 50-55 are sustainable.

Hi Urbano, thanks for the pointer!

Equalizer said...

"The people will absolutely not tolerate any more excuses for postponing computerization, and Congress and the Executive know this.JAZA"

Jaime is the eternal optimist. That's why I like this guy.

However,the sad reality is that the Executive prefers the current manual voting precisely because it is so easy to CHEAT!