1. Leveraging Demographic Transition for Sustainable Development By Assefa Hailemariam (PhD) Associate Professor of Population Studies Addis Ababa University National Youth Development Consultation Forum Dec 21-22 2015, Capital Hotel, Addis Ababa 6/27/20161Assefa Hailemariam

2. Content of the Presentation Concept of: – Demographic Transition – Demographic Dividend – Sustainable Development Global Experiences in Leveraging DT for Sustainable Development Conclusion 6/27/20162Assefa Hailemariam

3. Demographic Transition (DT) 6/27/20163Assefa Hailemariam

4. What is Demographic Transition?  The "Demographic Transition" is a model that describes population change over time  It is a series of stages that country’s population goes through as the country transforms from traditional to modern or from pre-industrial to industrial high low  Demographically, it is the shift from high to low mortality and fertility 6/27/20164Assefa Hailemariam

5. What is Demographic Transition? 5 It involves four stages that are based on changes in population size and social behaviors: Phase 1: High fertility High mortality Low population growth Phase 2: High fertility Declining mortality High population growth Phase 3: Declining fertility Declining mortality Phase 4: Low fertility Low mortality 6/27/2016Assefa Hailemariam

6. What is Demographic Transition? Stage One: Low population growth High birth rate – High demand for Children (children needed to work on farms), no or very little of contraception High death rate – Poor nutrition, poor personal and environmental hygiene (water supply and sanitation) Stage 2: Population growing at faster rate High Birth Rate: still high demand for Children (children needed to work on farms), no or very low use of contraception Decreasing death rate – better medical knowledge, improved nutrition and personal and environmental hygiene (water supply and sanitation) Stage 3: Population still increasing, but rate of increase slower Declining birth rate - children needed less on farms, people have smaller families when infant mortality decreases Decreasing death rate - more medical advances, clean water, greatly decreased infant mortality, improved sanitation Stage 4: Little population growth rate, almost stable Low birth rate - children are expensive, contraception widely available, women gain higher status and control Low death rate - advanced medical services, good living standard, increased health education 6/27/20166Assefa Hailemariam

7. Demographic Transition Theory 6/27/20167Assefa Hailemariam

8. Preindustrial Early Industrial Advanced Industrial Post Industrial Birth Death Pop Demographic Transition Theory 6/27/20168Assefa Hailemariam

9. Preindustrial EarlyIndustrial Advanced Industrial Post Industrial Birth Death Pop Demographic Transition Theory 6/27/20169Assefa Hailemariam

10. Preindustrial Early IndustrialAdvancedIndustrial Post Industrial Birth Death Pop Demographic Transition Theory 6/27/201610Assefa Hailemariam

11. Preindustrial Early Industrial Advanced IndustrialPostIndustrial Birth Death Pop Demographic Transition Theory 6/27/201611Assefa Hailemariam

12. Demographic Transition: Stage one YOUNG. Each successive age group (from 0–4 to 85+ is smaller than the preceding one The working age group (shown in orange) has to provide for a comparatively large population of children However children can help their parents in growing food, collecting firewood, fetching water, etc. High infant and U5MR High fertility due to Physiological effect, insurance effect, or replacement effect 6/27/201612Assefa Hailemariam

13. Demo graphic Transition: Intermediate (Stages 2 & 3) The age pyramid is dominated by the working age groups Given appropriate conditions (low unemployment, proper education, etc.) the working age population is potentially well able to support the old and the young. 6/27/201613Assefa Hailemariam

14. Demographic Transition: Stages 4  OLD. Now the pyramid is almost rectangular in shape  The working age population needs to support a large population of older people  Notice here and in the previous diagram the left- right asymmetry, which is because women tend to live longer than men 6/27/201614Assefa Hailemariam

15. Age Structure Transition Demographic transition leads to age structure transition Decline in fertility leads to decline in fertility and decrease in the annual number of births Decrease in the annual number of births results in a decrease in the proportion of the young (under 15) The large base of population pyramid shifts upwards & age pyramid no longer remains triangular in shape. 6/27/201615Assefa Hailemariam

16. DEMOGRAPHIC DIVIDEND 6/27/201616Assefa Hailemariam

17. What is a demographic dividend? It is the growth in a country’s economy resulting from a change in the age structure of its population – Fertility falls ► fewer births ► size of the population of under age 15 falls ► changes in ages structure – Fewer children < 15 years of age ► fewer expenditures on education, health and food – Fertility remains lower ► working age population grows ► dependency ratio declines ► Bulge of age pyramid 6/27/201617Assefa Hailemariam

18. The Bulging of age pyramid Is the result of a transition from high to low fertility Is the upward shift of the large base of the pyramid that results in an increased concentration of population in the working ages Consists of large numbers of young adolescents and young adults (15 – 29) who were born when fertility was high followed by smaller numbers of children born after fertility has declined 6/27/201618Assefa Hailemariam

19. The Bulging of age pyramid As fertility continues to decline, the bulge continues to move upwards until it reaches old ages. The age pyramid in this situation resembles like a rectangle 6/27/201619Assefa Hailemariam

20. Impacts of the Demographic Dividend on the Economy The demographic dividend impacts on the economy: – Contributes to economic growth (Mason, 2004) – Potential for political unrest (Fuller and Hoch, 1998) – Potential for increased population mobility (within and outside the national boundary) 6/27/201620Assefa Hailemariam

21. Creating and Earning the DD It’s an integrated development process that starts from rapid decline in fertility 21 Assefa Hailemariam March 2013

22. Conditions required to harvest the “demographic dividend”  (1) Labour supply  Needs larger numbers of workforce  Women should enter the workforce as family size decreases  (2) Savings  Younger working age people whose productivity is higher should have a higher level of savings  (3) Human capital investments  Smaller numbers of children, allow greater investment in education, health, etc. and hence, increased primary and secondary enrolment ratios  Infrastructure  A well-developed infrastructure can reduce transactions costs, increase savings, enable economic efficiency and increase labor productivity;  provide employment opportunities;  Internal infrastructure stocks like telephone lines per capita and road density to improve growth performance 6/27/201622Assefa Hailemariam

23. Sustainable Development (SD) 6/27/201623Assefa Hailemariam

24. 6/27/201624Assefa Hailemariam

25. Sustainable Development Three aspects of sustainable development have been recognized: – Economic: An economically sustainable system must be able to produce goods and Services on a continuing basis, to maintain manageable levels of government and external debt, and to avoid extreme sectoral imbalances which damage agricultural or Industrial production – Social: A socially sustainable system must achieve distributional equity, adequate provision of social services including health and education, gender equity, and political accountability and participation 6/27/201625Assefa Hailemariam

26. 6/27/2016Assefa Hailemariam26 – Environmental: An environmentally sustainable system must maintain a stable resource base, avoiding over-exploitation of renewable resource systems or environmental sink functions, and depleting non-renewable resources only to the extent that investment is made in adequate substitutes. This includes maintenance of biodiversity, atmospheric stability, and other ecosystem functions not ordinarily classed as economic resources.

27. 6/27/2016Assefa Hailemariam27 Eradicating poverty and reducing disparities in living standards Promoting an open international economic system that will lead to economic growth Better scientific understanding of development related problems Sharing knowledge and innovative technologies Full participation of women and the creativity, ideals and courage of youth Conservation, restoration and protection of the health and integrity of the Earth's ecosystem. are essential to achieve sustainable development.

28. Leveraging DT for SD 6/27/201628Assefa Hailemariam

29. The Demographic Dividend is not automatic 29 Asian tigers (Malaysia, Thailand, Indonesia, Taiwan) experience : 1.Rapid fertility decline [window of opportunity only 30 – 50 years]; 2.Definite infant and child mortality decline; 3.Massive investment in education, esp. for girls 4.Concerted investment in human development and human capital (skills development). Assefa Hailemariam

30. Asian Tigers: Success Story Between ¼ to 1/3 of economic growth since 1970 in East and South East Asia can be attributed to the Demographic Dividend” (Bloom and Williamson, 1998; Mason, 2001) The economic success was made possible by sustained investments in education, health, family planning, and economic reforms 306/27/2016Assefa Hailemariam

31. The Demographic Bonus Decline in fertility sets the stage for: – A decline in dependency ratios, an increase in the share of the working age population, increased savings and increased private investment – A decline in public spending on social sectors freeing up resources for public investment in economic sectors  Foster growth, yielding a demographic bonus 6/27/201631Assefa Hailemariam

32. Changing Age Structure and Lower Dependency Ratio Changing Age Structure and increasing Longevity  Increasing Working Age Population to Total Population  Growth in Working Age Population to Total Population  32 6/27/2016Assefa Hailemariam

33. The Demographic Dividend Rapid fertility decline sets the stage for: – A decline in dependency ratios, an increase in the share of the working age population, increased savings and increased private investment – A decline in public spending on social sectors (health, education, etc) freeing up resources for public investment in economic sectors – Leading to production and income increases as a result of the existence of more effective workers per consumer. 6/27/201633Assefa Hailemariam

34. 6/27/2016Assefa Hailemariam34 High pop growth, usually exogenously induced through a decline in child mortality rates, puts a burden on economic growth and poverty reduction in the early stages of the demographic transition through the generation of higher dependency ratios and lower savings, and increasing pressure on farm land Yet, this early phase of high pop growth also generates favorable conditions for an accelerated economic growth through an increase in the share of working age population, when a decline in mortality is followed by a decline in fertility

35. 6/27/2016Assefa Hailemariam35 Demographic Dividend, which results from age structure transition is not automatic It depends on both the creation of and capitalization on opportunities for a set of specific policies and environments which make it a time sensitive phenomenon Education, health, and job creation and policies that favor fertility declines are essential to take advantage of the changing age structure and leverage it with sustainable development