Demographic Change and Economic Growth in the BRICS: Dividend, Drag - PowerPoint PPT Presentation

Demographic Change and Economic Growth in the BRICS: Dividend, Drag or Disaster? Presentation based on the 2015/16 Global Monitoring Report (GMR) www.worldbank.org/gmr Philip Schellekens Lead Economist, Prospects Group, World Bank Group with contributions from: Syud Amer Ahmed, Pinyi Chen, Marcio Cruz, and Bryce Quillin www.worldbank.org/GMR

Global Monitoring Report 2015/2016 • First World Bank Group report on global demography since 1984 • What has changed since then? o Demographic trends o Thinking on demography o Globalization

Plan of talk PART 1: The Global Setting • What are the patterns of demographic change? • How does demographic change affect growth and development? • What role for policies at the national and international levels? PART 2: The BRICS • How do demographic trends in the BRICS vary? • Will demographic change be conducive for growth or spell trouble? • What policies are critical to bolster outcomes?

Plan of talk PART 1: The Global Setting • What are the patterns of demographic change? • How does demographic change affect growth and development? • What role for policies at the national and international levels?

Patterns: Global trends are at a turning point The working-age share of the A period of unprecedented global global population peaked and the population growth has ended world is now aging Population growth rate (percent) Global population shares by age cohort (percent) Ages 15-64 on left axis, Ages 0-14 and 65+ on right axis 2.5 Ages 15-64 Ages 0-14 Ages 65+ 68 40 2.0 66 35 64 30 1.5 62 25 60 20 1.0 58 15 56 10 0.5 54 5 0.0 52 0 1950 60 70 80 90 2000 10 20 30 40 2050 1950 60 70 80 90 2000 10 20 30 40 50

Patterns: Stark disparities across countries Cumulative change in population, 2015-50 -10% -2% 30% 15% 20%

Patterns: The rise of Sub-Saharan Africa More than half of global population Working-age population growth is growth through 2050 will be in Sub- slowing globally but will remain high in Saharan Africa Sub-Saharan Africa Annualized growth rate, ages 15 – 64 (%) Share of global population growth (%) 60 1980-2015 2015-50 1950-2015 2015-50 3.0 50 2.5 2.0 40 1.5 30 1.0 20 0.5 10 0.0 -0.5 0 HIC EAP ECA LAC MNA SAR SSA HIC EAP ECA LAC MNA SAR SSA HIC High-income countries EAP East Asia and the Pacific ECA Europe and Central Asia LAC Latin America and the Caribbean MNA Middle-East and North Africa SAR South Asia SSA Sub-Saharan Africa

Impact: Two types of demographic dividend may boost per capita economic growth 8 Average annual change in real GDP 6 per capita, 1960-2014 4 2 0 -2 -10 0 10 20 30 -4 Change in the share of the working-age population, 1960-2014 Note: A rising working-age population share is positively correlated with GDP per capita growth. An increase of 1 percentage point in the working-age population share is estimated to boost GDP per capita by 1.5 percentage points, on average.

Impact: A new typology of demography and development that helps us disentangle the impact Criteria for the demographic typology: Growth of Working- age Population Total Fertility Rate, 1985 Total Fertility Rate, 2015 Share, 2015-30 <2.1 >=2.1 >4 <=4 <= 0 Post-dividend Late-dividend Pre-dividend Early-dividend >0 Note: The working-age population is defined as the share of the population aged between 15 and 64 years. Total fertility rate is the average number of births per woman in her lifetime.

Impact: Demographic transition from pre- to post-dividend stage Four groups of countries can be identified based on the opportunities for growth and development that demographic change presents Total Fertility Rate 9 Pre-dividend Early-dividend Late-dividend Post-dividend 8 7 6 Russia 5 Brazil 4 China 3 2 South Africa India 1 0 45 55 65 75 85 Life expectancy (years)

Impact: The world through the lens of the typology GMR 2015/2016 10

Impact: Simulations into 2030 according to demographic type A. Average change in the share of working age B. Average GDP per capita (annualized) population, 2015-30 (percentage points) growth, 2015 – 30 (percentage points) 0.6 Other sources of growth 5.0 Impact of Demographic Change 0.4 4.0 0.2 3.0 0.0 4.2 3.2 2.0 2.2 2.3 -0.2 1.0 2.0 0.8 0.5 -0.4 0.0 -0.3 -0.6 -0.2 -1.0 -0.6 Pre-dividend Early-dividendLate-dividend Post-dividend World Pre-dividend Early-dividend Late-dividend Post-dividend World

Impact: Simulations into 2030 for aggregate economic growth Average aggregate GDP (annualized) growth, 2015 – 30 (percentage points) Impact of Demographic Change Other sources of growth 8.0 7.0 6.0 5.0 4.0 6.0 3.0 4.7 4.6 2.0 3.0 1.0 1.9 0.0 0.3 0.9 -0.6 -0.5 -0.4 -1.0 -2.0 Pre-dividend Early-dividend Late-dividend Post-dividend World

Policies: Pre- and early-dividend countries Early-dividend countries Pre-dividend countries further along in demographic lagging in human transition development outcomes Sparking demographic transition Accelerating job creation • • Improve maternal and child Invest in human capital • health Enhance labor market mobility • • Expand education without Reduce barriers to female labor letting girls fall behind force participation • • Empower women Strengthen conditions • conducive to savings & job Improve access to creation comprehensive family planning services Example: Niger, Sudan Example: India, South Africa

Policies: Late- and post-dividend countries Post-dividend countries with Late-dividend countries with shrinking proportions of 15- shrinking proportions of 15- 64 population & aging well 64 population & aging underway accelerating Adapting to aging Sustaining productivity growth • • Reform welfare systems for Continued mobilization of fiscal sustainability while savings for productive ensuring social protection investment • Raise labor force participation • Ensure public policies rates & productivity of everyone, encourage labor force at all ages participation of both sexes • Pursue policies that encourage • Design cost-effective, fertility rebound, including sustainable welfare systems measures to reconcile childcare & work Example: Brazil, China, Russia Example: Japan, Germany

Policies: Development disparities 87 percent of the world’s poor lived in centers of global poverty in 2015 while the engines of global growth accounted for 78 percent of global economic growth since 2000

Policies: Demographic divergences Global working-age population growth will be Aging already advanced or accelerated in dominated by the centers of global poverty the engines of global growth Share of population, ages 65+ (%) Annual growth of population 15-64 (percent) 3.0 30 Pre-dividend Early-dividend Late-dividend Post-dividend 1980-2015 2.5 25 2015-50 2.0 20 1.5 15 1.0 10 0.5 5 0.0 0 -0.5 1950 60 70 80 90 2000 10 20 30 40 2050 Pre-dividend Early-dividend Late-dividend Post-dividend

Policies: Leveraging greater globalization • Scope for leveraging demographic differences between countries for own growth as well as positive development spillovers • Trade • Capital flows • Migration • Channels are complementary • Generally, migration more constrained than trade and capital flows

Plan of talk PART 2: The BRICS • How do demographic trends in the BRICS vary? • Will demographic change be conducive for growth or spell trouble? • What policies are critical to bolster outcomes?

Patterns: Diminishing population growth for all BRICS Brazil Russia India 1 800 160 250 1 600 150 1 400 200 140 1 200 130 150 1 000 120 800 100 110 600 100 400 50 90 200 80 0 0 195060 70 80 90200010 20 30 40 50 1950 60 70 80 90 2000 10 20 30 40 50 1950 60 70 80 90 2000 10 20 30 40 50 China South Africa 70 1 600 60 1 400 50 1 200 1 000 40 800 30 600 20 400 10 200 0 0 1950 60 70 80 90 2000 10 20 30 40 50 1950 60 70 80 90 2000 10 20 30 40 50

Patterns: Working-age population shares peak much earlier in Brazil, China and Russia Late-dividend BRICS: share of working-age Early-dividend BRICS: share of working-age population (percent) population (percent) 75 75 70 70 65 65 60 60 Brazil 55 55 India Russia China South Africa 50 50 1950 60 70 80 90 2000 10 20 30 40 50 1950 60 70 80 90 2000 10 20 30 40 50

Patterns: Russia and South Africa would be further along in the transition if not for their earlier mortality and HIV/AIDS crises Life expectancy at birth for males, years Life expectancy at birth for females, years Brazil Russia 90 90 Brazil Russia India China India China South Africa South Africa 80 80 70 70 60 60 50 50 40 40 30 30 1950-55 1960-65 1970-75 1980-85 1990-95 2000-05 2010-15 1950-55 1960-65 1970-75 1980-85 1990-95 2000-05 2010-15

Patterns: Working-age population growth rates expected to decline considerably in China and Russia Average change in the share of working age population (percentage points) 0.5 2000-2014 2015-2030 0.40 0.4 0.32 0.32 0.30 0.27 0.3 0.2 0.15 0.13 0.11 0.1 0 0.06 -0.1 -0.11 -0.2 -0.3 -0.35 -0.4 -0.41 -0.5 BRICS BRA RUS IND CHN ZAF