Demographic transition and economic growth in Benin Barthlmy Biao - PowerPoint PPT Presentation

Demographic transition and economic growth in Benin Barthélémy Biao and Benin Team 1 12/5/2014 NTA 10, Beijing, China.

Contents 1. Introduction 2. Data 3.Principal results 4.Conclusion and project plans 12/5/2014 2 NTA 10, Beijing, China.

1. Introduction Meaning and importance of demographic dividend The mean demographic dividend growth rate resulting from changes in the age structure of the population of a country (Bloom et al., 2002). A demographic dividend occurs when the drop in the birth rate leads to changes in the age distribution of a population. NTA 10, Beijing, China. 12/5/2014 3 .

The demographic transition, or the point at which the rate of birth and death moves from a high level to a low level, is a critical stage of development opportunities for families and countries. If countries can plan and make necessary investments in young people during the demographic transition, they can create a virtuous circle of improving education, human capital, and the financial sector, and by extension economic productivity (Mason, Lee and Lee, 2008). What about the demographic dividend in Benin? 12/5/2014 4 NTA 10, Beijing, China.

Country Information (2007) Total population (thousands) 8,407,482          l a C a ( ) Y ( ) a Y ( ) a S a ( ) ( ) a ( ) a Population growth rate (%) 3.01             Lifecycle Deficit Asset-based Reallocations Net Transfers    Total fertility rate (TFR) 5.31 Age Reallocations Life expectancy at birth (years) 56 Child dependency ratio 83 Old ‐ age dependency ratio 5 GDP per capita, PPP annual growth (%) 1.51 Official exchange rate (local currency unit per USD, period 6.1 average) 12/5/2014 5 NTA 10, Beijing, China.

Population by Age, 2007 350000 300000 250000 Total 200000 150000 100000 50000 0 0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78 81 84 87 90 Age Source: UN Population Program The age structure of the population indicates that as the age increases, the size of the population by age decreases. People age 52 and over are a very small proportion of the total compared to the age group 16–48 years. Children age 0– 16 are a large group. The size of the population aged 16–48 years is less than the sum of the child and elderly population. 12/5/2014 6 NTA 10, Beijing, China.

Fertility and Mortality Rates Are Dropping Evolution du taux de fertilité moyen au Bénin Evolution du taux de mortalité total (pour 1000 Hbts) 8,00 40 35 7,00 30 6,00 Taux en unité 25 5,00 Taux 20 4,00 15 3,00 10 Taux de mortalité 2,00 Taux de fertilité au Bénin 5 (/1000Hbts) 0 1,00 1950 ‐ 1955 1955 ‐ 1960 1960 ‐ 1965 1965 ‐ 1970 1970 ‐ 1975 1975 ‐ 1980 1980 ‐ 1985 1985 ‐ 1990 1990 ‐ 1995 1995 ‐ 2000 2000 ‐ 2005 2005 ‐ 2010 0 1950 ‐ 1955 1955 ‐ 1960 1960 ‐ 1965 1965 ‐ 1970 1970 ‐ 1975 1975 ‐ 1980 1980 ‐ 1985 1985 ‐ 1990 1990 ‐ 1995 1995 ‐ 2000 2000 ‐ 2005 2005 ‐ 2010 Périodes Périodes Benin experienced increasing fertility from 1950 to 1990, when it reached a peak of 7 children per woman. Then from 1990 to 2010, the the fertility rate declined. Mortality declined continuously over the period 1950–2010. We have to keep in mind that low and declining fertility is largely associated with increasing human capital investment. 12/5/2014 7 NTA 10, Beijing, China.

The window of opportunity for the demographic transition has begun for Benin. However, productivity in the working-age group will scarcely keep up with the cost of consumption by the elderly and children if public policies are not implemented. This is indicated by the profiles of consumption and production throughout the economic lifecycle. 12/5/2014 8 NTA 10, Beijing, China.

2. DATA  Household Data survey EMICoV (Integrated Modular Survey of Living Conditions of Households: INSAE, 2007). EMICoV provides information on households and their members and some information on labor market  Data from national accounts for 2007 (INSAE,2013)  School enrollment, primary, public by age and level (INSAE, 2009: Social dashboard)  budget for the health sector in 2007  Health sector statistics, 2010 12/5/2014 9 NTA 10, Beijing, China.

DATA (Continued)  Report on Strategy for Growth and Poverty Alleviation, 2007 : Estimating health costs by program  Survey of World Population Prospects (2013) 12/5/2014 10 NTA 10, Beijing, China.

3. PRINCIPAL RESULTS 12/5/2014 11 NTA 10, Beijing, China.

Per Capita Labor Income Profiles, Smoothed YLE_mean_sm 800000 YLS_mean_sm 700000 YL_mean_sm 600000 500000 (XOF, 2007) 400000 300000 200000 100000 0 0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78 81 84 87 90 Age Young people begin to work at age 16 in self-employment and informal activities. Income increases with age evolves to a peak at age 48, but the shape of the curve indicates that only a few in this age group have a high income. From age 49 labor income drop steadily with age, but with a slight increase in income from self- employment. NTA 10, Beijing, China. 12/5/2014 12

Per Capita Private Health Expenditure Profile 25000 CFH_mean CFH_mean_sm 20000 (XOF, 2007) 15000 10000 5000 0 0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78 81 84 87 90 Age Children and the elderly have higher healthcare consumption than the working-age population 12/5/2014 13 NTA 10, Beijing, China.

Per Capita Private Education Expenditure Profile 25000 CFE_mean CFE_mean_sm 20000 15000 XOF, 2007 10000 5000 0 0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78 81 84 87 90 Age 12/5/2014 14 NTA 10, Beijing, China.

Public Expenditures Profiles (Cge, Cgh And Cgx) by Age, Smoothed 60000 CGE_mean_sm CGH_mean_sm 50000 CG_mean_sm 40000 XOF, 2007 30000 20000 10000 0 0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78 81 84 87 90 Age The government invests with partners in the education and health of young people. Health programs are concentrated on children age 0–5 years. There is little public spending on healthcare for the elderly. 12/5/2014 15 NTA 10, Beijing, China.

Aggregate Consumption Expenditure Profiles 70 CF_Agr CG_Agr 60 C_Agr 50 (Billion, XOF) 40 30 20 10 0 0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60 63 66 69 72 75 78 81 84 87 90 Age Children, adolescents and young adults have high consumption, based on health and education consumption. Consumption then declines steadily with age. 12/5/2014 16 NTA 10, Beijing, China.

Per Capita Consumption and Labor Income Profiles 800000 C_mean_sm 700000 YL_mean_sm 600000 (XOF, 2007) 500000 400000 300000 200000 100000 0 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 Age Labor income equals consumption age ages 29 and 64. The age group 30– 63 produces more than they consume, while the younger and older age groups consume more than they produce. 12/5/2014 17 NTA 10, Beijing, China.

Aggregate Consumption and Labor Income Profiles 70 C_Agr 60 YL_Agr 50 (Billion, XOF) 40 30 20 10 0 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 Age 12/5/2014 18 NTA 10, Beijing, China.

In Another Form….. 70 LCD 60 C_Agr YL_Agr 50 40 (Billion, XOF) 30 20 10 0 0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30 32 34 36 38 40 42 44 46 48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 -10 -20 -30 12/5/2014 19 NTA 10, Beijing, China.

First Demographic Dividend Estimated The First Demographic Dividend, BENIN, 1950-2050 0.80 0.60 0.40 0.20 0.00 Percent 1950 1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 -0.20 -0.40 -0.60 -0.80 -1.00 Year Since 1999, Benin has enjoyed a demographic dividend . 12/5/2014 20 NTA 10, Beijing, China.

Benin’s Lifecycle Deficit Deficit age 0 to 29 1,248.20 Surplus age 30 to 61 ‐ 397.51 Deficit age 62 + 27.68 Total deficit 1,275.88 Total surplus ‐ 397.51 Difference 878,37 12/5/2014 21 NTA 10, Beijing, China.

4. Conclusion and Project Plans Benin can enjoy its demographic dividend until 2100. Before 1990, the value of the first dividend was negative. The dependency ratio was still high and the nonworking population was a burden to the workforce. The window of opportunity is available between 1990 and 2100. Over this period, the first dividend is estimated at 0.25%. It should reach its peak between 2020 and 2030 with an estimated average of 0.50%. This implies that the guidelines on demographic policy must take into account the dynamics of the age structure in order to implement efficient policies. 12/5/2014 22 NTA 10, Beijing, China.