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Where's the Real Population "Disaster in the Making"? Pakistan or the West?

Multiple western newspaper headlines are screaming of a "disaster in the making" in Pakistan after the latest population census in the country. These headlines beg the following questions:  Is Pakistan's total fertility rate of 2.62 children per woman a bigger disaster than the sub-replacement level of less than 2 children per woman in the West? Are the rapidly aging western societies and declining working population less of a disaster than Pakistan with its younger population and a growing percentage of it in the work force?  To answer these questions, let's consider the following quote:

“So where will the children of the future come from? Increasingly they will come from people who are at odds with the modern world. Such a trend, if sustained, could drive human culture off its current market-driven, individualistic, modernist course, gradually creating an anti-market culture dominated by fundamentalism - a new dark ages.” ― Philip Longman, The Empty Cradle: How Falling Birthrates Threaten World Prosperity ...

Fear of Population Bomb:

The above quote captures the true essence of the West's racist fears about what some of them call the "population bomb": East will dominate the West economically and politically for centuries if the growing colored populations of developing Asia and Africa turn the West's former colonies into younger and more dynamic nations with rising education and better living standards.

Much of the developed world has already fallen below the "replacement" fertility rate of 2.1.  Fertility rates impact economic dynamism, cultural stability and political and military power in the long run.

Pakistan Population Pyramid by Age/Gender. Source: Theodora via CIA

Pakistan Population Growth:

Pakistani women's fertility rates have declined significantly from about 4.6 in 2000 to 2.62 babies per woman in 2017, a drop of 43% in 17 years.  It is being driven drown by the same forces that have worked in the developed world in the last century: increasing urbanization, growing incomes, greater participation in the workforce and rising education.  Pakistan now ranks 65 among 108 countries with TFR of 2.1 (replacement rate) or higher.

The latest Census 2017 results show that Pakistan's population growth rate has declined to 2.34% between 1998 and 2017, down from 2.61% (from 1981 to 1998) and 3.4% (from 1961-81). Life expectancy has increased from about 62 years in 1998 to 66.5 years now. The total fertility rate has declined from 4.6 children per woman in 1998 to to 2.62 children per woman in 2017.  At the same time, Pakistan's labor force is growing at a rate of 3.6% a year, faster than the 2.34% overall population growth. Given Pakistan's human capital growth in recent years, it is a welcome situation that is expected to produce significant demographic dividend for the country.

Labor Force Expansion:



Pakistan's labor force expansion is the 3rd biggest in the world after India and Nigeria, according to UN World Population Prospects 2017. Rising working age population and growing workforce participation of both men and women in developing nations like Pakistan will boost domestic savings and investments, according to Global Development Horizons (GDH) report. Escaping the low savings low investment trap will help accelerate the lagging GDP growth rate in Pakistan, as will increased foreign investment such as the Chinese investment in China-Pakistan Economic Corridor. Increased savings and investments will not only enlarge the nation's tax base but also help create more jobs for the expected new entrants into the work force as it did in 2000-2010, according to a World Report titled "More and Better Jobs in South Asia".

Pakistan's Total Fertility Rate 2.62 Children Per Woman. Source: Wa...


Source: World Bank Report "More and Better Jobs in South Asia"

Pakistan's working age population in 15-64 years age bracket is expected to increase by 27.5 million people to 147.1 million in 10 years, according to Bloomberg News' analysis of data reported in UN World Population Prospects 2017.  Pakistan's increase of 27.5 million is the third largest after India's 115.9 million and Nigeria's 34.2 million increase in working age population of 15-64 years old. China's working age population in 15-64 years age group will decline by 21 million in the next 10 years.

Source: Bloomberg

Pakistan's labor force growth will continue by adding 80 million workers n 30 years' time, third only to India's 234 million and Nigeria's 130 million additional workers in 15-64 years age group. China's work force will decline by 171 million workers in this time period.

Source: Bloomberg

Savings, Investment and GDP Growth:

Currently, about a third of Pakistan's population is below the age of 15, dependent on working age adults. This high ratio of dependent population results in low savings, low investment and consequent slower economic growth and sub-par socio-economic development.

Source: State Bank of Pakistan

Pakistan's national savings was about 10% of GDP in 1960s. It increased to above 15% in 2000s in Musharraf years, but declined afterwards. It is well below the savings rates in South Asia region with India's 30%, Bangladesh's 28%, and Sri Lanka's 24.5%.

Source: State Bank of Pakistan

Higher levels of inequality in India, Bangladesh and Sri Lanka account at least partially for their higher savings rates than Pakistan's because people in higher income groups tend to save more of what they earn. But the other probably more important reason for Pakistan's lower savings rate is the larger percentage of children under the age of 15 who do  not work and depend on their parents' incomes.

Rising working age population and growing workforce participation of both men and women in Pakistan will boost domestic savings and investments, just as it has in other South Asian nations.

Countries With Declining Populations:

115 countries, including China (1.55), Hong Kong (1.17),  Taiwan (1.11) and Singapore (0.8) are well below the replacement level of 2.1 TFR.  Their populations will sharply decline in later part of the 21st century along with the economic growth rates.

 United States is currently at 1.87 TFR, below the replacement rate but still better than China and other developed nations mainly due to immigration.  "We don't take a stance one way or the other on whether it's good or bad," said Mark Mather, demographer with the Population Reference Bureau. Small year-to-year changes like those experienced by the United States don't make much difference, he noted. But a sharp or sustained drop over a decade or more "will certainly have long-term consequences for society," he told Utah-based Desert News National.

Japan (1.4 TFR) and Russia (1.6 TFR) are experiencing among the sharpest population declines in the world. One manifestation in Japan is the data on diaper sales: Unicharm Corp., a major diaper maker, has seen sales of adult diapers outpace infant diapers since 2013, according to New York Times.

Median Age Map: Africa in teens, Pakistan in 20s, China, South America and US in 30s, Europe, Canada and Japan in 40s.


The Russian population grew from about 100 million in 1950 to almost149 million by the early 1990s. Since then, the Russian population has declined, and official reports put it at around 144 million, according to Yale Global Online.

Reversing Trends:

Countries, most recently China, are finding that it is far more difficult to raise low fertility than it is reduce high fertility. The countries in the European Union are offering a variety of incentives, including birth starter kits to assist new parents in Finland, cheap childcare centers and liberal parental leave in France and a year of paid maternity leave in Germany, according to Desert News. But the fertility rates in these countries remain below replacement levels.

Summary:

Overzealous Pakistani birth control advocates need to understand what countries with sub-replacement fertility rates are now seeing: Low birth rates lead to diminished economic growth. "Fewer kids mean fewer tax-paying workers to support public pension programs. An "older society", noted the late Nobel laureate economist Gary Becker, is "less dynamic, creative and entrepreneurial." Pakistan's labor force growth is forecast to be the 3rd biggest in the world after India's and Nigeria's, according to UN World Population Prospects 2017. Rising working age population and growing workforce participation of both men and women in developing nations like Pakistan will boost domestic savings and investment, according to Global Development Horizons (GDH) report. Escaping the low savings low investment trap will help accelerate the lagging GDP growth rate in Pakistan as will increased foreign investment such as Chinese investment in China-Pakistan Economic Corridor over the next several decades.

Here's a discussion on this and other subjects:

https://youtu.be/ucopTLFQdKY




Related Links:

Haq's Musings

Pakistan's Labor Force Expansion on Saving, Investments and GDP Growth

Pakistan's Population Growth: Blessing or Curse?

Pakistan's Expected Demographic Dividend

World Bank Report on Job Growth in Pakistan

Underinvestment Hurting Pakistan's GDP Growth

China-Pakistan Economic Corridor

Musharraf Accelerated Growth of Pakistan's Financial and Human Capital

Working Women Seeding a Silent Revolution in Pakistan

Views: 70

Comment by Riaz Haq on September 10, 2017 at 7:57pm

 There is a wide range of figures quoted for TFR in Pakistan.

Some estimates like the ones from the World Bank and Population Research Bureau (PRB) are as high as 3.6. 



Now the CIA estimated Pakistan's population at 201,995,540 as of July 2016. 

That's really close to the 207 million Census 2017 population figure. 

So I think the CIA pyramid is a pretty good starting point for TFR estimation. 

It requires some work to figure out a reasonable TFR estimate using raw data from population pyramid. 

Here's a rough calculation of total fertility rate in Pakistan that I have done: 

Population of Women 15-50 years: 50 million

girls 15-19 10 million

women 20-24 10 million

women 25-29 9 million

women 30-34 7 million

women 35-39 5 million

women 40-44 4 million

women 45-49 4 million 

Median age in the country: 23.4 years .... 104 million below this age

Let's assume these 104 million are children of 50 million women 15-50 years. Let's also assume 20 million of these women will have another 1.5 children per woman to add another 30 million children 

So it's 134 million children among 50 million women 

It works out to total fertility rate of 2.68 children per woman. 

Based on data from https://www.cia.gov/library/publications/the-world-factbook/graphic...

and https://theodora.com/wfbcurrent/pakistan/pakistan_people.html 

Comment by Riaz Haq on September 10, 2017 at 8:13pm

INDIA - Bloomberg reports that India's Youth will be the World's Future by having the strongest workforce in the world. 

Half of India's population are millennials, under the age of 25 whereas two-thirds of the country's population is below the age of 35. 

India's workforce is expected to increase to a billion people between the ages of 16 and 54. 
The workforce is expected to derive from North India where Uttar Pradesh has a fertility rate of nearly 3 whilst its neighbouring state, Bihar boasts a fertility rate of 3.3. Taking into account Bihar's already 100 million population, the state is expected to contribute generously to the establishment of a leading workforce. 

India's current demographic transition is occurring on a large scale. 

Compared to China's generation mainly in their 50's who have removed their country from poverty to middle-status income, India's population in their 20's are expected to do the same. 

Similarly, South Africa's increasing workforce have been trained and prepared for the workplace by Workforce Holdings this year. Independent Online reported in March that diversified services company, Workforce Holdings have trained nearly 15 000 individuals in preparation for the workplace. 

The group provides a number of work-related services including temporary as well as permanent recruitment. 1 100 permanent staff are employed by Workforce Holdings and the company has 32 000 temporary contractors weekly. 

Workforce Holdings is also listed on the AltX board of the JSE. 


https://www.iol.co.za/business-report/india-may-soon-knock-out-chin... 

Raghuram Rajan flags India's biggest worry that could cost Modi a win in 2019 elections: Slow Job Growth 

http://economictimes.indiatimes.com/news/economy/policy/raghuram-ra...

"Remember that we have what we call the population dividend. A million new people entering the labor force every month," Rajan said. "If we don’t provide these jobs that are required, you have a million dissatisfied entrants. And that could create a lot of social mischief." 

Rajan is right in this aspect. India will have the world’s biggest labor force by 2027 and the millennial generation is crucial to anchor one of the fastest paces of economic growth. However, fresh employment opp .. 

Under Modi, just over 10,000 jobs a month are being created instead, according to government figures from 2015. 

Read more at:
http://economictimes.indiatimes.com/articleshow/60434472.cms?utm_so...

Comment by Riaz Haq on September 14, 2017 at 8:24am

India's consumption story set to end due to low jobs growth, investment, warns Ambit

http://www.firstpost.com/business/indias-consumption-story-set-to-e...

The ongoing consumption demand that began in fiscal 2012 is unsustainable given the poor employment growth as private sector investments still remains a far cry, and this growth story may get hard stop soooner than later, warned a brokerage in a report.

According to Ambit Capital, despite the slowdown in income and employment growth between FY12 and FY17, private consumption continued to grow at a rapid pace, especially in categories like FMCG and passenger vehicles "showing resilience".

As per the brokerage, the rise of consumption growth over FY12 to FY17 has been driven by higher retail credit.

"As corporate credit demand waned over 2011-12 to 2106-17, both NBFCs and banks pushed retail credit aggressively. The retail credit-GDP ratio rose from 13 percent to 16 percent in 2016-17," Ambit said.

However, it noted the "current bout of consumption growth appears unsustainable mainly because consumption boom has uniquely been accompanied by a contraction in the investment-GDP ratio" to 7 percent during FY12 to FY17, while the ratio for consumption-GDP is 3 percent.

"Cross-country evidence suggests that only consumption booms that are accompanied by an increase in investments tend to be sustainable as this is a tangible proof of jobs being created and/or efficiency improving," it said where the averages of these have been 4 percent each.

The report also noted that the current retail credit-funded consumption binge is likely to experience a "hard stop" sooner than later on basis of various trends, including a plunge in consumer confidence to a four-year low during the first quarter of the current fiscal.

Besides, households' savings ratio at an 18-year low and retail NPA problems have begun to emerge particularly in the housing finance segment, are also factors which could effect retail credit-funded consumption, Ambit said.

Comment by Riaz Haq on September 14, 2017 at 10:36am

Are we entering into a "jobless" growth phase in South Asia?

By Dr. Selim Raihan, Professor, Department of Economics, University of Dhaka, Bangladesh, and Executive Director, South Asian Network on Economic Modeling (SANEM).

http://www.thedailystar.net/opinion/economics/are-we-entering-joble...

The relationship between economic growth and employment is an important issue in economics discourse. Promotion of inclusive growth also requires economic growth processes to be employment friendly. The measure that captures the employment effect of economic growth is the "employment elasticity" of economic growth, which is the ratio of percentage change in employment to the percentage change in real gross domestic product (GDP).

We have calculated the employment elasticity with respect to the change in real GDP for the South Asian countries for three different periods from 2001 to 2015. There are mixed patterns among the South Asian countries. During 2001 and 2005, Maldives had the largest employment elasticities (1.39) and Sri Lanka had the lowest one (0.08). India, with a share of 75 percent of the total population in South Asia, had the employment elasticity of only 0.38, one of the lowest in South Asia. Two other large countries, Pakistan and Bangladesh, had employment elasticities of 0.70 and 0.77 respectively. 

For the period of 2006-2010, India experienced a drastic fall in employment elasticity to only 0.03 despite the fact that the average GDP growth rate of India increased from 6.6 percent (2001-2005) to more than 8 percent (2006-2010). Over these periods, Bangladesh also had a similar experience where employment elasticity declined from 0.77 to 0.4 in the wake of a rising average GDP growth rate from 5 to 6 percent. While Afghanistan, Maldives, and Nepal also experienced a decline, Pakistan and Sri Lanka could increase the elasticities.

Over the recent period between 2011 and 2015, Bangladesh experienced a further fall in the employment elasticity to 0.28, while India's improvement is meagre (from 0.03 to only 0.09). Despite the slower economic growth rates during this period, Afghanistan, Maldives, Nepal, and Pakistan could increase their employment elasticities. Sri Lanka had a further fall in employment elasticity to only 0.14. During this period, India had the least employment elasticity among all South Asian countries.


The aforementioned analysis points to the concern that two major South Asian countries, India and Bangladesh, experienced a substantial reduction in employment elasticities throughout the periods of high economic growth. While during 2001 and 2005, the annual average job creation in Bangladesh and India were 1.6 million and 11.3 million respectively, in 2011-2015, such numbers declined to 1 million and 3.2 million for Bangladesh and India respectively. Most of the other South Asian countries experienced either volatile, or slow or stagnant economic growth, and therefore, despite a rise in employment elasticities, the actual employment generation in these countries had not been substantial. It is also important to mention that while SDG 8 talks about ensuring "decent" jobs for all, South Asian countries are seriously lagging far behind. In most of the South Asian countries, there are persistent employment challenges such as lack of economic diversification, poor working conditions, low productivity and a high degree of informality. This is reflected by the fact that among the top five countries in the world with very high proportion of informal employment in total employment, four are from South Asia (Bangladesh, India, Nepal, and Pakistan).

Comment by Riaz Haq on September 14, 2017 at 5:58pm

When 3 million people died in 1943 Bengal famine caused by the British decision to divert food supplies for war, Churchill said it's the Indians' own fault because they breed like rabbits". 

http://www.independent.co.uk/news/uk/politics/not-his-finest-hour-t...

Many of his colleagues thought Churchill was driven by a deep loathing of democracy for anyone other than the British and a tiny clique of supposedly superior races. This was clearest in his attitude to India. When Mahatma Gandhi launched his campaign of peaceful resistance, Churchill raged that he "ought to be lain bound hand and foot at the gates of Delhi, and then trampled on by an enormous elephant with the new Viceroy seated on its back." As the resistance swelled, he announced: "I hate Indians. They are a beastly people with a beastly religion." This hatred killed. To give just one, major, example, in 1943 a famine broke out in Bengal, caused – as the Nobel Prize-winning economist Amartya Sen has proved – by the imperial policies of the British. Up to 3 million people starved to death while British officials begged Churchill to direct food supplies to the region. He bluntly refused. He raged that it was their own fault for "breeding like rabbits". At other times, he said the plague was "merrily" culling the population.

Skeletal, half-dead people were streaming into the cities and dying on the streets, but Churchill – to the astonishment of his staff – had only jeers for them. This rather undermines the claims that Churchill's imperialism was motivated only by an altruistic desire to elevate the putatively lower races.

Hussein Onyango Obama is unusual among Churchill's victims only in one respect: his story has been rescued from the slipstream of history, because his grandson ended up as President of the US. Churchill believed that Kenya's fertile highlands should be the preserve of the white settlers, and approved the clearing out of the local "blackamoors". He saw the local Kikuyu as "brutish children". When they rebelled under Churchill's post-war premiership, some 150,000 of them were forced at gunpoint into detention camps – later dubbed "Britain's gulag" by Pulitzer-prize winning historian, Professor Caroline Elkins. She studied the detention camps for five years for her remarkable book Britain's Gulag: The Brutal End of Empire in Kenya, explains the tactics adopted under Churchill to crush the local drive for independence. "Electric shock was widely used, as well as cigarettes and fire," she writes. "The screening teams whipped, shot, burned, and mutilated Mau Mau suspects." Hussein Onyango Obama never truly recovered from the torture he endured.

Comment by Riaz Haq on Friday

Here are the key statistics reported by Credit Suisse:

Total Household Wealth Mid-2016 :

India $3,099 billion Pakistan $524 billion

Wealth per adult:

India Year End 2000 Average $2,036 Median $498.00

Pakistan Year End 2000 Average $2,399 Median $1,025

India Mid-2016 Average $3,835 Median $608

Pakistan Mid-2016 Average $4,595 Median $1,788

Average wealth per adult in Pakistan is $760 more than in India or about 20% higher.

Median wealth per adult in Pakistan is $1,180 more than in India or about 120% higher

http://www.riazhaq.com/2016/11/cs-wealth-report-2016-average-pakist...

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