GLOBAL MONITORING REPORT 215/216 Development Goals in an Era of Demographic Change MARCIO CRUZ DEVELOPMENT PROSPECTS GROUP
Global Monitoring Report 215/216 Implications of Demographic Change: Pathways to Prosperity Rapid population growth is set to continue in the poorest countries over the coming decades. In contrast, countries with low fertility rates, including most high-income countries, have aging population structures. Plan of talk A new demographic typology How demographics impact: Economic growth The achievement of development goals The nature of public transfers
Total Fertility Rate Demographic Patterns: Stark Diversity across Countries Countries are at different stages of demographic transition 9 8 7 6 5 4 3 2 1 Pre-dividend Late-dividend Early-dividend Post-dividend 45 55 65 75 85 Life expectancy (years) 2
Defining a demographic typology Criteria for the demographic typology: Growth of Workingage Population Share, 215-3 Total Fertility Rate, 1985 Total Fertility Rate, 215 < 2.1 2.1 < 4 4 <= Post-dividend Late-dividend > Early-dividend Pre-dividend 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. 3
Demographic Patterns: Stark Diversity across Countries The world can be divided into pre-, early-, late- and post-dividend countries 4
Share of global population, 215 (%) Number of countries, 215 Most low-income countries are pre-dividend while most high-income countries are post-dividend 7 percent of the global population lives in early- and late-dividend countries Most pre-dividend countries are low-income while most post-dividend countries are high-income 45 7 4 6 35 3 25 5 4 2 3 15 1 5 2 1 Pre-dividend Early-dividend Late-dividend Post-dividend Pre-dividend Early-dividend Late-dividend Post-dividend Low-income countries Upper-middle-income countries Lower-middle-income countries High-income countries 5
Average poverty headcount rate and share of global poverty, percent Contributions to global GDP growth, 2-14 (percent) Global development and demographic disparities Centers of global poverty 87 percent of global poverty is in pre- and early-dividend countries Engines of global growth 78 percent of global growth was from late- and post-dividend countries 6 5 4 3 Average poverty headcount rate Share of global poverty 5 4 3 LIC LMC UMC HIC 2 2 1 1 Pre-dividend Early-dividend Late-dividend Pre-dividend Early-dividend Late-dividend Post-dividend 6
Share of population living in urban areas (%) Share of urban population living in slums (%) Demographic transition is associated with geographic distribution of population within countries Early-dividend countries are urbanizing rapidly A large share of the population of early- and latedividend countries still lives in slums 8 Pre-dividend Late-dividend Early-dividend Post-dividend 8 Pre-dividend Early-dividend Late-dividend 7 7 6 6 5 5 4 4 3 3 2 2 1 199 213 1 199 214 7
Total fertility rate Life expectancy (years) Fertility rates and life expectancy have converged Fertility rates in late-dividend countries have converged to those of postdividend countries since the 195s Differences in life expectancy across typologies of countries have narrowed 7 6 195-1955 21-215 8 7 195-1955 21-215 5 4 6 3 5 2 4 1 Pre-dividend Early-dividend Late-dividend Post-dividend 3 Pre-dividend Early-dividend Late-dividend Post-dividend 8
Annual growth of population 15-64 (percent) Share of population, ages 65+ (%) Prospects of development and demographic disparities Global working-age population growth will be dominated by the centers of global poverty Aging already advanced or accelerated in the engines of global growth 3. 2.5 198-215 215-5 3 25 Pre-dividend Late-dividend Early-dividend Post-dividend 2. 2 1.5 1..5 15 1. 5 -.5 Pre-dividend Early-dividend Late-dividend Post-dividend 195 6 7 8 9 2 1 2 3 4 25 9
Average annual change in real GDP per capita, 196-214 Demographic change can boost growth A rising working-age population share is positively correlated with GDP per capita growth 8 6 An increase of 1 percentage point in the working-age population share is estimated to boost GDP per capita by 1.1 to 2. percentage points, on average. 4 2 An increase of 1 percentage point in the share of working-age population is associated with an increase of.6 to.8 percentage point in savings. -2-4 -1 1 2 3 Change in the share of the working-age population, 196-214 1
Percent Changing demographics can step up development Lower child-dependency ratios are associated with lower poverty rates 1 1 9 9 8 8 7 6 5 4 3 2 7 6 5 4 3 2 A reduction of 1 percentage point in the child dependency ratio is associated with a reduction of.38 percentage point in the poverty rate. 1 1 EAP SAR SSA EAP SAR SSA Poverty headcount Child dependency ratio 199 212 199 212 12
AGO IRQ GAB BWA JOR PAN PRY DOM MEX ZAF COL ECU PER TUR BRA CRI TUN ALB MNE MUS BLR BIH ROM BGR ISL SWE URY NOR ARG SYC NLD DNK FIN FRA IRL CHL GBR BEL CHE LUX AUT MLT DEU CZE ITA HRV CYP SVN HUN ESP LTU RUS PRT POL EST LVA SVK GRC Child-dependency ratio NER UGA TCD BFA MOZ MDG MLI BDI MWI AFG TGO TZA ZAR GIN RWA ETH COM GNB NPL LBR SLE HTI CMR MRT SEN YEM SDN KEN SWZ GTM PAK COG GHA STP CIV DJI NGA BOL NIC HND BGD CPV ZMB SLV IND LSO BTN KSV LKA MAR ARM MDA GEO UKR Child-dependency ratio T6 population tend to have lower child-dependency ratios than B4 population in countries in all income categories 1.6 1.4 1.2 1.8.6.4.2 a. Low-income countries b. Lower-middle-income countries B4 T6 1.6 1.4 1.2 1.8.6.4.2 B4 T6 1.6 1.4 1.2 1.8.6.4.2 c. Upper-middle-income countries d. High-income countries B4 T6 1.6 1.4 1.2 1.8.6.4.2 B4 T6 13
Labor income still supports substantial consumption for 65-year olds, while 75-year-olds rely mostly on public transfers or asset-based flows USA Taiwan (China) Sweden Spain Korea, Rep. Slovenia Japan Hungary Germany Uruguay Thailand Costa Rica China Chile Brazil South Africa Philippines Peru Mexico Indonesia India Argentina a. Age 65 b. Age 75 Labor income Private transfers Public transfers Asset-based flows -.5.5 1 1.5 Share of consumption at age 65 USA Taiwan (China) Sweden Spain Korea, Rep. Slovenia Japan Hungary Germany Uruguay Thailand Costa Rica China Chile Brazil South Africa Philippines Peru Mexico Indonesia India Argentina -.5.5 1 1.5 Share of consumption at age 75 14
Average GDP per capita (annualized) growth, 215 3 (percentage points) Poverty rate at $1.25 a day (%) Making the most out of demographic change Average GDP per capita (annualized) growth over 215-23, percentage points Global poverty will likely be concentrated in Pre-dividend countries 5 4 3 2 2.8 3.2 4.2 Other sources of growth Net impact of demographic change 2.1 1.6 5 4 3 2 215 23 WB target 1 1.8.5 -.2 -.6 -.3 Pre-dividend Early-dividend World -1 Pre-dividend Early-dividend Late-dividend Post-dividend World 15
Thank You Global Monitoring Report 215/215 www.worldbank.org/gmr Questions or comments? S. Amer Ahmed (sahmed2@worldbank.org) & Marcio Cruz (marciocruz@worldbank.org) 16