There is an alarming rapid decline in fertility rates in both developed and developing nations, according to the United Nations. Here is how the Wall Street Journal describes it: "The world is at a startling demographic milestone. Sometime soon, the global fertility rate will drop below the point needed to keep the population constant. It may have already happened".
 |
| Total Fertility Rates in 12 Most Populous Nations. Source: Wall Street Journal |
Birth rates are low and fertility is rapidly dropping for women across all levels of income, education and labor-force participation around the world. Fertility is falling among Pakistani women too but more slowly than elsewhere in Asia. In fact, Pakistani women have the third highest fertility rate (3.47) among the 12 most populous nations of the world.
 |
| Pakistan Fertility Rate. Source: Data Commons |
Birth rates have economic, social and geopolitical consequences. "The falling birthrates come with huge implications for the way people live, how economies grow and the standings of the world’s superpowers", says the Wall Street Journal report titled "Suddenly There Aren’t Enough Babies. The Whole World Is Alarmed".
No challenge is greater than the irreversible decline in female fertility rates that China, Japan, South Korea and the West are now experiencing. It's an existential threat. Nations and civilizations with sub-replacement fertility rates will eventually cease to exist. Automation can not replace young curious minds responsible for new ideas, innovation and social and economic vitality. Nor can automation replace consumers needed to buy and pay for products and services produced by robots.
 |
| Economic Growth Rate Till 2075. Source: Goldman Sachs Investment Research |
Economic Impact of Slower Population Growth:
Daly and Gedminas argue that slowing population growth in the developed world is causing their economic growth to decelerate. At the same time, the economies of the developing countries are driven by their rising populations. Here are four key points made in the report:
1) Slower global potential growth, led by weaker population growth.
2) EM convergence remains intact, led by Asia’s powerhouses. Although real GDP growth has slowed in both developed and emerging economies, in relative terms EM growth continues to outstrip DM growth.
3) A decade of US exceptionalism that is unlikely to be repeated.
4) Less global inequality, more local inequality.
 |
| Goldman Sachs' Revised GDP Projections. Source: The Path to 2075 |
Demographic Dividend:
With rapidly aging populations and declining number of working age people in North America, Europe and East Asia, the demand for workers will increasingly be met by major labor exporting nations like Bangladesh, China, India, Mexico, Pakistan, Russia and Vietnam. Among these nations, Pakistan is the only major labor exporting country where the working age population is still rising faster than the birth rate.
 |
| Pakistan Population Youngest Among Major Asian Nations. Source: Nikkei Asia |
 |
| World Population 2022. Source: Visual Capitalist |
 |
| World Population 2050. Source: Visual Capitalist |
Over 10 million Pakistanis are currently working/living overseas, according to the Bureau of Emigration. Before the COVID19 pandemic hit in 2020, more than 600,000 Pakistanis left the country to work overseas in 2019. Nearly 700,000 Pakistanis have already migrated in this calendar year as of October, 2022. The average yearly outflow of Pakistani workers to OECD countries (mainly UK and US) and the Middle East was over half a million in the last decade.
 |
| Consumer Markets in 2030. Source: WEF |
World's 7th Largest Consumer Market:
Pakistan's share of the working age population (15-64 years) is growing as the country's birth rate declines, a phenomenon called demographic dividend. With its rising population of this working age group, Pakistan is projected by the World Economic Forum to become the world's 7th largest consumer market by 2030. Nearly 60 million Pakistanis will join the consumer class (consumers spending more than $11 per day) to raise the country's consumer market rank from 15 to 7 by 2030. WEF forecasts the world's top 10 consumer markets of 2030 to be as follows: China, India, the United States, Indonesia, Russia, Brazil, Pakistan, Japan, Egypt and Mexico. Global investors chasing bigger returns will almost certainly shift more of their attention and money to the biggest movers among the top 10 consumer markets, including Pakistan. Already, the year 2021 has been a banner year for investments in Pakistani technology startups.
 |
| Pakistan Demographics |
Haq's Musings
South Asia Investor Review
Pakistan is the 7th Largest Source of Migrants in OECD Nations
Pakistani-Americans: Young, Well-educated and Prosperous
Last Decade Saw 16.5 Million Pakistanis Migrate Overseas
Pakistan Remittance Soar 30X Since Year 2000
Pakistan Among Top Sources of STEM Workers in America
Two Million Pakistanis Entering Job Market Every Year
Pakistan Projected to Be 7th Largest Consumer Market By 2030
Pakistani-Americans' Annual Household Incomes Estimated at $150,000
Pakistan's Population Growth: Blessing or Curse
10 comments:
Your view that high fertility rate in Pakistan is a good thing is rather interesting. Nearly everyone else I have read (including prominent Pakistani columnists like Khurram Husain in DAWN) say such high fertility rates and large working age population is at best a double-edged sword for developing countries like Pakistan (and to an extent, India) due to their high levels of poverty, low literacy and social development, low industrialization, low levels of economic growth, looming water shortages and other socio-economic and ecological challenges magnified by destabilizing effects of climate change. If things are challenging enough for India in these circumstances (as any respected Indian economist would say), it would be worse for Pakistan as it faces greater prospects of ecological threats and instability.
Also, we need to keep in mind how growth of automation could progressively reduce opportunities for unskilled labour in the Western world. I wouldn't count on exports of unskilled or lower-skilled workforce to save Pakistani economy at this point, since they would have to contend with surplus of immigrants waiting to fill in such vacancies from Africa and Middle East too thanks to raging civil wars and poverty. Besides, remittances are a poor foundation to build an economy on, as the experience of my own state in southern India shows. Kerala is a relatively affluent state with high HDI thanks to the flow of Gulf remittances since 1970s, but is an import-dependent consumer state with high levels of unemployment and lack of employment opportunities due to low industrialization, not to mention that the state government is essentially bankrupt and is struggling to pay even salaries and pensions these days thanks to lack of tax revenues - a situation that somewhat mirrors Pakistan.
As for the prospect of companies queueing to invest in Pakistan, I guess it depends on a lot many factors other than merely a large consumer population. FDI and economic growth requires sustained and sound economic policies, political stability, social development, infrastructure, security and a skilled workforce. Otherwise, one would have seen India growing into an economic powerhouse rivalling China rather than being hobbled by high levels of unemployment as it is at present. Pakistan with its ad-hoc rentier economy and its recurring boom-bust cycles, chronic political instability and security challenges has a poorer record at attracting investment. Also, Pakistan's economic planners have a history of chasing mirages ("game-changers") and quick-fixes rather than pursuing sound economics and difficult, but necessary reforms. For instance, we know how the CPEC hype unravelled. After a decade, Chinese trucks aren't exactly queuing at Gwadar and Pakistan isn't making billions out of their rent and toll fares. Chinese companies have not relocated their factories en masse to Pakistan, and is unlikely to do so due to slowing economic growth and growing levels of unemployment in China itself.
In a nutshell, lets not count the chickens before they hatch. The hyped "demographic divident" of a large working-age population could very well turn into a "demographic nightmare" of legions of restive, unemployed youth going berserk if your optimistic prognosis does not come to pass.
Vineeth: "Pakistani columnists like Khurram Husain in DAWN) say such high fertility rates and large working age population is at best a double-edged sword for developing countries like Pakistan (and to an extent, India) due to their high levels of poverty, low literacy and social development, low industrialization, low levels of economic growth, looming water shortages and other socio-economic and ecological challenges..."
No challenge is greater than the irreversible decline in female fertility rates that China, Japan, South Korea and the West are now experiencing.
It's an existential threat. Nations and civilizations with below-replacement fertility rates will cease to exist.
Automation can not replace young curious minds responsible for new ideas, innovation and social and economic vitality. Nor can automation replace consumers needed to buy and pay for products and services produced by robots.
Wealthier nations do indeed adapt to the new demographic reality by taking in skilled and unskilled immigrants to run their systems. After all, countries like United States, Canada, Australia and New Zealand developed out of nothingness during the last few centuries thanks to a steady flow of immigrants from other continents. Nevertheless, my argument is that this demographic shift in the developed world may not necessarily turn out to be another "game-changer" for Pakistan as its largely unskilled workforce (like India's) would end up having to compete with similar desperate immigrants from other poor nations. Remember that India itself has a huge population of working age who would need to find employment somewhere. The developed world would have no dearth of aspirants for even menial jobs from such countries. Pakistani job aspirants would have to jostle with them.
Therefore, it would be foolish for Pakistan to bet its future on remittances from exporting its "demographic dividend". That's a mistake my state made in the past when its left-wing governments and militant trade unions closed down factories and scared away private entrepreneurs, leaving its working age population with no choice but to migrate to other states or countries. Now investors avoid Kerala altogether and instead setup factories in neighbouring Karnataka and Tamil Nadu states. If Gulf economies (where most expatriates from Kerala are employed) enter into a crisis and start laying off foreign workers, Kerala's society would be turned upside down.
Rather than chasing such uncertain hopes, Pakistani authorities should concentrate their energy on fixing the country's unstable economic, political and security situation to attract more investment into its underdeveloped industrial sector. A large middle class consumer base isn't going to automatically attract investment unless there is predictability in policies and stability in the economic and political system. Take for instance the recent case where the government of Pakistan had to halt repatriation of profits by foreign firms to their home countries ostensibly due to forex reserve crunch. Why would foreign companies risk their money in investing in a country with such unpredictable political and economic landscape and recurring crisises, and where they are unsure whether they would even be able to repatriate their profits?
Without adequate employment opportunities at home to absorb most of its workforce, the possibility of the "dividend" turning into a "nightmare" and then a "disaster" is very real for both Pakistan and India.
Finally, lets call a spade a spade. In the modern world, high fertility rates are a sign of patriarchy and social backwardness. Developed societies have low birth rates as women have become more educated, independent and empowered, and prioritise their career over producing babies. Yes, falling birth rates has its drawbacks, but it is also a sign of social progress and gender equality, not to mention the beneficial effects that a lower human population has on the ecology as a whole.
The world can do with less people. But that's my personal opinion.
Vineeth: "In the modern world, high fertility rates are a sign of patriarchy and social backwardness. Developed societies have low birth rates as women have become more educated, independent and empowered, and prioritise their career over producing babies. Yes, falling birth rates has its drawbacks, but it is also a sign of social progress and gender equality, not to mention the beneficial effects that a lower human population has on the ecology as a whole"
Your arguments reflect the conventional thinking that still prevails in the developing world. The reality of low birth rates is changing this thinking in the West.
Almost every rich country is now trying very hard to reverse the declining birthrates without success. This reality is starting to worry many in the developing world as well. Here are some excerpts from a recent Wall Street Journal story:
"Fertility is below replacement in India even though the country is still poor and many women don’t work—factors that usually sustain fertility.
Urbanization and the internet have given even women in traditional male-dominated villages a glimpse of societies where fewer children and a higher quality of life are the norm. “People are plugged into the global culture,” said Richard Jackson, president of the Global Aging Institute, a nonprofit research and education group.
Mae Mariyam Thomas, 38, who lives in Mumbai and runs an audio production company, said she’s opted against having children because she never felt the tug of motherhood. She sees peers struggling to meet the right person, getting married later and, in some instances, divorcing before they have kids. At least three of her friends have frozen their eggs, she said.
“I think now we live in a really different world, so I think for anyone in the world it’s tough to find a partner,” she said.
Sub-Saharan Africa once appeared resistant to the global slide in fertility, but that too is changing. The share of all women of reproductive age using modern contraception grew from 17% in 2012 to 23% in 2022, according to Family Planning 2030, an international organization.
Jose Rimon, a professor of public health at Johns Hopkins University, credits that to a push by national leaders in Africa which, he predicted, would drive fertility down faster than the U.N. projects.
Once a low fertility cycle kicks in, it effectively resets a society’s norms and is thus hard to break, said Jackson. “The fewer children you see your colleagues and peers and neighbors having, it changes the whole social climate,” he said".
Any country that achieves social development and espouse gender justice, equality and liberal values would inevitably see its birth rates fall. High birth rates are a sign of conservative, underdeveloped societies where women had nothing to do but stay at home and bring up kids. With the wide availability of contraceptive measures, an educated married woman with a job would not choose to have more than two kids. Many would be content with one or even none at all. High birth rates in countries like Pakistan and India were a sign of its lower social development and social conservatism. In India, for instance, you can see how disparity in birth rates across regions and communities correlate strongly with social development. Fertility rates in better developed southern states achieved replacement levels decades ago. Now these states have total fertility rates below replacement levels (Kerala - 1.8, Tamil Nadu - 1.8, Karnataka - 1.7, Andhra Pradesh - 1.7, Telengana - 1.8 etc). On the other hand, impoverished Bihar has a TFR of 3.0 and UP has 2.4. This has had some political repurcussions. A new census and electoral delimitation is around the corner, and the southern states are expected to see their representation in Parliament (in percentage terms) - and hence their political heft - to fall in comparison to northern states even as the total number of seats go up. In other words, southern states are going to pay a penalty for their own success at social upliftment while northern states are "rewarded" for their relative backwardness. This is the predicament that Western nations face too.
Also in India, you would see such disparity in fertility rates across religions as well. The relatively marginalized and socially backward Muslim community here has historically had higher birth rates than Hindus and Christians, and though Muslim fertility rates have been falling as well (2.4) they still remain at a level higher than Hindus (1.9). The end result is that the percentage of Muslims in India has increased from around 10% in the 1951 census to around 15% in the 2011 census. The results of the new census is expected to see further rise in percentage of Muslim population relative to others. This has often led to calls from Hindutva groups that Hindu women need to abandon family planning and have more babies to "compete" with the rising percentage of Muslims. But of course, such exhortations never work as the women who needs to bear the burden of larger families are never receptive to it.
Vineeth: "High birth rates are a sign of conservative, underdeveloped societies where women had nothing to do but stay at home and bring up kids....Muslim fertility rates have been falling as well (2.4) they still remain at a level higher than Hindus (1.9)"
Reality check:
1. Indian Muslim fertility rates are falling the fastest among all major religious groups in India, according to the government’s own data. The fertility rate – the average number of children a woman gives birth to – among Muslims fell from 4.41 to 2.36 between 1992 and 2021, while it dropped from 3.3 to 1.94 for Hindus.
2. Falling birth rates of Indian Hindus have come at the expense of women....girl fetuses are being killed at a very high rate, contributing to huge gender imbalance in the country. Is this a sign of social development?
3. Lower fertility among Indian women has done little to increase female labor participation rates which are among the lowest in the world.
4. Falling birth rates in India have not helped make it rich or prosperous. It remains among the world's poorest, most malnourished and unhappiest countries.
I think you got the "cause" and "effect" wrong here. Higher social development results in lower fertility rates, not the other way round. In other words, lower fertility rates in a community, region or country is generally a sign or indicator of its social progress. In India, the communities and regions that are more socially developed also tend to have lower fertility rates while those with lower social development tend to have higher fertility rates.
The reason India as a whole remains backward is to a large extent due to the populous BIMARU states (Bihar, Jharkhand, Madhya Pradesh, Chhatisgarh, Rajasthan and Uttar Pradesh) all of which have the highest levels of poverty and illiteracy and also happen to have high fertility rates. If one were to look at the religious communities, the more affluent Hindu upper castes tend to have fewer kids, while Hindu lower castes and Muslims have more. The southern state of Kerala is often considered to be the most socially developed state in India. While the Muslim community in Kerala have lower fertility rates compared to their counterparts in other states, they have higher fertility rates in comparison to Kerala's Christian and Hindu communities (in that order) that are more affluent and socially developed. Thus, one can see that there is a clear correlation between higher social development and lower fertility rates. The former results in the latter.
Muslim fertility rates in India have indeed been falling rapidly over the last few decades, but they still remain at a level higher than that of Hindus, which is what I pointed out in my previous comment.
To add to my previous reply, though I'm well aware of the high incidences of female infanticide and female foeticide in many parts of India, I am not sure how far it has had an impact in bringing down fertility rates in those areas. From what I have read, the southern and eastern states in India that has lower fertility rates also tends to have favourable/normal gender ratios while the northern and western states score poorly in both, which would indicate that it is better social development that plays the major role in bringing down fertility rates rather than female infanticide or foeticide.
Fareed Zakaria
@FareedZakaria
Can India lift itself from the doldrums of a jobs crisis? Can the country grow rich before it grows old?
My conversation with Raghuram Rajan, former head of India’s central bank and coauthor of “Breaking the Mold: India’s Untraveled Path to Prosperity”
https://x.com/FareedZakaria/status/1792259556766105698
Like I said in my previous comment, the ongoing jobs crisis that India is facing is one of the reasons why I say Pakistan should not trust its economic future on exporting its manpower to the developed world. India has enough jobless youth of its own who would need to find employment somewhere. Are Pakistanis better placed than the multitude of economic migrants from India and other developing nations to fill up the job vacancies in the West? Are they better skilled? Also, if Pakistan hopes to export its educated and skilled workforce, that would result in the same "brain drain" you wrote about India earlier. "Brain drain" from Pakistan cannot be better than that happening from India. Pakistan needs to create more jobs within the country. It needs more industries and foreign investment.
And this is where the real advantage of India vis-a-vis Pakistan comes in. India has a more stable economy and political system. Though its current GDP growth is insufficient to generate enough jobs for its teeming working-age population, it has ensured that its economy did not go bankrupt. The last time India approached IMF for a bailout was in 1991. Compare that to the number of times Pakistan was compelled to approach the lender of last resort. Pakistan's ongoing economic crisis isn't a temporary phenomenon that would go away pretty soon or has easy solutions. Pakistani government would need to initiate sustained reforms that would inflict pain on its population in the short-term and would cost its government political capital, but is vital for the survival of the nation. India's relative political and economic stability ensures that it attracts investment and expand its industrial base. For example, automobile manufacturers in India are currently in an expansion spree. Capacity of existing manufacturing facilities are being expanded and new greenfield facilities are being setup. Suzuki's Indian subsidiary intends to double its production in India (most of it for exports) in a few years. Even India's home-grown auto brands are expanding their exports to more countries. The country is expected to become world's third largest automobile producer behind China and US in a few years. (I repeatedly quote the auto industry as an example here as it is an industry whose trends I closely follow and has been a success story in India's industrial landscape.)
This doesn't mean India's future is a path paved with roses like Modi govt would have the people believe. The job crisis that Raghuram Rajan speaks about is real. India's current economic growth is insufficient to generate enough jobs for its teeming working-age population. India's workforce is still relatively unskilled, and the quality of its education system is such that aside from those graduating from some premier institutions many of the youth who hold a degree are unemployable. But Pakistan is facing all of this and more. Recurring threats of bankruptcy, and a shaky political setup that is more worried about when the rug is going to be pulled from under them than initiating economic reforms would not inspire confidence in the minds of investors and entrepreneurs. Foreign investors always look for predictability and stability in any country before committing their money. They would want assured returns. Can Pakistan in its current state guarantee all that?
Post a Comment