Ageing and Age-Structural Transition in the Arab Countries: Estimated Period of Demographic Dividends and Economic Opportunity
Ageing and Age-Structural Transition in the Arab Countries: Estimated Period of Demographic Dividends and Economic Opportunity
by Prem C. Saxena
Garware Chair Professor Tata Institute of Social Sciences Sion-Trombay Road, Deonar, Mumbai – 400 088, INDIA E-mail: premsaxena2004@yahoo.com
Abstract
The rapid demographic transition particularly, the worldwide reduction in mortality rates during the latter half of the last century has resulted in numerical growth of older (65+) population, which would have far reaching socioeconomic consequences. This paper examines the trends of ageing and age-structural transition in 22 members of the League of Arab States by the middle of the 21st century. The analysis is based upon medium variant population projections published by the United Nations in 2008. Based on the indices of ageing, Arab states have been classified as ‘Fast’, ‘Medium’ and ‘Slow’ ageing countries. The analysis of ‘Potential Support Ratio’ showed rapid increase during the period around 1995-2020 and thereafter recorded a decline. It, however, revealed increasing of burden of old-age persons placed on the working population. Based on the analyses of growth rates for working age population and of total population, the period of demographic dividend/economic opportunity for all the Arab States has been estimated. 1. Introduction Population ageing is the outcome of demographic transition. Reductions in infant, child and maternal mortality and decreases in fertility rates during the post-half of the last century have resulted in numerical growth of older populations around the world. Rapidly swelling numbers of elderly population – defined here as persons aged 65 years and above has far reaching socioeconomic consequences. Most of the developed countries of the world have experienced higher growth of elderly population much earlier. In these countries mortality had stabilized at lowest level in early 70’s and fertility had reached replacement level or even below during last decade. In Arab region, however, onset of fertility decline is relatively a new phenomenon and therefore, the process of ageing is in its early stages. Nevertheless, in the wake of fast changing demographic scenario in developing countries, the need to meet the challenges ahead on account of increase in the absolute population aged 65 years and above, cannot be underestimated. Particularly, in Arab countries where old age dependency burden is likely to increase not only due to decline in levels of fertility and mortality but also on account of age-selective out migration from the countries. The prevailing economic conditions, especially high unemployment rates in most of the Arab countries and political uncertainty in the region are some of the push factors operating on the young population. This is altogether a different scenario in the Arab region which most of the developed countries had never experienced. The interplay of emigration of young adult population with the ongoing fertility and mortality transition may accelerate demographic ageing. During the process of age-structural transition, a transitory period of ‘demographic dividend’ or ‘window of economic opportunity’ as called by economic demographers, comes which may prove to be conducive for higher economic growth if grabbed properly. Below we elaborate the condition under which the period of demographic dividend is realized which temporarily opens the ‘window of economic opportunity’ for the country: 2 What is Demographic Dividend? At an early stage of demographic transition, fertility rates fall, leading to fewer children to feed. Concurrently, the working age population provisionally grows more rapidly as compared to the dependent population on it. This situation may allow governments to invest a larger share of available resources on economic development and other developmental programmes. During this period, per capita income may grow more rapidly. This is what is called the first demographic dividend (Lee and Mason, 2006). This period may last for five decades or even more. Its duration, however, depends mainly upon the pace of fertility decline in future. A rapid fall in fertility would reduce the growth of working age population, resulting in slow growth of per capita income and shortening of the period of economic opportunity. On the other hand, continuing improvement in old-age mortality accelerate the growth of elderly population. This is the stage when the first demographic dividend turns negative. Thus, the first demographic dividend gives transitory bonus. Fortunately, there is possibility of having a second demographic dividend. Due to increased longevity, a large old population may continue working in the extended period of retirement, with little or no family liability. This provides very favorable conditions to accumulate assets. If these additional assets are properly invested, national income would rise. This is the period of second demographic dividend. The period of first dividend is short lived and yields transitory bonus, whereas the second that continues indefinitely, transforms that bonus into greater assets and sustainable development. These outcomes are, however, not automatic but depend on the implementation of effective policies (Lee and Mason, 2006). 2. The Objectives The present study is aimed at examining the prospects of ageing and age-structural transition in 22 members of the league of Arab states. On the basis of indices of ageing, the countries of the region are grouped in three categories of ageing, namely, ‘fast ageing’, and ‘medium ageing’ and ‘slow ageing countries. Age-structural transition has been studied and the period of demographic dividend/economic opportunity has been estimated separately for countries falling in the above three categories of ageing. For ‘slow ageing’ countries, however, only the year of onset of the period of demographic dividend has been obtained since for almost all of the countries belonging to this category of ageing, period of first demographic dividend may not be over by 2050. Finally, the Arab states, which may get the second demographic dividend before 2050, have been identified. 3. Data and Methods
To accomplish the above objectives, necessary data have been taken from the United Nations publications (U.N. 2007 and U.N. 2008). For the purpose of analysis, medium variant population projections have been used. In the present paper, we first briefly give past and future course of demographic (fertility and mortality) transition. To ascertain future prospects of population ageing in 22 Arab countries, three indices, namely (i) Old-age dependency [# of persons 65 years and over per 100 persons of age 15 to 64 years], (ii) Oldest-old dependency [# of persons 80 years and over per 100 persons of age 15 to 64], and (iii) ageing index [# of persons 65 years old and above per 100 persons under 15 years] have been computed from the data given in the U.N. 2007. Based on these three measures of ageing, the relative position of 22 Arab countries as ‘fast’, ‘medium’ and ‘slow’ ageing countries have been ascertained and discussed. To study age-structural transition, we consider the changes in five age groups, namely, 0-4, 5-14, 15-24, 25-64, and 65+. These age segments are compatible with different vital stages of life cycle. For example, the first two age groups give the changes in child population whereas age group 0-4 necessarily indicates the recent fertility change, if any. The age segment 15-24 represents the youth population in which some part of the population may be in labour force and rest may still be pursuing their studies. The age group 25-64 is the prime working age group in which people are engaged in economic activity and the ages 65+ 3 constitute the old age group in which the bulk of the population is dependent upon the working population in 15-64 age segments. The age structure (i.e., the share of population in different age groups) has phenomenal effect on per capita GDP growth rate and thus on the economy of the country (Lindh and Malmberg,1999); Anderson, 2001; Navaneetham, 2004; Mason and Lee, 2006).
To study the burden of old-age persons placed on the working population, Potential Support Ratio (PSR) has been computed for all the Arab countries for all the years starting from 1980 to 2050. The PSR is defined as the number of people aged 15-64 per one older person aged 65 or older. However, for the present study, the potential support ratio has been taken as the number of people aged 20-64 per one elderly person aged 65 years or more. This is because, the majority of the population in the 15-19 age segments would be going to schools/colleges for education and therefore they have not been included in computing the ratio. To study the trend, PSRs for all the years from 1980 to 2050 have been plotted on the graph for selected Arab countries. Large vaiations have been observed in the time-trend of potential support ratio. The points of time are noted from which the ratio shows a monotonic increase, reaches maximum (i.e., before recording a downward trend). Estimation of the Period of Demographic Dividends and Economic Opportunity It has been shown mathematically that output per capita would grow if the growth rate of working population exceeds the growth rate of total population even if the output per worker does not change (Bloom and Williamson 1997). This is the time of the beginning of the period of economic opportunity for a country. To know the timing of the opening of the ‘window of opportunity’, the growth rates of the population in working (effective) age groups (20-64) and of the total population have been computed for all the 22 Arab countries at five year intervals from 1980 to 2050. The period of economic opportunity starts where the difference in the growth rates of working population and of total population becomes positive. Later, when it becomes negative, it shows the end of the period of first demographic dividend for that country. The first and the last cut-off points of the two trajectories mark the beginning and end of the period of first economic opportunity, respectively. The second cut-off point may also mark the beginning of the second demographic transition provided the elderly population could take advantage of the favourable conditions of the first demographic transition and accumulate assets. The years of the two cutoff points are marked when the sign of the difference in the growth rates of the population aged (20- 64) and of total population changes from negative to positive and later it again becomes negative. From these two cut-off points the period of economic opportunity is computed.
