Population Management should be Mainstreamed in the Philippine Development Agenda

Dennis S. Mapa Associate Professor in Statistics and Economics University of the Philippines Diliman

Mulat Pinoy Media Forum 28 August 2010

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Population – Poverty Nexus
Population (in millions) 76.95 81.83 86.80 92.23 Poor (in millions) 25.47 24.55 28.56 30.44 Percentage of Poor 33.00 30.00 32.90 33.00

Year 2000 (actual) 2003 (est) 2006 (est) 2009 (est)

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Three Phases of the Demographic Transition and Its Impact on the Economic Growth

• Demographic transition is described as “a change from a situation of high fertility and high mortality to one of low fertility and low mortality.” mortality. • A country that enters into a demographic transition experiences sizable changes in the age distribution of the population. population. • One of the reasons why the country is having a low economic growth is due to its slow demographic transition. transition.
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PHASE 1. Triggered by initial decline in infant mortality, the youth dependency group swells. Economic growth and saving rate are low since the young requires investment in health and education.
Philippines 2000
70 and Over 60 - 64 50 - 54 40 - 44 30 - 34 20 - 24 10 - 14 0-4

-10 10

-5 5 male

0 female

5

10

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PHASE 2. Economic growth is promoted about 20 years later when the youth enters the working age group.
Thailand 2000
70 and Over 60 - 64 50 - 54 40 - 44 30 - 34 20 - 24 10 - 14 0-4

-10 10

-5 5 Male

0 Female

5

10

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PHASE 3. Economic growth continues as the elderly cohort swells, individuals accumulate saving in their working years to serve as buffer during the retirement years. years.
Japan 2000
70 and Over 60 - 64 50 - 54 40 - 44 30 - 34 20 - 24 10 - 14 0-4

10 -10

-5 5 male

0 female

5

10

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Demographic Factors and Economic Growth
• Demographic factors have strong and significant effects on economic growth (Bloom and Canning (2001); Bloom and 2001) Williamson (1998)). 1998)). • First dividend – demographic transition results to higher per capita income (Mason and Lee; 2006). Lee; 2006) • Second dividend - individuals accumulate saving in their working years to serve as buffer during their retirement years; years; when society increases its saving rate this results to a more rapid economic growth, creating the second demographic dividend (Mason; 2007) (Mason; 2007). • The Philippines has not benefited from the two demographic dividends due to its rapid population growth. growth.
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Why the Philippines Grew Slow? (Cross Country Analysis)
Variable Initial Conditions GDP per person, 1975 Ratio of Workers to Total Population Population Growth Total Workers OPENNESS SAVING RATE Human Capital I: Average LEB (1976 - 2000) Human Capital II: Illiteracy Rate (Average, 1976 -2000) INSTITUTION TROPIC Total Growth Differential (Accounted by Model) Actual GDP per capita (average, 1975-2000) Philippines Thailand Forgone Annual Growth

1502 53.76 2.36 2.85 64.30 22.03 64.39 7.93 2.97 1

805 52.12 1.58 2.53 67.96 28.02 66.11 5.58 6.26 1

1.072% 0.768%

0.028% 0.206% 0.072% 0.116% 0.574% 0.000% 2.836%

4.100%

8.840%

4.740%

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Tale of two countries: What would have been the per capita income growth if the country’s population growth path was similar to that of Thailand?
8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0
19 79 19 75 19 83 19 81 19 89 19 77 19 85 19 87 19 91 19 93 19 95 19 99 19 97

PHIL- Actual

PHIL SIM

THAI

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Reduction in Poverty
Scenarios Status quo With low proportion of young dependents Difference
* assuming the same population in 2003

Poverty Headcount (Individuals) Number % 20,465,409 26.12 17,646,631* 22.52

2,818,778

3.60

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The Goldilock Period Demographic Transition and Dividends
• As countries move from large families and poverty into high growth (wealth creation) and ageing, they pass through what is called a Goldilock period: a period: generation or two in which fertility rate is neither too high nor too low. low. • This fertility rate that is consistent with stable population is about 2.1 (the replacement rate of fertility). fertility). • The fall to replacement fertility is a unique and precious opportunity for higher growth. growth.
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Poor countries are racing through the Demographic Transition as rich ones
South Korea ASEAN 5 Singapore Thailand Indonesia Malaysia Philippines Rest of SE Asia Vietnam Myanmar Brunei Darussalam Cambodia Lao PDR 1960 5.67 1970 4.53 1980 2.83 1990 1.59 2000 1.47 2006 1.13

5.45 6.40 5.52 6.81 6.96

3.09 5.33 5.35 5.47 6.20

1.74 3.21 4.36 4.21 5.17

1.87 2.11 3.10 3.68 4.31

1.44 1.86 2.42 2.96 3.62

1.26 1.85 2.23 2.65 3.30

6.05 6.06 6.83 6.29 6.42

5.89 5.98 5.62 5.81 6.42

4.97 4.54 4.04 5.84 6.41

3.62 3.38 3.20 5.73 6.08

1.90 2.41 2.58 3.96 4.03

2.08 2.10 2.34 3.27 3.29

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How do we speed up the demographic transition?
• Sachs (2008) pointed out that “demographic transitions, where 2008) they have occurred, have typically been accelerated and even triggered, by proactive government policies.” policies. • There is a need to influence public policies that play an important role in assisting, particularly the poor households, the achievement of voluntary reduction of fertility rates. rates. • This will relieve the direct pressures of population growth, particularly unwanted fertility estimated to contribute about 16% 16% of the future population growth through direct population policies. policies.
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The Current Strategy Does Not Work
• The current strategy of reducing the total fertility rate by relying on Natural Family Planning (NFP) methods clearly will not bring us to the Goldilocks period at a faster pace. pace. • “even as population growth is coming down, it is not coming down at the rate necessary to improve the socioeconomic status of the country.” (Health country. Secretary Esperanza Cabral)

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Relationship between per capita GDP and TFR of the Philippine Regions from 1993 to 2006
6.0 5.5 5.0 TR F 4.5 4.0 3.5 3.0 2.5 8.5

9.0

9.5

10.0

10.5

11.0

LN(GDPPC)

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Determinants of TFR (Regional Data)
MODEL 1 Variable Estimate s.e. MODEL 2 + Estimate s.e.

Log of Income Education Labor Force Participation Constant Overall R2

-2.51*** -1.87* -1.85

0.855 0.998 2.673

-2.78*** -2.08** -1.78 31.77*** 0.48

0.594 0.964 2.57 5.27

29.49*** 7.54 0.50

+ other control variables not shown; *significant at 10%; ** significant at 5%; ***significant at 1%

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Simulation of TFR under 2 Scenarios (Preliminary Estimates)
• Scenario 1
• business as usual • average per capita income growth of 2 percent per year • Scenario 2 • with government intervention to relieve pressure of unwanted fertility • 90 percent coverage on unwanted fertility • average per capita income of 2 percent per year

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Total Fertility Rates under 2 Scenarios
3.5 3 2.5 2 1.5 1 0.5 0 2008 2010 2020 2030 3.3 3.3 3.2 2.72 2.65 2.18 2.11 1.64 Scenario 1 Scenario 2

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TFR of the Bottom Quintile under 2 Scenarios
6.00 5.20 5.00 4.00 3.00 2.00 1.00 2008 2010 2020 2030 2040 3.93 3.39 2.85 2.31 5.20 5.10 4.55 4.01 3.47 Scenario 1 Scenario 2

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TFR of the Second Quintile under 2 Scenarios
4.50 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 2008 2010 2020 2030 2040 3.16 2.62 2.07 1.53 4.20 4.20 4.09 3.55 3.01 2.47 Scenario 1 Scenario 2

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Top 30 Provinces ( Red color ) with high percentage of young dependents .

• 30 out of 80 provinces

• population of 22.6 million, representing 30% of the total

Bicol Region Eastern Visayas Mindanao

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Mainstreaming Population Management in the Development Agenda
• Policy makers must address the country’s rapid population growth head-on though proactive government policies, such as the Reproductive Health (RH) bill. • The failure to pass the RH bill is very unfortunate – the impact of a rapid population growth is irreversible. • Government must also directly intervene by, for example, providing contraceptive services to poor households that cannot afford these contraceptive services.

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Mainstreaming Population Management in the Development Agenda
Alternative Drivers in Reducing Fertility Rate • Increasing the capacity of women to participate in the labor market. • Investing in health to decrease child and maternal mortality . • Enhance education, particularly of women.
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Conclusions
• Higher population growth results in lower per capita income and higher poverty incidence

• Demographic trap can lead to poverty trap, when poor families choose to have large number of children. children.

• We are paying a high price for our rapid population growth. growth.

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Thank you and good afternoon!

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