Philippines and the demographic dividend

5

First of two parts

FOR today, as a respite for weary and frustrated citizens like me, I will shift focus from BS Aquino’s nowhere presidency and the corrupt houses of Congress, to something more positive and hopeful in our national life.

All the negativity in national governance today is leading many of us, judging by the letters being received by this paper and this writer, to thoughts of desperate measures and final solutions. As with Tom Paine, these are times that try men’s souls.

The subject I will tackle today is demographics, specifically Philippine demographics, which, according to experts, is the single most important factor driving the national economy today and raising hopes for a better future, if we can only survive President Aquino and the 16th Congress.


Demographics are the quantifiable statistics of a given population. Demography is the scientific study of human populations. And demography, some now say, is destiny.

It has long been bruited about by local and foreign observers that this country has good and favorable demographics, so good that some are deliriously projecting a positive outlook for the Philippines all the way up to 2050.

Outdoing even our perennial prophet of boom, Dr. Bernie Villegas, the venerable and respected Hong Kong and Shanghai Banking Corporation (HSBC), through one of its economists, has declared that “the Philippines will be one of the brightest stars in Asia.” And it went on to explain why. (More on this in Part 2)

Why the big fight over RH law
And yet absurdly and inexplicably, we have just fought a costly and exhausting war over the Reproductive Health Law, which tested the faith of many and divided families and friends.

The war took place without its proponents saying honestly that it was a population control measure. It was not for women’s health. Its opponents couldn’t say either that they were opposed to a policy of moderating population growth.

I was too late to fight in that war over RH – both in the battle for the law’s passage in Congress and the battle over the law’s constitutionality in the Supreme Court — because at the time I was on a sabbatical from journalism, doing work as a consultant and doing research for a book project.

Had I been a combatant, I would have argued against the legislation, because (1) it is an imposition by the World Bank and the United States on us as a conditionality for aid to our country; (2) the law makes no sense and is totally out of step with contemporary history; (3) it is bad public policy and bad economics; and (4) the billions to be spent on contraceptives will always be better spent on the provision of education and health care to our children and the youth.

The uselessness of the RH law and its obligatory funding will become fully apparent in this series on the demographic dividend and its strategic importance to our people and our country.

Why Malthus is now defunct
First, let’s lay one ghost to rest.

Thomas Malthus, the British economist who predicted in 1898 mass starvation, wars and epidemics unless population growth was controlled, has been emphatically proven wrong. In fact at the time of his forecast, the world was on the brink of an enormous advance in both prosperity and population. Between 1820 and 1920, world population increased five-fold, and world economies grew forty-fold.

Some people today, especially rich people, still worship by Malthus. But the fact is, says his fellow Brit Margaret Thatcher, more and more people today are threatened by obesity, than by starvation. Less farmland is producing more food.

Demography as the strategic factor for PH
Demography is the single most important strategic factor today in the unfolding story of the Philippines and the Filipino people.

More than geography, economy, politics and culture.

Demography is the most reliable calculus of what our national community can look forward to in the near and distant future.

When the 100 millionth Filipino was born sometime this July, the Philippines entered the select company and category of countries with a population of 100 million or more.

Only 11 countries have more people inhabiting their historic lands. They are, in order of population size, China, India, United States, Indonesia, Brazil, Pakistan, Nigeria, Bangladesh, Russia, Japan and Mexico.

But what really matters, says Harvard economist and demographer David Bloom in his seminal study on “the economic consequences of population change,” is not population size, but the age structure of the population. Structure is what produces the dynamics of economic growth that made all the difference in the economic miracle in East Asia and elsewhere.

Bloom coined the term “demographic dividend.” He has been the bearer of hope in our time in the same way that Malthus was the bearer of despair in his.

Early in the new century, while serving as a consultant to some Filipino CEOs, I brought to them the ideas of David Bloom and what I believed would be the implications for the Philippines. One got so excited, he brought professor Bloom all the way to Manila to lecture, which I attended. It’s safe to say that Bloom’s ideas have since found their way into major corporate policies and investment decisions in this country.

Philippine demographic data
Philippine demographic data deserve a long look because they underpin the rosy readings of Philippine prospects, and the operation of the demographic dividend in the economy and in society.

DEMOGRAPHIC-DATA20140821

The key data are gathered in this simple table.

With a median age of just 23.3 years, and a working age population of over 60 million today, the Philippines has a fast growing economy (the fastest growing in Asean today) and a lot of potential and dynamism in reserve.

Our demographically young country can look forward to a growing population of working-age people. By 2020, the Philippines will see its population grow to over 110 million.

In contrast, underpopulation is the big headache of Western countries today. After years of preaching that it was irresponsible to have more than two children, they are now talking about a return to “natalist policies” to encourage larger families.

The dividend as window of opportunity
Bloom’s concept of the demographic dividend is the fresh reason driving developing countries to attend to fertility dynamics in their societies.

Simply stated, the demographic dividend occurs when a falling birth rate changes the age distribution, so that fewer investments are needed to meet the needs of the youngest age groups and resources are released for investment in economic development and family welfare.

A declining birth rate makes for a smaller population at young, dependent ages and for relatively more people in the adult age groups—who comprise the productive labor force. It improves the ratio of productive workers to child dependents in the population.

That makes for faster economic growth and fewer burdens on families.

According to Bloom, the demographic dividend lasts for a period of usually 20 to 30 years, when fertility rates fall due to significant reductions in child and infant mortality rates. This fall is often accompanied by an extension in average life expectancy that increases the portion of the population that is in the working age-group. This cuts spending on dependents and spurs economic growth.

Bloom underlines two caveats. The demographic dividend is a limited window of opportunity. In time, the age distribution changes again, as the large adult population moves into the older, less-productive age brackets.

Dividend could become a debacle
In addition, the dividend is not automatic. While demographic pressures are eased

wherever fertility falls, some countries will take better advantage of this than others.

Some countries will act to capitalize on the released resources and use them effectively, but others will not. Then, in time, when the window of opportunity closes, those that do not take advantage of the demographic dividend will face renewed pressures in a position that is weaker than ever.

If not managed effectively, the dividend could become a debacle.

In part 2, we will discuss how the demographic dividend operates in society, and what policies are most important and effective in taking full advantage of the window.

yenmakabenta@yahoo.com

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5 Comments

  1. Jaime Dela Cruz on

    “Our demographically young country can look forward to a growing population of working-age people. By 2020, the Philippines will see its population grow to over 110 million.”
    This suggest that by 2020, we will have more working age citizen which translate to better economic opportunities. The logic is lacking another factor to make it true, jobs. Demographic dividend will only pay off if the government is as fast as the brith rate in creating job opportunities. I’m with Gabriela silang, while I understand what David Bloom is preaching, I am still very much aware of our realities.

  2. I usually agree with Mr Makabenta, but not this time. He is right to draw attention to a demographic dividend, but this is not a long term benefit. Today’s young people are tomorrows old people. A balanced population is needed, not an exploding birth rate.
    In addition, he pays no regard to the planet’s ability to sustain billions more. Malthus may have been wrong at the time, but even his critics accept that the planet’s resources are finite. This is especially true of food and fresh water, but also of all the other raw materials a growing population demand. At present, the Philippine economy is unable to adequately fund the dependency costs of all its children, and the growth of the economy is insufficient to provide jobs for all those reaching adulthood. Who really believes continued growth in the population will bring economic and social benefits either in the short or long term.

  3. Hi Yen! Looks like the comments on the columnist were absent today. They are interested in politics alone. Re Malthus, isn’t he the one formulated that plenty harvest, cheap goods and less will increase the price? If so, then not all his idea are bad isn’t it?

  4. gabriela silang on

    am caught between goodbye and i love you. nice insights. gave me wider perspective and understanding. but given the situation we’re in. i mean the real politik, where do we draw the line? so many kids aimlessly wandering our streets with much criminality to boot;,moral decadence, abject poverty, no jobs, no opportunity, rampant corruption and what ave you. of course. we’re aware that such sorry state we’re in is the handiwork of our corrupt leaders who prefer the populace to live in continued poverty and benightedness. change the leaders? elect the righteous ones? easier said than done. for as long as people remain uneducated and poor, unscrupulous politicians/leaders will thrive dulling the pain and ignorance through loose coins during elections. we’re in a bind. unless we produce a righteous leader, we will be talking the same talk for ages to come.

  5. Gloria M. Kuizon on

    Thank you very much, Sir Yen Makabenta for writing this article. Only The Manila Times editorials and your colleague Mr. Rene Bas and the Philippine Star’s Bobit Avila have written about this VERY VERY important subject.
    The mentality behind President Aquino’s and his administration’s policy of upholding the very ANCIENT policy of the US, all the Western Powers, the World Bank-IFC and the UN to push population control IS also the same LAZY and backward mentality that makes the Philippines a pretend economic star even if half of the population as very poor and those who are statistically just above the poverty line are also just as hard up.
    These stupid people, who would rather lie about the true state of the economy and invent the DAP instead of pushing on with the truly effective ideas to fight poverty and following the scientific insights of Dr. Bloom, are giving us Filipinos the same problems that the US and the West are now suffering from.