Development Dialogue: Does Demographic Change Pay a Dividend for Health and Nutrition?
Changes in a country’s demography – its population age structure or gender balance, for example – can have significant impact on the economy, demand for social services and policy environment. Some countries have been able to harness the so-called “demographic dividend” – a term that describes the potential favorable interplay between changes in countries’ population age structure resulting from their demographic transition and economic growth. Decreases in fertility and mortality, and timely adoption of responsive socioeconomic policies, help a nation achieve the demographic dividend.
This two-week conversation will address how demographic change can have a positive impact on health and nutrition outcomes. What kinds of socioeconomic policies should be put in place today to help countries take advantage of population changes as they go through their demographic transition?
The concept of the demographic dividend is helpful to describe the potential favorable interplay between changes in countries’ population age structure resulting from their demographic transition and economic growth. The combination of reductions in mortality and (especially) fertility and the timely adoption of appropriate socioeconomic policies are crucial factors to determine whether the dividend is realized. Demand and expenditures for social services, including health care, are also impacted by changes in the population age structure.
Countries and regions have had varying experiences. East Asia’s rapid mortality and fertility transitions, which started earlier, led to a very high peak in working-age share, more than 2.5 working-age people per dependent. This has produced a first demographic dividend in the form of higher economic growth due to increased labor supply. The large working-age cohort can also save for retirement, possibly at a higher rate than before due to longer life expectancy, producing a potential second dividend due to increase in savings and resources for investment. Several East Asian governments promulgated early on far-sighted education, health, labor, and economic policies that allowed them to harness both dividends. New challenges have emerged for countries in the region to adjust their welfare system to the needs of older populations.
Latin America and South Asia are following East Asia’s lead, and their decline in fertility means their working-age share is now rising rapidly and will peak between 2030 and 2040. Countries should urgently enact policies that are necessary to realize both dividends and “become rich before they become old”. At the same time, the shifting burden of disease towards chronic conditions and injuries requires swift health policy action.
In contrast, the projected decline in fertility in Sub-Saharan Africa implies that the working-age share will not peak until 2080. Moreover, the ratio of working-age population per dependent will be less than 2 at its peak. So the projected growth impacts from the Sub-Saharan demographic transition are small and slow in coming. This raises two key policy questions. First, can the fertility decline in SSA be accelerated, and how? Second, how can we ensure that the potential of the demographic dividend is realized?
The Health, Nutrition and Population Global Practice of the World Bank Group has provided financing, knowledge and convening services to help client countries with different demographic profiles manage their demographic transitions for maximum impact on universal health coverage, health and nutrition outcomes, and socioeconomic development. In this Development Dialogue, we aim to encourage debate and learning around the following key questions:
- Under what conditions is public support for reproductive health and family planning acceptable within cultural and religious context? What demand and supply factors help understand changes in fertility preferences and behavior?
- How does the transition from high to low fertility have positive impact on health and nutrition outcomes, and vice versa? What policies can ensure this impact is achieved to its full potential?
- Will demographic change and improved human capital be sufficient to achieve the first and second demographic dividends? What other policies should be in place?
- As countries progress with their demographic transition and grow older, what are the macro-fiscal and health policy challenges that countries face, particularly given high-level policy commitments to achieve universal coverage in many countries today? What policies would help address those challenges?
As we move through our lives, we are workers, voters, parents, students and patients; at some ages we are contributing labor to our societies and at other ages we are dependent. Because of these basic facts, changes in the age structure of populations that occur when fertility falls have sweeping and reasonably predictable consequences for the economy, politics, investments in children, and both demand for and financing of health services and education. But understanding those consequences, and thinking through how fertility decline starts, stalls and then could accelerate, requires adopting a dynamic framework.
Within this dialogue, I am interested in exploring two aspects of the “demographic dividend” puzzle – aspects that have particular salience for the World Bank.
- The first aspect is how to effectively support the increasing number of national governments that have a commitment to expand access to family planning. Making high quality family planning services available to women and couples who wish to delay or limit births is a critical investment in faster and fairer development. It advances families’ own prospects, and contributes to healthier economies at the national level. But what should outside funders and technical experts do to support public investments in quality family planning, and what are the pitfalls to avoid?
- The second aspect is how countries that are well along with a demographic transition can use the “bonus” productivity to invest in effective prevention of chronic, non-communicable diseases that otherwise will place massive demands on health systems as populations age. Many countries face a rapidly closing window for prevention efforts to take hold and forestall a massive call on health care resources from heart disease, cancer, diabetes and other health threats.
In both these areas, the World Bank can work in close partnership with national governments to make the best use of both time and money. I’m eager to participate in this discussion, and to learn from dialogue participants.
Ellen Starbird, Director of the Office of Population and Reproductive Health, USAID.
Ellen provides high-level leadership to the Agency’s family planning/reproductive health agenda and portfolio, valued at approximately $600 million USD annually and directs the Office's $100 million program. Ellen has over 25 years of experience designing, managing, monitoring, and evaluating international family planning and reproductive health programming. She is widely known as a strategic thinker who is committed to advancing access to family planning for women, men, couples, and adolescents around the world. Ellen joined USAID in 1989 and has spent her career in the Office of Population and Reproductive Health, starting in the Policy, Evaluation, and Communication, where she was Chief from 1995-2006. She served as Deputy Director of the Office for the next six years, and has been Director since 2013. She has an M.A. in Development Economics from the Fletcher School of Law & Diplomacy.
Ellen Starbird and Ariel Pablos-Mendez discuss demographic change, and if it can produce a dividend for health and nutrition.
Ellen and Ariel: Demographic change is powerful. Does that change produce a dividend for health and nutrition? It depends. Rapid mortality decline without an accompanying fertility decline results in large cohorts of infants, children, and young people. Governments may have difficulty providing quality health services, education, housing, and jobs in the face of an ever-growing population. Many of today’s countries with large youth populations are struggling to keep up with the demand for education and jobs, resulting in a cohort of disenfranchised youth and a greater risk of civil strife.
What are the policy options? An important one is to invest in expanding access to voluntary family planning. More than 225 million women in the developing world today want to space or limit childbearing but are not using a modern method of family planning. When high-quality, voluntary family planning services are available, affordable, and accessible, couples can choose to start childbearing later, space pregnancies at healthier intervals, and have fewer children overall. The benefits are reaped first at the family level—with more resources to invest in better nutrition, more education, and better health care for each child. Over time, these benefits can accrue to society as a whole. Delaying first births, spacing subsequent pregnancies at least two years after a previous birth, and stopping childbearing once desired family size is reached can prevent as many as 70,000 maternal deaths and more than 500,000 newborn deaths annually. Longer birth intervals are associated with lower risk of pre-term birth, reduced stunting, and improved infant mortality. This health dividend is sustainable when the resources freed up from just needing to keep up with rapid population growth are invested in strengthening systems and improving performance.
Better yet, a virtuous circle is initiated. When accompanied by supportive economic and social policies, especially education for girls, voluntary family planning programs and improved child survival result in age structure shifts toward a larger working age population and the opportunity for accelerated and long-lasting economic growth. That economic growth—with attention to equity—further accelerates improvements in health. And it all begins with a policy decision to invest in voluntary family planning.
Many developing countries are looking to tap into their “demographic dividend”— the economic opportunity that results from the bulge in countries’ working-age population as fertility rates decline and life expectancy increases.
But we know that this “demographic dividend” is by no means guaranteed. The benefits of the transition can only be harnessed if we make the right investments in health, education and economic opportunities. With its far-reaching impact on child growth and cognitive development, nutrition is an especially critical component to this. A growing body of evidence shows nutrition’s close correlation with an individual’s educational attainment, productivity, and even future earning potential. In many ways, reaching children with proper nutrition – especially within the critical 1,000 day window before their second birthday – is a down-payment countries can make toward the demographic dividend.
Yet in many countries beginning their demographic transition, malnutrition is still responsible for nearly half of childhood deaths. The Cost of Hunger in Africa (COHA) study estimates that 52% of the working-age population in several African countries is currently stunted —representing a serious barrier to productivity, competitiveness and innovation on the continent.
Over the past decade, we have developed a range of effective tools and technologies to improve nutrition, while also working to find new solutions. Countries should prioritize scaling up these tools and gather evidence on what works and what doesn’t, so they can emerge on the other side of their transition with healthy, educated and productive communities – and the economic muscle to invest in the next generation.
Alex Ezeh, Executive Director, African Population and Health Research Center (APHRC), on if demographic change pay a dividend in health and nutrition in SSA.
Demographic dividend (DD) refers to the potential economic growth a country can experience following a decline in mortality and fertility levels and the ensuing changes in the age structure of the population. For many countries, the DD is created when sustained fertility reductions lead to a decline in dependency ratio over a few decades.
However, reaping the dividend is not automatic and depends on the availability of employment and continued decline in fertility levels. A number of countries in East and South East Asia and Latin America have achieved such dividends with rapid and sustained declines in fertility levels. Africa’s demographic dynamics is quite diverse and the key determinants of DD, such as investments in education, health and infrastructure, vary widely across countries. Understanding the demographic profile of the region’s 54 countries will be central to understanding IF and WHEN specific African countries will likely experience this window of opportunity and HOW MUCH a dividend they would likely experience. This level of information will be crucial in supporting Africa countries in formulating appropriate national policies and investment choices that could create and maximize such a dividend.
Current demographic profiles of various countries in the region, the continued stalls and weak declines in fertility over the past two decades, and the potential of fertility levels remaining significantly above replacement level over the near future, remain major constraints to achieving such a dividend in SSA. The high levels of unmet need for family planning and of unintended pregnancies, however, present unique opportunities for achieving drastic changes in the region’s demographic profile. In a context where the right social, health and economic policies are in place, such a radical change in fertility will result in significant decline in the dependency ratio which will likely raise productivity and savings per capita, leading to greater investment and improvements in human capital and economic development, together with dividends in health and nutrition. Tracking, evaluating and validating these processes will require significant change in the culture of data generation and use in the region.