14 January 2019 - 17:00
The trajectories of demographic change
The challenges and opportunities of demographic transition
Demographic indicators of fertility and mortality rates, age, migration, families, weddings, etc., are a key force behind the economic, corporate and political performance of all countries. In any discussion of the future of the global population, the ghost of Malthus is constantly hovering over our shoulders: an overpopulated globe swallowing up resources at an absurd rate, the pall of anthropization and the disastrous effects of unchecked development. Could it happen any other way? Let’s attempt to parse whether there are any positives to be drawn from the statistics on demographic trends.
According to UN estimates, the current global population of 7.6 billion is expected to reach 8.6 billion in 2030 and 9.8 billion in 2050. The expanding population is not distributed equally, whether in the growth in recent years or the growth forecast for the next few decades. Some countries have a large number of children and young people, whilst others have an abundance of people of working age, and others still are experiencing a rapid rise in elderly people. Some countries stand out with high fertility levels, in others, people are having fewer children, whilst others still, such as the United States and a few European countries, have seen a recent uptick in this regard. Each of these represents an individual data point in a shared process of demographic transition, and each presents predictable challenges and opportunities for the country in question. This transition process ‘has largely been brought about by a decline in mortality rates (improved nutrition and hygiene, disease control and medical treatment), followed by a reduction in the fertility rate due to couples choosing to limit the size of their families, unburdened by concerns of high infant mortality. This ‘“transition”, which took shape in developed countries in the 19th and early 20th centuries and began in the latter part of the last century in the developing world, is taking longer to occur in Africa’ (Livi Bacci 2015). The population growth will be especially prevalent in certain regions, especially Africa, where the population is expected to increase so rapidly that over half of the increase in global population between now and 2050 is forecast to take place there. This is due to a delay in the same process of demographic transition, from high to low mortality rates and high to low birth rates: in short, there is a period of a few decades before the birth rate adjusts to the decline in the mortality rate, and during this period the population growth rate will accelerate, exactly as is happening in Africa.
Overall future demographic trends will be influenced by the trajectories of two primary drivers of change: fertility and migration, as well as mortality. Throughout the world as a whole, the fertility rate has been in constant decrease since the 1960s. Between 2010 and 2015, the average woman had 2.5 children during her lifetime, but this number varies wildly in different regions. Europe had the lowest fertility rates (although there has been a slight uptick in the last fifteen years, from 1.4 to 1.6 births per woman), and between 2010 and 2015, 46% of the world’s population lived in countries (primarily European and North American) in which the fertility rate was below the replacement level – meaning that the number of new births every year was insufficient to replace their parents’ generation (which requires 2.1 children per woman). In 2017, 60% of Africa’s population was under 25 years of age, whilst only 5% was aged 60 or above. Despite its decreasing fertility rate, Africa remains the continent with the highest rate population growth.
Between 1950 and 2015, Europe, North America and Oceania experienced positive net migration, primarily migrants coming from Africa, Asia, Latin America and the Caribbean. Between 2000 and 2010, the annual net movement of people between the primary regions of the world grew consistently, and the net flow of migrants to developed countries reached 3.1 million people each year. From 2010 until today, however, the net flow of intercontinental migration decreased, and the forecast is for this reduction to continue, whilst intracontinental migration is expected to increase. In most cases, the impact of international migration on the demographic dynamics of a country is much smaller than the impact of the balance between fertility and mortality rates. While a change in the fertility rate is a slow process, however, certain countries with low fertility rates and an increasingly aging population and where the mortality rate is equal to or even greater than the fertility rate, positive net migration can serve as the primary source of population growth, and in certain cases has helped to avoid a drop in population size. In addition, as the age distribution of migrants is typically younger, positive net migration tends to raise the percentage of the population of working age (in addition to children and young adults) in comparison to the percentage in old age. Migration unquestionably constitutes a positive factor for those countries, including the majority of developed countries, which fail to reach the replacement level and receive a boost from migration, which is also helpful for improving the old-age dependency ratio (the ratio between those above the age of 65 and those of working age). At the same time, it must be recognized that immigration is only a partial counterweight to the long-term revival of the age distribution.
On the whole, as demonstrated above, without resorting to baseless optimism, international demographic trends do not indicate an inherently negative Malthusian catastrophe on its way. Rather, they offer a balance of light and dark: for one or the other to prevail will depend largely on the decisions of policy makers, who will have a fundamental say in the final outcome.
Prosperity and a better quality of life can damage the economy as they go hand in hand with higher life expectancy and lower fertility rates, producing a displacement between the assets needed to guarantee a pension to those who have retired and those still in work. A difficult situation that will only deteriorate: in advanced economies, a third of the workforce could retire within a decade, a figure set to rise to 40-50% in the next 20 years. In this context, the supplementary pension is what private companies like Generali offer their clients who over time want to put small amounts of money aside for a more secure future.
To learn more, watch the video Far away, so close.