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CHEVRON
has a fascinating magazine ad that presents the
intriguing idea that sometimes the root of a problem can
become the solution. It reads in part:
“With
our planet’s population continuing to increase. . . our
demand for energy is also growing. Finding and
developing all the fuel and power we need for our homes,
businesses and vehicles, while protecting the
environment, could be one of the greatest challenges our
generation will face. / The key to ensuring success is
found in the same place that created this need: humanity
itself. When the unique spirit we all possess is allowed
to flourish, mankind has proven its ability to take on,
and overcome, any issue. . . / The problem. . . becomes
the solution.”
I see
the same dynamic working in the dramatic transformation
of Philippine demographics from bane to boon for
economic development. For decades many observers and
analysts (myself among them) have railed against the
millstone that our rapidly increasing numbers have
placed on the economy. The task of growing our economy
had come to resemble the labors of Sisyphus who, in
rolling a stone up a mountain, was denied success every
time he neared the summit. Every gain we made in
productivity was being wiped away by the many new mouths
we had to feed every year. Ergo, we concluded, unless we
can rein in population growth, we would never get
anywhere in our national development program.
As the
21st century has rolled in, however, the situation
appears to be markedly changing. Instead of being the
albatross around our neck, our country’s 88 million to
90 million people look more and more like our hope for
the future. Oh yes, the problems of poverty,
underdevelopment, poor services, disease and what have
you are still very much with us. But it’s our human
resources—their energy, their youth, their dynamism—who
supply the confidence that we will be equal to the
problems, and that we will finally keep our appointment
with modernization and progress.
Why the
change in perspective? What is taking place?
What we
are witnessing is “the demographic dividend” at work. In
the seminal study on the subject by Harvard’s David
Bloom, “The Demographic Dividend: The Economic
Consequences of Population Change,” he contended that
what really matters is not “population size and growth,”
but the age structure of a population. “Because
individual economic behavior varies at different stages
of life, changes in age structure can significantly
affect national economic performance. Nations with a
high proportion of young or old dependents tend to
devote a relatively high proportion of resources to
these groups, often limiting economic growth. By
contrast, nations in which a relatively large share of
the population has reached the prime ages for working
and saving may enjoy a boost to income growth stemming
from the higher share of the population that is working,
from the accelerated accumulation of capital and from
reduced spending on dependents. This phenomenon is known
as the ‘demographic dividend.’ The combined effect of
this dividend and effective policies in other areas can
stimulate economic growth.”
Bloom
and World Bank economists ascribe as much as a quarter
of the economic growth of the East Asian tigers—Korea,
Taiwan, Hong Kong and Singapore—to the demographic
dividend. The same dynamic is now at work in Southeast
Asia and Latin America, and yes, the Philippines.
With
some 62 percent of our population of working age and
nearly 10 million of our people working abroad, our
country and our economy are reaping rewards we did not
see in previous decades. OFW remittances are fueling
partly the surge of economic activity in the country and
the process of economic transformation. As the Filipino
worker has risen in prominence abroad, our workers at
home are also doing more work for the global economy
with the recent rise in foreign direct investments (FDIs)
and outsourcing work by foreign companies in the
country. We are now second only to India as the top
outsourcing destination in the world.
We are
seeing here only the initial stages of the global
redistribution of jobs. Down the road, there will be
more demand for migrant labor, more outsourcing of
business activities and more FDIs going to developing
countries like the Philippines. And these will all have
far-reaching impact on the modernization of our country.
To fully
reap the demographic dividend, it’s not enough to just
have a huge working-age population. We must invest
wisely and aggressively in their education, training and
health so that they can become more productive workers
here at home and abroad. This calls for education and
training in the skills and knowledge needed in the new
economy—particularly in the sciences, engineering and
business. This requires a degree of commitment and
dedication we have not seen before in our education and
health systems.
In its
2007 World Development Report, the World Bank devoted
the annual study to the subject of youth demographics
and economic growth. Significantly, it noted that the
demographic window may already be closing for China,
Brazil and Vietnam, as their youth populations are now
decreasing and dependency ratios are increasing. But in
Egypt, India and the Philippines, “the window is still
open: the number of youth relative to other age groups
will continue to rise until 2015, when the relative
number of youth will begin to level off and eventually
decline.”
This,
then, is the window before us. The main points of the
demographic thesis are simply summarized:
First,
improvements in public health are the key to initiating
the demographic transition.
Second,
effective family planning can accelerate the demographic
transition, potentially enhancing the economic benefits.
Finally,
good policies in education, the economy and governance
are critical to collecting the demographic dividend.
Effective policies in all these areas can create a
“virtuous cycle” of sustained growth. |
