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Sanjeev Sanyal: World population - Boom to bust?

Data from population censuses conducted in many countries last year suggests that population growth is slowing very sharply

Sanjeev Sanyal 

Tomorrow is and we are probably expected to spend it fretting over demographic growth. The recently forecast that world population will hit almost 7 billion this year, 9.3bn in 2050 and over 10 billion by the end of this century. It also forecasts that India will surpass as the world’s most populous country before 2025 and that its population will peak at 1.72bn in 2060.

However, data from population censuses conducted in many countries last year suggests that population growth is slowing very sharply. Birth rates have been low in developed countries for some time but they are now plunging in developing countries. The Chinese, Russians and Brazilians are no longer replacing themselves, while Indians are having fewer children. Indeed, global fertility will fall to the replacement rate within 15 years. Population may keep growing for a few more decades because of momentum from rising longevity but, reproductively speaking, our species should no longer be expanding. This would be a major turning point in the history of the human race.

(TFR) is the average number of live births per woman over her lifetime. In the long run, a population is said to be stable if the TFR is at the “replacement rate”. The replacement level of TFR is a little above 2.3 for the world as a whole although it is somewhat lower at 2.1 for developed countries, since they have lower infant mortality rates. The TFR for most developed countries now stands well below replacement levels. The OECD average is at around 1.74 but countries like Germany and Japan produce less than 1.4 children per woman.

However, the biggest TFR declines in recent years have been in developing countries. The TFR in and India were 6.1 and 5.9 respectively in 1950. The ratio has now fallen to 1.8 in due to the aggressive and to 2.6 in India due to changing social attitudes. Indeed, India’s urban middle-class may be already below replacement rate. My informal survey of urban middle-class families suggests that their fertility rate may be below 1.5 and falling. In other words, urbanisation and upward mobility will depress population growth in India into the future.

An additional factor could depress future birth rates in China and India. The Chinese census suggests that there are 118.6 boys being born for every 100 girls. Similarly, India has a gender ratio at birth of around 110 boys for every 100 girls, with large regional variations. Compare this with the “natural” ratio of 105 boys per 100 girls. A cultural preference for boys is usually held responsible for the deviation. Since it is women who give birth, the future scarcity of women implies that the effective reproductive capacity for both countries is below that suggested by the unadjusted TFR.

After making the adjustment for the gender imbalance, China’s Effective Fertility Rate (EFR) is around 1.5 while that for India is around 2.45 — both below what is widely discussed. In other words, the Chinese are already far from replacing themselves while the Indians are only slightly above the replacement rate. The EFR is around 2.4 for the world as a whole, barely above the replacement rate. Current trends suggest that the human race will no longer be replacing itself by the early 2020s. Population growth will continue for a few more decades because of momentum from the age structure but, unless we discover the elixir of immortality, the gains from longevity will peter out eventually and the fall in fertility will triumph.

The above shifts have important implications for global labour supply. China is aging very rapidly and its working age population will begin to shrink within a few years. Will relaxing the help? It may have some positive impact in the very long run but China is already past the tipping point because of a combination of gender imbalance and a very skewed age structure. The number of women of child bearing age (15-49 years) in China will drop 8 per cent between 2010 and 2020, another 10 per cent in the 2020s and, if not corrected, at an even faster pace thereafter. Thus, China will have to withdraw an increasing proportion of its female workforce and deploy it for reproduction and childcare. Even if such social engineering was possible today, it would further deplete the country's available workforce.

Meanwhile, the labour force has peaked or is close to peaking in most major economies. Germany, Japan and Russia already have a declining workforce. The US is one of a handful of advanced countries with a growing workforce due to its openness to immigration. However, this may become more difficult as the source countries become richer and themselves see rapid declines in birth rates. Thus, many developed countries will be wondering about how to keep people working productively into their early seventies. India is the only large economy that has a workforce that is growing in sufficient scale over the next three decades to balance the declines expected in other major economies.

Note, however, that birth rates are declining even in India. Current trends suggest that its population will probably stabilise at 1.55bn in the early 2050s, a full decade and 170mn below the UN’s forecast. Similarly, world population will peak at around 9bn in the 2050s, almost half a century sooner than generally anticipated. It could be argued that this is still higher than the planet’s carrying capacity but, when demographic dynamics turn, the world could be faced with a very different set of problems.

The author is Deutsche Bank’s Global Strategist. The opinions expressed here are personal

First Published: Sun, July 10 2011. 00:15 IST