Economy · June 24, 2022

Are the children of Africa our last hope to save us from demographic decline?

In 2010 I asked the following question in one of my blogs: “Can rapid population growth be good for economic development? It quickly became the most read blog in World Bank history, as it was part of a larger controversy. At that time, most people still believed the world had an “overpopulation problem” and adhered to some version of Malthus’ theorem or Paul Ehrlich’s “population bomb” theory. However, a handful of people including Hans Rosling, Shanta Devarajan, and I, we saw a very different story emerge from the data.

From our point of view, the “overpopulation camp” was misinterpreting the consequences of population growth because it misinterpreted the sources of that growth. Today, the main driver of population growth is not high fertility (as in the past) but increased longevity, especially in emerging market regions. As such, population growthsupported by “adult filling” as Hans Rosling called itit is not a symptom of underdevelopment but just the opposite.

Skeptics were also wrong to think that more adults would result in higher unemployment assuming more people were vying for a small amount of existing jobs. However, this “corrected pie mistake” it does not take into account economies of scale and the functioning of the labor market. We illustrate this point by looking at South Africa and Japan. Both countries have nearly the same number of children (ages 0-14), with Japan around 15 million and South Africa around 17 million. However, while Japan has 110 millions of adults (over the age of 15) versus 43 million in South Africa, South Africa’s unemployment rate is ten times higher (30%) than in Japan (3%). Clearly, South Africa has an unemployment problem, but it is not determined by demographics (see Figure 1).

Figure 1. Demographics and jobs: a history of two countries

Figure 1. Demographics and jobs: a history of two countries

sources: World Bank (2021), World development indicators, World Data Lab (2022) World Data Pro; International laboratory Organization. (2020). ILOSTAT database [country profiles].

Today, if anyone has a demographic problem on their hands, it is the advanced economies where opinion makers are liked Elon Musk fears that we will soon face a shortage of skilled workers and ultimately risk the survival of our species. A rapid decline in fertility almost everywhere means the overall number of children (ageS. 0-14) should decreaseslightly less than 2 bmillions today around 1.8 bmillions by 2050. The total number of children in Asia is projected to decline by 220 mmillions (from 1.076 bmillions to 855 mmillions). The rest of the world will also have 40 mmillions fewer children (a drop from 353 mmillions to 312 mmillions). The only exception is Africa, which will add about 100 mmillions children (from 550 mmillions to 650 mmillions) to the world population by 2050. Indeed, across Africa, the number of children is still rising by a relatively modest percentage 1 percent per yearcompared to a staggering 2.7 percent “adult growth”resulting in an overall population growth of 2 percent. If Africa had followed the path of Righteast of wworld from 2000 it would be about 250 mmillions fewer children in the world by 2050 (cf. ffigure 2). Then the world would be just home around 1.5 bmillions children (to 25 percent decrease compared to 2000), which would have raised many more alarm bells among those concerned about “Depopulation” of orbig planet.

Figure 2. The children of the world: the decline of Asia, the rise of Africa

Figure 2. The children of the world: the decline of Asia, the rise of Africa

Source: Projections based on Wittgenstein Center for Demography and Global Human Capital, (2018). Wittgenstein Center Data Explorer version 2.0.

With improved health and sanitation, The African population growth will be even higher the short and medium term. I believe this is a good thing, as this population growth is driven by adults. African economies could benefit from a dividend of education as a larger cohort of parents invest more (resources and attention) in fewer children. In turn, like African kids “skill up ”and access digital value chains, they will find opportunities to work in negotiable services. In an optimistic scenario, this dividend of education will eventually result in a job dividend. If this happens, the projected global demographic imbalance can become an opportunity for Africa. Businesses inside need for talent will find native speakers of French and English speakers just a click away. Investing in Africa will help Both of them development and the fund lines.