Asia’s demographic transition over the next 30 years

Author: Peter Drysdale, Editor, East Asia Forum

By 2050 Asia will add another billion to its already huge population of 4.3 billion. Demographers reckon that this will be a very good result, not because Asia’s population will become so large but because the population projection for 2050 is several billion lower than it would have been without the spread of control over human fertility that has occurred over the past four decades.

Great-grandmother, grandparents and parents in Yichang city with a new baby. The one-child policy in China is increasingly being seen as an impediment to growth. Some projections have the labour force declining by around 10 million people a year from 2025. (Photo: AAP)

With 1.4 billion and 1.2 billion people respectively, China and India currently account for 37 per cent of the world’s population. Thirty years later, they are expected to account for roughly the same share of world population. But the overall numbers hide the fundamental changes that will have occurred by then. The bulk of population growth in Asia over the next three and a half decades will be in South Asia, a result not of high birth rates but of the large number of people in the childbearing ages, itself the product of past higher levels of fertility.

The falls in birth rates across Asia mean that today there is a concentration of population in most Asian countries in the working ages. Economists call this feature of population transition in Asia the demographic dividend because it provides the opportunity for more productive investment of capital and for a stronger focus on developing the human capital of the next generation of workers, both essential features of economic development. Economies like Japan and the Asian tiger economies of Korea and Taiwan benefited from the demographic dividend during their earlier periods of high economic growth. Capturing the demographic dividend is now a major objective in the progress of development in countries such as Malaysia, Thailand, Indonesia and China. The economies of South Asia and elsewhere also need to ensure that they capitalise on this source of growth potential.

As Zhongwei Zhao points out in this week’s lead from the latest issue of East Asia Forum Quarterly (EAFQ), large variations in fertility and mortality have helped to form different age structures and demographic characteristics across Asia, with their very different impacts on Asia’s social and economic development. This means that Asia will face not one but at least three different kinds of demographic, social and economic futures.

One group, including many countries in East Asia, completed their demographic transition some time ago. Their recent and current fertility levels are lower or much lower than 1.8 children per woman, and life expectancy tends to be higher than 74 years. Past population changes opened the ‘demographic window’ to economic development, and most of these countries have enjoyed rapid economic growth in recent decades. Because of their very low fertility rates and remarkable reductions in mortality, these countries have witnessed and will continue to witness rapid ageing. Many of them have witnessed or will soon experience a notable decline in the working-age population, or even a decline in the national population. Old-age dependency ratios are rising in these countries. Their fertility levels are far below the population replacement rate and if this trend is not reversed soon, the age structure of these populations will become even more top-heavy or biased towards old people.

A second group of countries — spread right across Asia and including countries such as Turkey, Indonesia and Oman — has largely completed its demographic transition, but fertility levels are either higher than replacement or have only just reached this level. Their life expectancy is generally within the range of 70 to 75 years. The proportion of old people is still growing relatively slowly in these countries. Most of them will have low or declining dependency ratios over the next few decades, which, if there are favourable development policies and adequate investment, will likely bring about the kind of rapid economic growth that we have seen in the first group. Creating sufficient jobs will be a major challenge over the next 20–30 years.

The other group of countries is largely from South, Southeast and West Asia. Most of them are still in the late stages of the transition that could yield a demographic dividend. Their fertility rates are still higher than the replacement level and life expectancy is generally lower — in some cases much lower — than 70 years. Rapid population growth will continue to be a major challenge for them, and some will see their current population more than double by the middle of the century. This will lead to increased population density, a high dependency ratio and strong demand for employment — and these factors will put great pressure on development.

As Peter McDonald concludes in the EAFQ overview, ‘demography never stands still and those countries that were at the head of demographic change in the second half of the 20th century now find themselves facing the new challenges of very low fertility and very rapid ageing of their populations. Rapid falls in mortality rates have also contributed to ageing and to a shift in the burden of disease to older-age chronic illnesses’.

In the next 30 years or so, Zhao notes, ‘fertility and mortality changes are likely to be relatively slow and steady in most Asian populations, although they may decline rapidly in South Asian countries. This is because after falling to a low level, mortality rates are very unlikely to bounce back dramatically unless the country is struck by catastrophic infectious disease, natural disaster or war. Similarly, in low-fertility populations, small fluctuations or a moderate increase in fertility may take place, but a drastic surge or reduction in fertility seems unlikely in the near future’.

The certainty about Asia’s future demographic changes stems also, Zhao says, from the impact of population momentum. ‘Because of this, a number of major demographic trends in Asia have already been determined by the size and structure of the current population’. While unexpected events or radical interventions can still alter Asia’s demographic future, the demographic backdrop has been largely embedded.

The end of population growth in the region may be in sight, but past and present growth means the challenges of managing the impact of demographic structure and change on social and economic development will vary across the region and require efforts and innovation on a scale unprecedented in human history. The success or failure in meeting these challenges will be a major determinant of whether Asia fulfils the expectations that are held for its long-term economic growth.

Peter Drysdale is Editor of the East Asia Forum.