CHANGING WORLD
By DR. BERNARDO M. VILLEGAS
(Part 1)
Dr. Bernardo M. Villegas
If the Philippines is now being considered by investors both here and abroad as one of the most promising emerging markets in the world in the next ten to twenty years, the main reason is based on our demographics: we are among the few countries in Asia that can still boast of a young, growing, and English-speaking population. Without this very valuable human resource, we would not have more than 10 million of our overseas workers remitting to their relatives at home more than $30 billion yearly and another 1.2 million well-paid workers in the BPO-IT industry earning $25 billion yearly. These two sectors alone account for more than 15 percent of our GDP and are the sources of the consumption power that makes the economy least vulnerable to global financial crises. If in 2019, the world does experience a serious economic slowdown, the Philippine economy can still grow at close to 7 percent on the basis of a strong domestic market. This large population base is being strongly complemented by the “Build, Build, Build” Program of the Duterte administration which in the next three years will gather enough momentum to make growth rates of 8 to 10% possible. These growth rates were experienced by China and India in the last century when they were in similar stages of a construction boom.
The good news is that the growing young population (50 percent of our population are below 23 years of age) are increasingly better educated. We are now investing two more years of basic education in the youth under the K to 12 curriculum. The Duterte administration is spending a higher percentage of its budget on education and health, thereby converting people into valuable human resources for a growing economy. To sweeten the pot even more, leading businesses in the private sector are investing more in improving the quality of tertiary education in both the academic and technical fields. Examples are the Ayala Group, the SM group, the PHINMA group, the Yuchengco group, and others. There is also the increased awareness of both national and multinational corporations of the need to invest in the on-the-job training of their own workers in tandem with NGOs that are committed to technical training such as Meralco Foundation, Dualtech, Center for Industrial Technology and Enterprise, CITE, and the Shell Foundation.
All this good news about the Philippine demographic advantage is in great contrast with recent alarming statements about the global decline in fertility being “simply astonishing” (Mercatornet, January 29, 2019). In an article quoting The Guardian, Shannon Roberts refers to the sharp global decline in fertility since 1970. In the United States, all of Europe, and much of the rest of the West, febrility is already below the replacement level of 2.1 children per fertile woman which will eventually lead to population decline unless these countries are able to attract enough immigrants to sustain current population level. The leading example of a country with a very low fertility rate of 1.1 babies per fertile woman but open to immigrants is Spain in which some 5 million of the 45 million residing permanently in the country were born outside the country. This has enabled Spain’s economy to grow at one of the fastest rates in Europe over the last decade or so, despite suffering from the aftermath of the Great Recession. There is the greatest likelihood that many European countries may almost cease to exist by 2300 if low fertility rates are not reversed.
Low fertility rates are not limited to small countries. As Ms. Roberts reports, “The really big news… is found in the large countries of the developing world, where the great majority of people live. There, declines in birth rates have been simply astonishing. China, the world’s largest country, has a fertility rate of 1.5, lower than Britain’s. India, soon to overtake China as the world’s most populous nation, is at the replacement rate of 2.1 and falling. Brazil, the fifth most populous country, has a fertility rate of 1.8. The case of China is especially worrying since it is now expected to be the major engine of growth for the world economy. Already in 2019 the Chinese economy is slowing down and its leaders are frantically trying to make the domestic economy the engine of growth by stimulating domestic consumption. In an article in the New York Times last January 21, 2019, Steven Lee Myers et al reported that, according to Chinese academics, China is facing its most precipitous decline in population in decades, setting the stage for potential demographic, economic, and even political crisis in the near future. As a result of several decades of a one-child policy enforced aggressively by the Chinese state, China’s fertility rate declined to 1.6 children per fertile woman. In fact some academics believe that the Chinese government is obscuring the actually fertility rate to disguise the disastrous ramifications of the “one- child” policy. It is possible that the fertility rate might have actually fallen to 1.18 between 2010 and 2018 which, together with South Korea, may be the lowest in the world.
It is not easy to raise fertility rates by government edict. Chinese women born during the years following the “one-child” policy are now reaching or have already passed their peak fertility age. There are simply not enough of them (millions of girls were aborted because of the preference for boys by Chinese couples) to sustain the country’s population level, despite new efforts by the government to encourage families to have two or more children. There is no doubt that this looming demographic crisis could be the Achilles heel of China’s stunning economic transformation over the last 40 years ever since Deng Xiaoping started the free market revolution in 1978. As the New York Times article observed: “The declining population could create an even greater burden on China’s economy and its labor force. With fewer workers in the future, the government could struggle to pay for a population that is growing older and living longer.”
(To be continued).