OF SUBSTANCE AND SPIRIT
Diwa C. Guinigundo
Seven years ago, in October 2015, the United Nations Population Fund (UNPF) and the National Economic and Development Authority (NEDA) published a study entitled “Demographic sweet spot and dividend in the Philippines: The window of opportunity is closing fast.” It was commissioned to Dr. Dennis S. Mapa, then dean and professor of the University of the Philippines (UP) School of Statistics.
Dr. Mapa wrote that “in the last 60 years, the age structure of the population has been rapidly changing in most countries all over the world and this phenomenon, given the right economic policies in the labor market, health, governance and economy, has created a rare window of opportunity for countries to experience rapid economic growth over a relatively long period.”
During our long years of attending congressional budget hearing, it was not uncommon to witness some members of both houses quizzing the economic managers about the Philippines’ demographic dividend, as if we had long achieved it, forgetting that the legislature holds the budget key to the future.
Mapa clarified that the country’s population dynamics is linked with rapid economic growth by what is called demographic transition — the change from a situation of high fertility and high mortality to one of low fertility and low mortality. Countries that enter their demographic transitions experience substantial changes in their population’s age structure. If right public policies are implemented to leverage on these changes, we might just experience that “economic growth over a relatively long period.” Immediately, we realize that harvesting demographic dividend is not automatic. Nations have to work hard for it.
Countries in successful demographic transitions can expect to achieve income growth as the first dividend. They are able to promote more working-age population relative to the population. The second dividend is higher economic growth resulting from higher spending on investment as countries move from consumption-related spending.
In an earlier study with now NEDA Secretary ArsiBalisacan in 2004, Mapa showed an interesting contrast between Thailand and the Philippines. In 2000, Thailand was already in the second phase of the demographic transition, where the proportion of working-age population (15-64) expands relative to the young dependents (0-14) and the older population (65-above). On the other hand, the Philippines was still in its first phase, that which is driven by an initial decline in infant mortality but fertility remains elevated, combining to swell youth dependency.
Our challenge then was to successfully ensure the availability of resources for basic education, primary health care and other consumption-related services. Thailand was already absorbed in developing ways to employ the most productive working-age population. Now we know that Thailand has achieved spectacular economic growth while we continue to contend with our demographic challenge. Our fertility rate remains elevated.
Mapa and Balisacan estimated that if the Philippines succeeded to break out of the first into the second phase from 1975 to 2000, we would have realized additional growth. Instead of making per capita GDP of $993 in 2000, we would have earned $1,210. Poverty would have been reduced by 3.6 million Filipinos. We don’t have to be the poor relation of the other ASEAN-5.
The key to accelerating our demographic transition to higher phases is low birth rates. This is not to say that people are unimportant to the development process. But actual experience teaches us that “rapid population growth in poor and developing countries hinders economic development, pushing the next generation of citizens into the poverty trap.”
Unfortunately, compared to Vietnam, our demographic transition has been rather slow. Mapa cited a 2012 study by the National Transfer Accounts that such snail pace at the time was due to our stubbornly high fertility rate. It would only be in 2050 that we could keep pace with Vietnam of the past.
The challenge then is to impress upon our policymakers that the demographic transition simply offers that window of opportunity to capitalize on our demographic advantage of young productive population. Only when we give them the right education, training, health and job opportunities that the youth can help attain rapid economic growth.
Fast forward to 2022, and Dr. Mapa, now the national statistician and civil registrar general, announced four days ago that the country’s total fertility rate declined from 2.7 children per woman in 2017 to 1.9 in 2022. Unlike the findings of his 2015 paper that the total fertility rates were indeed slow, the last two demographic and health surveys in 2017 and 2022 indicated that birth rates declined more significantly.
This change must have been the result of more education and training, more universal access to available methods on contraception, fertility control, sexual education and maternal care in the Philippines following the enactment of the Reproductive Health Act of 2012. Imputing economic literacy might be overstretching it but married couples could have learned to pitch their number of children to issues of affordability and responsible parenthood.
This government should therefore consider it urgent to validate whether the Philippines is now entering its second phase of demographic transition. Prior to the pandemic, we managed to grow by respectable pace of more than 6.0 percent in the last three years prior to the pandemic with declining unemployment rates of less than 6.0 percent. If indeed, we are at the threshold, we should start using the national budget more judiciously and implementing public policy to optimize the demographic change for all of us to harvest those elusive demographic dividends.
The Filipino people have waited and suffered enough.
The time is ripe for more durable economic prosperity, a leap to the upper middle-income group of countries and perhaps to an A credit rating.