The industrial revolution and the remarkable breakthroughs in modern medicine at the turn of the 19th century saw the collapse of the Malthusian constraints, unleashing a period of rapid population growth in human history. Over the next two centuries, the human population increased six-fold, with annual population growth accelerating to a peak of over 2% (World Population Prospects, 2019), while its counterpart measure- the fertility rate- reached 5.0 children per woman by the 1960s (IISD, 2021). However, the worldwide collapse of the total fertility rates since has led to an astonishing stagnation in population growth, particularly across the developed world, making the prospect of the human population peaking in the near future all more possible. Across the developed world, countries are already experiencing sub-replacement fertility rates below the minimum of 2.1 children per woman needed to maintain the current level of the population (Tammy, 2018). The most notable example of this emerging trend is Japan, whose population has already begun to decline, resulting in major socio-economic challenges which other countries are sure to face sooner or later. Indeed, from China to Europe, population growth is expected to turn negative by 2050 or earlier.
However, the story is much different in some parts of the developing world, notably in certain South Asian nations such as Bangladesh and much of Africa. Hence, while the policymakers of the developed world desperately search for tools to combat the effects of a stagnating and ageing population, those in poorer regions are faced with an entirely different challenge of catering to the basic needs of a growing population. One of the clearest examples of this ‘tale of two cities’ is the contrast in demographic changes that are currently sweeping through Japan and Bangladesh, two Asian countries with very different future outlooks.
Many of the developed nations that have already experienced tremendous economic growth following the WW2 era are experiencing the harshest demographic changes. Birth rates are trending downwards in many of these countries, creating warnings for economists and policymakers alike. A prominent example of this is the case of Japan. Japan has been deemed the oldest society in the world and policymakers are scrambling to reach a consensus on how they can best address these concerns. Studying the population demographics is imperative in providing an outlook on a country’s economic and social stability. In Japan’s case, the ‘super-ageing’ society is causing worry for a sustained economic downfall and pressure within the domestic job market.
So what do the statistics show us?
For the first time since the government started tracking, Japan had less than 1 million births in 2016, ensuing in a population decline of 300,000 people. This has become a consistent problem in Japan, which has had annual population declines of this size, if not higher, since 2016. In 2050 the population is set to decrease a total of 24% to 97 million. (Nakao, 2015) Based on population estimates by the Statistics Bureau of Japan, the nation has a very top-heavy population pyramid, with 38% of Japanese citizens over the age of 60. 12.5% are measured as being over 75 years of age, and this is only set to increase, with projections expecting this to double to 27% by 2060. Likewise, the population of Japanese younger than 19 is predicted to decrease to just 13%, from 40% right now (Statistics Bureau of Japan, 2014). Like much of the West, Japan experienced a significant baby boom post-WW2 due to strong economic conditions. Thanks to Japan’s high life expectancy, these babies are now reaching their elderly years and significantly skewing the population demographics. This combined with the sub-replacement fertility rates, are not enough to replenish the population and increase the population of young Japanese. (D’Ambrogio, 2020)
What’s causing this rapid population decline?
The ageing population stems from a combination of two factors, a higher life expectancy and a decreasing birth rate. In 2018, Japan was measured to have the second-highest life expectancy in the world. On the contrary, the Japanese government has long struggled to increase its fertility rate to the required replacement level. There are several explanations, including high levels of abstinence and poor job prospects for Japanese.
In 2019, the Japanese life expectancy was recorded as 87.45 years for women and 81.41 years for men. This ranks second in the world behind just Hong Kong. Japan’s population tends to follow healthier diets and a more active lifestyle than other developed countries, and their universal health care coverage has helped contribute to these high figures. Ultimately, the high life expectancy in Japan has resulted in a large concentration of elderly Japanese.
For a country to grow in population its fertility rate must exceed the replacement rate of 2.1. This represents the amount of children a family (on average) must have to replace their parents in society. In 2016 the birth rate in Japan stood at around 1.36 children per mother, significantly below the replacement rate. This has played a significant role in the decreasing population of young Japanese. Abstinence and cultural and social factors regarding work have also played a significant role in the low rate. A surprisingly large percentage of Japanese men and women report having no sexual experience, 24.6% and 25.8% respectively. Moreover, decreasing rates of marriage have contributed to the low fertility rate. Money and social status are substantially important for men in the pursuit of a partner and has meant that those that are in part-time employment are significantly more likely to not have a sexual partner. (D’Ambrogio, 2020)
Another explanation is the lack of opportunity in the Japanese economy, especially for men who are traditionally thought to be the breadwinners. Whilst Japan benefits from low unemployment rates and has done since before the war, its workforce is becoming increasingly irregular. An irregular workforce does not have stable employment, and they rely on temporary jobs to get by. Jeff Kingston, a professor at the Temple University’s Campus in Japan, estimated that a whopping 40 percent of the Japanese workforce is irregular. With such an emphasis on the breadwinner status of men in Japan, the irregular nature of work means they not only struggle to afford to have children but also with finding partners. (Semuels, 2017)
What are the consequences?
There have been profound challenges to Japanese society and economic status because of the changing population demographics. There are some foreseen benefits to the decreasing population as cities will become more liveable and less cramped. However, the inverted population pyramid presents some challenges to the organisation of society. Within Japan, there is a certain expectation on the children of elderly citizens to take responsibility by looking after them until they pass away. This pressure has caused new solutions to be introduced into Japan including elderly day centres and nursing homes, many of which have been converted from old schools. (Kelly, 1993)
The economic effects are even more pronounced. In the decades preceding its introduction Japan struggled with a multi-decade deflationary slump, in some quarters measuring a decrease in economic activity. The shrinking young-middle age population has created a labour supply shortage in many industries, ranging from the military to agricultural jobs. Whilst not all these implications can be attributed to low fertility rates, they certainly have played a factor. (McBride & Xu, 2018)
Has the Japanese government done anything?
The state of the Japanese economy has reached a vicious cycle whereby the economic stagnation is causing decreasing fertility rates due to a lack of savings to have kids. Consequently, the low fertility rates are causing a labour shortage and negatively affecting the economy.
The ex-prime minister, Shinzo Abe, attempted to address both issues (economic stagnation and low fertility rates) with a series of policy recommendations coined ‘Abenomics’. The first edition was a three-pronged set of economic policies comprised of fiscal expansion, monetary easing, and structural reform. Practically, the strategy sought to increase domestic competition, reform labour markets, and expand trade partnerships. Stimulus packages of 20.2 trillion yen were announced, half of which was spent on direct government spending, such as the construction of infrastructure projects like children’s day-cares near train stations. (McBride & Xu, 2018)
The second iteration of Abenomics promised to address the ageing and declining Japanese population. The implications of the changing labour demographics have meant a shrinking workforce and declining foreign investment. Abe pledged to increase the birth rate to 1.8 births per woman from the current 1.4 to ensure the population does not shrink below 100 million from its current figure of 127 million. Elderly care was also promised to be invested heavily into to ensure that parents would not have to leave their jobs for care reasons. Japan planned on following a similar approach to many Scandinavian countries with a set of policies including free daycare, prenatal incentives, family allowances for children, paid maternity leave, and job guarantees. (Wharton Staff, 2016)
Unfortunately, most of Abe’s policies were unsuccessful in their implementation, and most of the benefits have only been reaped by the small elite class. These issues are still front of mind for the current Japanese government as they are forced to innovate further with ideas such as AI matchmaking. (BBC, 2020)
On the opposite spectrum, we have countries like Bangladesh experiencing booming population growth. While having a landmass half the size of Italy, it has a population almost three times higher. Even today, Bangladesh experiences population growth of almost two million people per year and is now the eighth largest nation ranked by population size.
After a long-lasting colonial era under British rule and liberation struggles in the war for independence, in 1971, Bangladesh seceded from Pakistan and became a sovereign state. In 1971, Bangladesh had a population of 70 million people, and now it has more than doubled, to 165 million (Streatfield and Karar, 2009; World Bank). However, the quality of life has not followed the same trajectory of growth. This has led to a high level of poverty, unequal development around the country, and an increasing wealth gap.
How is Bangladesh’s population distributed?
Having one of the highest population densities in the world of 1,252 people per square kilometre, yet extremely low GDP per capita of $1,962, Bangladesh’s high population growth takes a heavy toll on the country’s development possibilities (World Bank). The age distribution is also very different when compared to many developed countries. According to the CIA (2022), 27% of the population is under 15 years old, and 19% are between 15 and 24 years old. Furthermore, these two groups are expected to grow even further, putting more pressure on the working portion of the population between the ages of 25 to 54, which is now at 40%. The elderly portion, on the other hand, is relatively small, with 14% of Bangladeshis being over 55 years old. Such a prevalence of youth and their future inflow into the workforce is expected to put a lot of stress on the economy, as the supply of labour heavily exceeds demand over the next ten years.
Why is population growth so high?
One major factor contributing to this population growth is the Bangladeshi cultural attitude towards family. With a strong influence of conservative religious traditions and widespread purdah norms, women are traditionally expected to take the role of a homestay wife with many kids to take care of (Robinson, 1999). According to Datta and Hassan (2022), Bangladesh is home to 38 million child brides. In 2019, 12% of 16-year-old girls were married before their 16th birthday. Furthermore, Hossain and Majumder (2019) found that the average age of a mother at first birth in Bangladesh is just under 18 years old. This social construct carries profound implications for the role of women in Bangladeshi society going forwards, with restrictions on woman’s involvement in economic activities curbing hopes of increased gender equality. With half of the population being female, such a paradigm denies a large portion of the population from participating and contributing economically to the development of their country.
The Bangladeshi government has attempted to respond to this problem by passing the “Child Marriage Restraint Act”, demanding harsher penalties and including several preventative measures against child marriage. However, this same law has an offsetting element that allows marriage before the legal age of 18 years under special circumstances, if the marriage is deemed to serve “the best interest of the minor.” Yet, the law does not specify what “the best interest of the minor” means, nor does it suggest any minimum age for such marriage (Datta and Hassan, 2022).
Another factor contributing to constant population growth is the divide between urban and rural parts of the country. This is attributed to causing the underdevelopment of the countryside and seeing poverty follow in its wake. As such, lack of opportunities led to the increasing rate of child employment, where child labour becomes necessary for the family to survive. In addition to that, underdeveloped health programs result in an increased infant mortality rate. For comparison, in Bangladesh, the infant mortality rate is 24 per 1000 live birth, while in Thailand and Australia, it is 7 per 1000 and 3 per 1000 respectively. (World Bank). Furthermore, the death rates for children under 5-years-old are also high, with more than 84 thousand children dead in 2020. While you might believe higher child mortality rates lead to slower population growth, families in Bangladesh responded by having even more children, with uncertainty in the survival of their children leading to an increased pregnancy ratio in comparison to urban areas (Streatfield and Karar, 2008).
What has the Bangladeshi government done to curb growth?
In response, the Bangladeshi government cooperated with International Development Association (IDA), receiving $36 billion in grants, and provided zero and low-interest loans in support of 271 projects (The World Bank). Those projects include agricultural fields, housing development and educational programs. To reduce poverty and underdevelopment in rural Bangladesh, those programs focused on infrastructural development as means for new businesses and quality of life improvements. The blueprint was shown through Second Rural Transport Improvement Project, which started in 2012 and was completed in 2018. The major challenge addressed through it was to increase access to public roads, as, in the year 2000, only 37 percent of the population lived within 2 km of an all-season road (The World Bank Bangladesh). In its effort, it committed $302 million to build 5,250 km of roads and benefit 22 million people. Another project of rural improvement involved Rural Electrification and Renewable Energy Development Project, intending to provide access to electricity to distant households. With a cost of $386 million, it delivered 80 thousand solar home systems to 1 million rural households (The World Bank). Such programs provide an example of how to deal with insufficient development in a highly populated country that has a spread rural population. As a result of such programs, the government was able to reduce rural poverty from 35.2 percent down to 26.4 percent in the span of the last ten years. Nevertheless, the poverty reduction was uneven across the country. While East experienced a reduction, West and North-West encountered not only stagnation, but in some cases a rise in poverty.
The Bangladeshi government sees the rising population as a hazard, expecting more than 245 million people to live in Bangladesh by 2067, and has a goal to stabilise it (Ullah et al., 2019). However, due to the conservative attitude among much of the nation, they are unable to implement major laws that would change it. Instead, the goal has shifted towards improving people’s quality of life and reducing the need for a big family. To do that, the Prime Minister established long-term goals that include reducing income inequality through the implementation of the National Social Security Strategy, improvement of health services in rural areas by refining Universal Health Coverage and focusing on target-oriented efforts to accelerate the usage of the domestic resource. As for the rest of the world, Bangladesh is an example of a highly populated country that is on its way to becoming a regional force, with the 28th world’s largest economy by 2030 (PWC, 2017).
What is more important is that such development can be projected onto other developing countries like Niger, Uganda, or South Sudan. While today they are only beginning their development, Bangladesh’s success story of cooperation with NGOs and powerful support from international financial institutes can be used to develop plans for their implementation in other regions that expect to see strong population growth. This way all previous wins and losses can be adjusted to local needs, developing new unique strategies to help them improve their economic and social wellbeing.
Knowing this, what are the implications for the rest of the world?
As illustrated by the contrasting case studies above, the most pronounced stagnation or reduction in population size is likely to occur in economically advanced nations such as Japan. Simultaneously, poorer nations which are already struggling to meet the basic needs of their existing populations are experiencing the highest birth rates, indicating that many of the world’s most populous countries in the future will come from the developing world, creating numerous welfare challenges.
Given the scarce availability of resources, the rapid growth in population in poorer countries could exacerbate shortages of food, potentially increasing the occurrence of malnutrition, ill-health, and diseases such as Rickets caused by diet deficiency and placing strain on already over-stretched development initiatives. Further, the UN World Water Assessment Program (2008) projects that by 2050, 57% of the global population will live in areas suffering from water scarcity, which are also likely to be impoverished nations. As human demand for clean freshwater grows, these communities may even experience violence and territorial conflict over water resources. Further, potential overcrowding in poorly planned cities in developing nations will mean an increased number of people living in unhygienic conditions, with increased exposure to infectious diseases, burdening the weak healthcare infrastructure in these countries.
While the developing world grapples with a range of headwinds related to resource competition and scarcity, many wealthier nations would face a completely different set of challenges due to a stagnating population. To commence, a diminishing consumer base would mean that demand for goods and services will drop across a medley of industries, ranging from constructing and housing to everyday consumables, creating fewer opportunities to generate growth within the domestic markets. As a result, advanced economies are likely to be more reliant on demand from developing nations with a younger and growing populace, resulting in the former becoming more susceptible to external shocks. Moreover, as pointed out in the case study on Japan, demand deficiency will likely create deflationary pressures (Anderson, 2014), complicating the investment landscape and limiting growth potential.
Moreover, as Kotkin (2017) argues, “death spiral demographics” could result in a decline in innovation due to the tendency for change to come from younger workers and entrepreneurs. As a result, the prospect of a slowdown in capital productivity growth is within the realm of possibility, meaning that countries may not be able to rely on productivity increases to offset the impact of population decline to maintain economic growth. The double curse of labour shortages and reduced innovation could inhibit the competitiveness of these economies, creating the potential for significant changes in economic power and patterns of globalisation.
In addition, the growth in dependency ratio (the ratio between those in the labour force and those not in the labour force) due to ageing populations will likely result in severe public finance challenges which will threaten the viability of social security programs, particularly state-run pensions, and aged care. Indeed, the shrinking working-age population leads to a reduced tax base which could also hinder governments’ ability to invest in public services and infrastructure, resulting in intensified austerity, degrading the quality of public assets and increased demand for borrowing to defend entitlement programs and politically popular transfer payments.
Conclusion
Overall, it is undoubtedly clear that the world is experiencing major demographic changes and will continue to do so over the next century. Falling fertility rates and population stagnation in developed nations are likely to instigate major socio-economic changes as indicated by Japan’s well-known struggles due to an ageing population. Simultaneously, the explosion of population growth in countries such as Bangladesh signals a potential shift in global power dynamics as an even larger share of the global consumer base and human capital will be in developing nations. However, these developing nations would face challenges of their own, particularly in sustainable development, as they grapple with the needs of a growing population. Policymakers in countries on both sides of the equation, however, would likely have to take ambitious, and sometimes politically unpopular, reforms to address the coming challenges.
The CAINZ Digest is published by CAINZ, a student society affiliated with the Faculty of Business at the University of Melbourne. Opinions published are not necessarily those of the publishers, printers or editors. CAINZ and the University of Melbourne do not accept any responsibility for the accuracy of information contained in the publication.
