Changes in Population Age Structure and Economic Development: The Case of Bangladesh

Year 2017, Volume: 3 Issue: 1, 1 - 54, 01.04.2017

Rashed Al Mahmud Tıtumır Zahidur Rahman

Abstract

Using the case of Bangladesh, this article critically explores the dynamics of changes in population age structure and their implications for economic development. It argues that the existing literature, though rich and covering a wide range of issues, is highly fragmented. The existing literature either narrowly focuses on population growth vis-à-vis economic growth; concentrates too much on empirical estimation of ‘dividend’; makes justifications for policy interventions; or concentrates on restricted microeconomic models of choice and rationality to understand demographic change. This article attempts to propose a comprehensive framework that stipulates the relations amongst changes in population age structure, demographic transition, and economic development in the contexts of developing countries. Per the proposed framework, Bangladesh is positioned in the intermediate stage of its demographic transition, which is supposed to be marked by a productive phase of ‘demographic dividend’ and could affect economic growth principally through changes in the composition of the labour force, as conditioned by a number of policy variables. Using this framework, the article finds the recent development performance of Bangladesh to be lower than expected, as it has not been able to fully capitalise on advantageous changes in the age structure of its population. This paper also identifies a number of challenges in terms of harnessing economic growth to be more job-intensive in productivity sectors, enhancing quality of labour and formation of skills, and expanding the productive capacity to absorb a growing labour force. All of these have useful implications for other developing countries in similar socio-demographic conditions

Keywords

Population Change, Demographic Dividend, Economic Development, Bangladesh.

References

• [1] ADB. (2015). Key indicators for Asia and the Pacific. Manila: Asian Development Bank.
• [2] ADB (2016). Skill development in Bangladesh (ADB Briefs, No. 67). Manila: Asian Development Bank.
• [3] Adnan, S. (1998). Fertility decline under absolute poverty: Paradoxical aspects of demographic change in Bangladesh. Economic and Political Weekly, 1337-1348.
• [4] Agrawal, P., & Sahoo, P. (2009). Savings and growth in Bangladesh. The Journal of Developing Areas, 42(2), 89-110.
• [5] Ahmed, S. (2014). Searching for sources of growth in Bangladesh. In Bangladesh Economists’ Forum (pp. 21-22). Dhaka: Policy Research Institute.
• [6] Asadullah, M. N. (2006). Returns to education in Bangladesh. Education Economics, 14(4), 453-468.
• [7] Barlow, R. (994). Population growth and economic growth: Some more correlations. Population and Development Review, 20(1), 153-165.
• [8] Bayes, A. (2010, March 22). The quality of Bangladesh’s economic growth. The Daily Star. Retrieved from http://www.thedailystar.net/news-detail-131027.
• [9] BBS. (2012a). Household income and expenditure surveys 1995, 2005, 2010. Dhaka: Bangladesh Bureau of Statistics.
• [10] BBS. (2012b). Population and housing census 2011. Dhaka: Bangladesh Bureau of Statistics.
• [11] BBS. (2015a). Report on the labour force survey 2013. Dhaka: Bangladesh Bureau of Statistics.
• [12] BBS. (2015b). Population projection Bangladesh: Dynamics and trends: 2011-2061. Dhaka: Bangladesh Bureau of Statistics (BBS) and Institute of Statistics Research and Training (ISRT), University of Dhaka.
• [13] Becker, G. S. (1960). An economic analysis of fertility. In Demographic and economic change in developed countries: A conference of the Universities-National Bureau Committee for Economic Research (pp. 209-240). Princeton: Princeton University Press.
• [14] Bloom, D. E., Canning, D., Fink, G., & Finlay, J. (2007). Realizing the demographic dividend: Is Africa any different? (PGDA Working Paper No. 23). Cambridge: Harvard University.
• [15] Bloom, D. E., Canning, D., & Malaney, P. (2000). Demographic change and economic growth in Asia. Population and Development Review, 26, 257–90.
• [16] Bloom David E., David Canning and Pia N. Malaney (2000), Population Dynamics and Economic Growth in Asia, Population and Development Review, Vol. 26, Supplement: Population and Economic Change in East Asia (2000), pp. 257-290
• [17] Bloom, D. E., & Freeman, R. B. (1988). Economic development and the timing and components of population growth. Journal of Policy Modeling, 10(1), 57-81.
• [18] Bloom, D. E., & Williamson, J. G. (1998). Demographic transitions and economic miracles in emerging Asia. World Bank Economic Review, 12(3), 419-456.
• [19] BMET. (2012). Training report. Dhaka: Bangladesh Manpower Bureau of Employment and Training (BMET).
• [20] Boserup, E. (1981). Population and technological change: A study of long-term change. Chicago: Chicago University Press.
• [21] Browning, M., & Crossley, T. F. (2001). The life-cycle model of consumption and saving. The Journal of Economic Perspectives, 15(3), 3-22.
• [22] Chesnais, J. C. (1992). The demographic transition: Stages, patterns, and economic implications. Oxford, England: Clarendon Press.
• [23] Coale, A. J., & Hoover, E. (1958). Population and economic development in low-income countries. Princeton: Princeton University Press.
• [24] Crenshaw, E. M., Ameen, A. Z., & Christenson, M. (1997). Population dynamics and economic development: Age-specific population growth rates and economic growth in developing countries, 1965 to 1990. American Sociological Review, 974-984.
• [25] Cutler, D. M., Poterba, J. M., Sheiner, L. M., & Summers, L. H. (1990). An aging society: Opportunity or challenge? (Brookings Papers on Economic Activity, 1:1990). Washington, DC: Brookings Institution.
• [26] De Bruijn, B. J. (2006). Fertility: Theories, frameworks, models, concepts. The Netherlands: Netherlands Interdisciplinary Demographic Institute.
• [27] DoPE. (2016). Bangladesh primary education annual sector performance report. Dhaka: Directorate of Primary Education, Bangladesh.
• [28] Duflo, E. (2012). Women empowerment and economic development. Journal of Economic Literature, 50(4), 1051-1079.
• [29] Easterlin, R. A. (1975). An economic framework for fertility analysis. Studies in Family Planning, 6(3), 54–63.
• [30] Ehrlich, P. (1968). The population bomb. New York: Ballantine.
• [31] Ehrlich, P. R., & Holdren, J. P. (1971). Impact of population growth. Science, New Series, 171(3977), 1212-1217.
• [32] Feyrer, J. (2008). Aggregate evidence on the link between age structure and productivity. Population and Development Review, 34, 78-99.
• [33] Guinnane, T. W. (2011). The historical fertility transition: A guide for economists. Journal of Economic Literature, 49(3), 589-614.
• [34] Hayes, G., & Jones, G. (2015). The impact of the demographic transition on socioeconomic development in Bangladesh: Future prospects and implications for public policy. A Background Paper Prepared for the Bangladesh Planning Commission of the General Economics Division in Support of the Development of the 7th Five-Year Plan 2016-2020. Dhaka: The United Nations Population Fund, Bangladesh Country Office.
• [35] Headey, D., & Hodge, A. (2009). The effect of population growth on economic growth: A meta-regression analysis of the macroeconomic literature. Population and Development Review, 35(2), 221-248.
• [36] Helal, M., & Hossain, M. A. (2013). Four decades of economic development of Bangladesh: An assessment. Journal of the Asiatic Society of Bangladesh (Hum.),58(2), 335-362.
• [37] Hock, H., & Weil, D. (2012). On the dynamics of the age structure, dependency, and consumption. Journal of Population Economics, 25(3), 1019-1043.
• [38] Hossain, A., & Zeitlyn, B. (2010). Poverty, equity and access to education in Bangladesh (CREATE Pathways to Access, Research Monograph No. 51). Brighton: University of Sussex.
• [39] Hurd, M. D., & Yashiro, N. (Eds.). 2007. The economic effects of aging in the United States and Japan. Chicago: University of Chicago Press.
• [40] ILO. (2012). Bangladesh skills snapshot 2012: National skills survey phase 1. Dhaka: International Labour Organisation, Country Office for Bangladesh.
• [41] ILO. (2013). Bangladesh country report: Trade and employment. Dhaka: International Labour Organisation, Country Office for Bangladesh.
• [42] Kapsos, S. (2005). Estimating growth requirements for reducing working poverty: Can the world halve working poverty by 2015? (Employment Strategy Paper 2004/14). Geneva: International Labour Organisation, International Labour Office.
• [43] Kar, D. & Spanjers, J. (2015). Illicit financial flows from developing countries: 2004-2013. Washington, DC: Global Financial Integrity.
• [44] Kelley, A. C., & Schmidt, R. M. (1995). Aggregate population and economic growth correlations: The role of the components of demographic change. Demography, 32(4), 543-555.
• [45] Khan, A. R. (2005). Growth, employment and poverty: An analysis of the vital nexus based on some recent UNDP and ILO/SIDA studies (DESA Working Paper No. 49). New York: United Nations, Department of Economic and Social Affairs.
• [46] Khuda, B., Barkat, S., & Roy, D. (2014). Population and development challenges in Bangladesh. In R. K. Mishra, J. Raveendran, & K. N. Jehangir (Eds.), Social Research in India and Selected Geographies. Delhi: Routledge.
• [47] Kirk, D. (1996). Demographic transition theory. Population studies, 50(3), 361-387.
• [48] Kuznets, S. (1967). Population and economic growth. Proceedings of the American Philosophical Society, 111(3), 170-193.
• [49] Lee, R. D. (2003). The demographic transition: Three centuries of fundamental change. Journal of Economic Perspectives,17(4), 167-90.
• [50] Lee, R., & Mason, A. (2006). What is the demographic dividend? Finance and Development, 43(3), n. p.
• [51] Lee, R., & Reher, D. (2011). Introduction: The landscape of demographic transition and its aftermath. Population and Development Review, 37, 1-7.
• [52] Legatum Institute. (2016). The Legatum prosperity index. London: The Legatum Institute.
• [53] Macunovich, D. J. (1998). Fertility and the Easterlin hypothesis: An assessment of the literature. Journal of Population Economics, 11(1), 53-111.
• [54] Malthus, T. (1798). An essay on the principle of population. London: J. Johnson.
• [55] Mason, A. (2001). Population change and economic development in East Asia: Challenges met, opportunities seized. California: Stanford University.
• [56] Mason, A. (2005). Demographic transition and demographic dividends in developed and developing countries. United Nations Expert Group Meeting on Social and Economic Implications of Changing Population Age Structure (pp. 81-102). New York: United Nations.
• [57] Mason, A., & Lee, R. (2007). Transfers, capital, and consumption over the demographic transition. In R. Clark, N. Ogawa, & A. Mason (Eds.), Population Aging, Intergenerational Transfers and the Macroeconomy (pp. 128-162). Cheltenham, UK: Edward Elgar Publishing.
• [58] Mason, K. O. (1997). Explaining fertility transitions. Demography, 34(4), 443-454.
• [59] Mincer, J. (1984). Human capital and economic growth. Economics of Education Review, 3(3), 195-205.
• [60] NIPORT. (2016). Bangladesh demographic and health survey 2014. Dhaka: National Institute of Population Research and Training (NIPORT), Mitra and Associates, and ICF International.
• [61] Osmani, S. R. (2015). Linking equity and growth in Bangladesh (Background paper prepared for The Seventh Five Year Plan of the Government of Bangladesh). Dhaka: The Government of Bangladesh.
• [62] Padda, I. H., & Akram, N. (2010). Fiscal policy and growth nexus: Scenario of developing economies. The Empirical Economics Letters, 9(4), 405-412.
• [63] Pool, E. I., Wong, L. R., & Vilquin, É. (Eds.), (2006). Age-structural transitions: Challenges for development. Paris: Committee for International Cooperation in National Research in Demography.
• [64] Rahman, M., Khan, T. I., & Sabbih, M. A. (2016). Education budget in Bangladesh: An analysis of trends, gaps and priorities. Dhaka: Campaign for Popular Education (CAMPE) and Centre for Policy Dialogue (CPD).
• [65] Raihan, S. (Ed.). (2016). Structural change and dynamics of labor markets in Bangladesh: Studies on labor and employment. Dhaka: South Asian Network on Economic Modeling (SANEM).
• [66] Sachs, W. (Ed.) (1997). The development dictionary: A guide to knowledge as power. Telangana, India: Orient Blackswan.
• [67] Schultz, T. W. (Ed.). (1973). New economic approaches to fertility: Proceedings of a Conference, June 8-9, 1972. Journal of Political Economy, 81(2, Part II).
• [68] Simon, J. L. (1981). The ultimate resource. Princeton: Princeton University Press.
• [69] Streatfield, P. K., & Karar, Z. A. (2008). Population challenges for Bangladesh in the coming decades. Journal of Health, Population and Nutrition, 26(3), 261-272.
• [70] Tamura, R. (2006). Human capital and economic development. Journal of Development Economics, 79(1), 26-72.
• [71] Thakur, V. (2012). The demographic dividend in India: Gift or curse? A state level analysis on differing age structure and its implications for India’s economic growth prospects (Working paper series 2012, No. 12-128). London: Development Studies Institute, London School of Economics and Political Science.
• [72] The Conference Board. (2014). Total economy database: Key findings. Retrieved from https://www.conference-board.org/data/ economydatabase/.
• [73] Titumir, R. A. M., & Hossain, J. (2003). Learning for skill formation and employability: A strategic framework for informal sector in Bangladesh. Journal of the Institute of Bangladesh Studies, XXXVI, 17-38.
• [74] Toufique, K. A. (2014). Labour market transition of young women and men in Bangladesh (Work4Youth Publication Series No. 13). Geneva: International Labour Organisation (ILO).
• [75] UNECA. (2013). Creating and capitalizing on the demographic dividend for Africa. Proceedings from CoM 2013: “Industrialization for an Emerging Africa”, 21-26 March 2013. Abidjan: United Nations Economic Commission for Africa.
• [76] UNFPA. (2015). The impact of the demographic transition on socioeconomic development in Bangladesh: Future prospects and implications for public policy. Dhaka: The United Nations Population Fund, Bangladesh Country Office.
• [77] United Nations. (2015). World population prospects: The 2015 revision, key findings and advance tables (Working Paper No. ESA/P/WP.241). New York: United Nations, Department of Economic and Social Affairs, Population Division.
• [78] Walker, J. R. (2012). Malthus: Theories of demographic transition. Economics 623, Spring 2012, 1-3.
• [79] Wang, F., & Mason, A. (2008). The demographic factor in China’s transition. In L. Brandt & T. G. Rawski, China’s great economic transformation (pp. 136-166). Cambridge: Cambridge University Press.
• [80] World Bank. (2015). Bangladesh development update: Economy moving forward despite challenges. Retrieved from http://www. worldbank.org/en/country/bangladesh/publication/bangladeshdevelopment-update-economy-moving-forward-espite-challenges.
• [81] World Bank. (2016a). Development goals in an era of demographic change. Washington, DC: Global Monitoring Report 2015/16.
• [82] World Bank. (2016b). World development indicators data set. Retrieved from http://data.worldbank.org/data-catalog/worlddevelopment-indicators.