Issues Magazine

Asian Population Transitions

By Graeme Hugo

Asia is currently home to four billion people and looms large in any consideration of global population.

In 2012 the federal government’s Australia in the Asian Century report described the pace and scale of change in Asia as “staggering”. The report was referring to the spectacular economic growth of countries like China, yet the transformation of the region’s population has been equally substantial. Moreover, it is very significant as both a major cause and consequence of the economic, social, political and environmental change that attracts so much attention.

Fig 1

Any discussion of the kind undertaken here is beset with a number of difficulties. In particular, the vast size and cultural, ethnic, political, religious and economic complexity of the Asian region makes it difficult to generalise. Countries in the region range from the Maldives (320,000) and Brunei (406,000) to China (1.35 billion), India (1.26 billion) and Indonesia (241 million), three of the world’s four largest countries that account for more than 40% of the globe’s inhabitants (Fig. 1). It has some of the world’s poorest nations such as Nepal (gross national income per capita at purchasing power parity in 2010 of US$1210), Bangladesh (US$1810), Afghanistan (US$1060) and Myanmar (US$1950) as well as wealthy nations such as Japan (US$34,610), Hong Kong/China (US$47,480) and Singapore (US$55,790). There are vast nations such as India and China and tiny countries that are virtual city-states such as Singapore. Inevitably there will be generalisation here, but the huge variation between countries and also within nations must always be borne in mind.

Table 1

The Demographic Situation in Asia

Although there is enormous diversity between and within the nations of Asia, Table 1 gives some indication of the scale and direction of demographic change for the entire region. Since 1970 the population of the region has more than doubled but the annual growth rate of the population has halved over that period. This has been due to a remarkable decline in fertility that has seen the average number of children borne by Asian women more than halve from 5.4 in 1970 to 2.1 in 2011. The average life expectancy has increased by more than 15 years over the same period. This has seen a substantial reduction in the proportion of Asians who are dependent children and a 75% increase in the share made up by the elderly. At the same time there has been a substantial redistribution of population so that more than 40% now live in urban areas compared with less than a quarter 25 years ago.

These shifts have been caused and in turn influenced by significant changes associated with rapid economic growth and structural change, globalisation, massive social change and political developments. There is little evidence of a slowing down in the pace of demographic change in Asia. Indeed, many of the trends evident in Table 1 will increase in both intensity and complexity, so their implications are likely to be even more striking.

These average trends, however, disguise considerable variation between individual countries. Overall population growth rates remain high (2–4%) in countries like Timor Leste, Cambodia, Afghanistan, Nepal, Pakistan and the Philippines. However, they are low over East Asia (0.5%) and South-East Asian countries like Indonesia (1.1%). In India, current rates of growth (1.4% per annum) are three times higher than China so it will become the largest global nation in 2030. The reduction in population growth has been most pronounced in East Asia and parts of South-East Asia, and least in South Asia and the Pacific.

At the base of this decline in population growth has been the dramatic reduction in fertility levels, which have exceeded most expectations of a quarter century ago. All Asian countries experienced a decline in fertility over the past quarter of a century. Indeed, in many countries in the region fertility levels have more than halved over that period. Some substantial declines in fertility (97–98%) have occurred in the three largest countries in the region – China, India and Indonesia. In the mid-2000s the average expectation of life at birth for a baby born in the ESCAP (Economic and Social Commission for Asia and the Pacific) region was 67 years if male and 72 if female. This is still well below levels in Western Europe (77 and 83) and North America (75 and 81) but it represents a substantial improvement over the past four decades.

Although in many cases the data are poor and, as Ruzicka (1983, p.4) points out, should be “interpreted as representing the central point of a range of possible values rather than an exact actual level of mortality”, the life expectancies indicate that several countries have recorded very substantial increases in life expectancy during the post-World War II period. There are still, however, substantial differences in mortality ranging from life expectancies of 79 and 86 years for women in Japan to 44 for males and females in Afghanistan. In Malaysia, Singapore and Brunei, where life expectancies are now in excess of 70 years, it is clear that standards of living and provision of health services have advanced to the levels typical of Euro-American societies. In the countries with life expectancies in the sixties (such as for males in Thailand, Philippines and Indonesia) there are indications that, despite growth in prosperity, government spending on health has been limited and there is a need for major improvements in provision and access to health services to substantially reduce mortality further. The legacy of long years of conflict and dislocation is still seen in high levels of mortality in Afghanistan, Burma, Cambodia and Laos.

Impacts on the Workforce

The differences in timing in the commencement of fertility decline and the extent of fertility decline and mortality decline have substantial impacts on the age structure of nations. In the early stages of the demographic transition – with high mortality and fertility – the age pyramid is broad-based but with a relatively flat slope because of the attrition of mortality. As mortality declines and fertility remains high the broad base of the age pyramid is maintained through older age groups. However, as fertility decline begins, the age pyramid is undercut, with smaller numbers being born into the youngest age groups.

In Asia, shifts in fertility, and to a lesser extent mortality, have been profound influences on age structure. For much of the past half-century, Asia’s age pyramid has been dominated by the child age groups due to high fertility and relatively high mortality. However, the onset of rapid, widespread and substantial fertility decline has seen a significant reduction in the dominance of younger age groups.

The undercutting of the age pyramid by rapid fertility decline has created what has been called the “Asian youth bulge” (Fuller and Hoch, 1998). As Westley and Choe (2002, p.57) point out, the “youth bulge … is the result of a transition from high to low fertility about 15 years earlier. The youth bulge consists of large numbers of adolescents and young adults who were born when fertility was high followed by declining numbers of children born after fertility declined.”

Table 2

Table 2 depicts the changes in the 15–24 age group that have occurred, and are anticipated to occur, between 1960 and 2040 in Asia. This depicts the passage of the youth bulge and indicates that in 1960 Asia’s youth population numbered 282 million and constituted 17% of the total population. However, over the next two decades it grew very rapidly and by 1985 had more than doubled in number and reached a peak of 20.5% of the total population. Subsequently, the growth of the age group has been lower as the effects of the decline in fertility have been felt. Hence, in 2010 the Asian youth population had reached 718 million but its proportion of the population declined to 18.3%.

The outlook for the future is for the youth population to decline slowly to 644 million in 2020 and to 634 million in 2040, when they would make up 13.4% of the total population. The ratio of youth to older adults has shifted from 1:2 in 1970 to 1:3 in 2005.

Fig 2

The youth bulge phenomenon has occurred in most Asian nations. Figure 2 depicts the proportion of the national population of six countries made up by 15–24 year olds over the 1950–2050 period. In Japan, fertility decline began in the 1950s so the proportion aged 15–24 peaked in 1965 and then declined dramatically. In Korea, fertility decline commenced in the 1960s so the youth peak occurred in 1980. In India and Indonesia, fertility decline began in the 1970s so the youth peak was in 1990. In Laos, fertility decline did not begin until much later so it is anticipated that the peak will occur in 2010. East Timor, on the other hand, has experienced massive disruption and mortality in its population in recent decades, so it has experienced fluctuations in the proportion made up by the youth population.

Despite these variations, Westley and Choe (2002, p.57) pointed out that between “1960 and 2000, the number of adolescents and young adults doubled or more than doubled in nearly every country in Asia. The only exceptions were China, Japan, North Korea and Kazakhstan.”

The Asian youth bulge represents “a ‘boom’ generation – a generation that is larger than those immediately before and after it – that is gradually working its way through nations’ age structure” (Bloom, Canning and Sevilla, 2003, p.xii). The passage of this bulge through the age structure can produce a “demographic dividend” of economic growth when the bulge passes into the working age groups, and as a result the workforce grows faster than the overall population. This increases the proportion of the national population within the working ages. As Bloom et al. (2003, p.xi) point out, this “can effect virtuous cycles of wealth creation”.

However, one of the major impacts of the decline in fertility and mortality in the ESCAP region over the past quarter century has been the beginnings of a significant long-term shift in the age distribution of the population in most countries in the region. All nations are to a greater or lesser extent experiencing an ageing of their populations, and the proportion of the population aged 65 years or over is increasing while the number aged less than 15 is decreasing. Overall, as Table 1 showed, the proportion of the population aged less than 15 years declined from 40% in 1970 to 25% in 2011. The bulk of the redistribution in the age structure has been to the working age groups from 56% in 1970 to 68% in 2011, resulting in a considerable improvement in dependency ratios and potentially delivering a “demographic dividend”. However, the population in the peak mobility age groups (15–34) grew from 31.4% in 1970 to 36.8% in 1995 but fell to 34.3% in 2010.

In summary, the following trends can be identified in the Asia–Pacific population:

  • The workforce-age population in Asia is currently growing at around 1.5% per annum – slightly above the world average.
  • Asia’s rate of growth will decrease sharply over the next two decades, and the growth rate will have fallen by two-thirds by the late 2020s.
  • The pattern is even more dramatic for the migration-prone 15–34 age groups, which are currently growing at less than half the rate of the workforce as a whole and will begin to decline in the 2020s, albeit at a very slow rate.

The Demographic Dividend

While there is considerable variation between countries, the Asia–Pacific is currently set to experience a demographic dividend with the opportunity to increase economic growth. This is because rapid and sustained declines in fertility has meant that the last large high-fertility cohorts are entering the workforce ages while there are decreasing numbers of dependent children and still small numbers of dependent elderly aged persons (Mason and Lee, 2006; Mason, 2007; Pool, 2006; Wang and Mason, 2007). This has meant the ratio of working age to non-working age population has reached a peak.

While this does not automatically confer a dividend of enhanced economic growth if there is an unfavourable policy environment, several empirical studies of Asian countries have confirmed that a dividend has resulted. For example, it has been shown that a high ratio of workers to dependents in China has contributed between 15 and 20% of economic growth during the reform era (Peng, 2005; Wang and Mason, 2007).

It is not just that the passage of the “Asia youth bulge” into the early workforce ages has created a highly favourable dependency ratio. Almost all Asian youth have experienced some formal education and are easily the best educated generation of young people in the region. While post-school formal education has remained the prerogative of a privileged elite in many nations, there has been a spectacular increase in the intergenerational differences in educational attainment. This has meant that there are not only more workers for each dependent than in past generations but also that their per capita productivity is considerably greater.

The same process concentrating population in the ages that deliver a demographic dividend – the twenties and thirties – has important implications for migration. This is because one of the most universal findings in migration research is that peak mobility is concentrated in the twenties and thirties age groups.

The rapid growth of the twenties and thirties age groups in Asia and the Pacific has coincided with unprecedented opportunities for international migration. This raises the question: what are the demographic dividend implications if a substantial number of the Asia–Pacific youth bulge do not remain in their own countries? There are a number of potential impacts:

  • Other things being equal, it would seem that emigration of young workers would dampen the magnitude of the demographic dividend. This would occur not only because it would decrease the number of workers for each dependent but also because migration is selective of the more productive young workers.
  • On the other hand, the countries with net gains of immigrants will benefit as the demographic dividend passes from the origin to the destination country, and the ratio of workers to dependents would improve.
  • However, the increasing literature on migration and development (Lucas, 2005; World Bank, 2006) suggests that in many cases the emigration of workers does not necessarily mean that their contribution to their source country economy is lost because:
    • they send back remittances;
    • they encourage foreign direct investment;
    • they send back knowledge, information and new ways of doing things; and
    • they return permanently, temporarily and virtually.
    • The literature suggests that the extent to which Asian and Pacific countries can benefit from their demographic dividends is dependent on them putting in place a favourable macro-economic policy environment (Bloom, Canning and Sevilla, 2003, p.42). One of these policy elements, which has gained little attention in the past, relates to migration. There is a real chance that for many poorer Asian countries a significant part of their demographic dividend may accrue to more developed countries, which are able to attract young and skilled nationals.

      Clearly, coming up with an appropriate mix of macro-economic, human resource, social and migration policies is crucial to maximising the efforts of the demographic dividend.

      Reference details are available from the author on request (