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World Bank | The Development Podcast
What Do Shifting Demographics Mean For Future Development?
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Foreign.
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Hello and welcome to the Development Podcast with me, Tony Kherasani. Today on the show, from demographic dividends to silver tsunamis, we're looking at worldwide population shifts. We'll unpack what's needed for the African continent to harness a growing young population to produce rapid economic growth and why aging populations and falling birth rates are challenges in other parts of the world. Plus why data, data and data are key to planning for these demographic shifts.
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If we're not investing in them now, we're going to really struggle to be able to deliver on that demographic dividends in the next couple of decades.
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This is an opportunity. With the right types of policies, with the right types of access to education and healthcare and infrastructure, the sub Saharan African countries can transform the number of young people in their countries into an engine for growth.
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All this in today's episode of the Development Podcast from the World Bank Group Demographic dividends, aging populations, low birth rates, not necessarily things you'll be discussing around the family dinner table. But these things matter to all of us. Why? Well, if a country has too few people of working age, then who is going to do the jobs a society needs to function? And let's be realistic, robots still have a long way to go. There are other issues too. Like, like who's going to pay for health care or pensions? Where is taxable income for public services in general going to come from? When birth rates fall, populations can dip below what's called a replacement rate, meaning they're effectively shrinking. And we know that the rate of the global population is already slowing down. On the African continent, however, there are more young people than old and populations are growing. In fact, in sub Saharan Africa, the population is expected to double over the next 25 years. And with that comes increased demand for food, jobs and access to government services. So how do young people in two very different parts of the world feel about their economic prospects and the way that demographics impacts their lives? Our producer Sarah caught up with one young woman in Ghana, which is a growing country with a very young workforce. And another in Korea where the population is shrinking. Let's start in Accra, Ghana.
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The sounds of the vast and busy Canto market in Ghana's bustling capital.
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Across.
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Cantamanto is West Africa's largest second hand clothes market with more than 30,000 traders.
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Cantamanto is a world inside a world and there's just so much music because there's all these different stalls and sections and each one is its own sort of community.
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Katya Osei is an ambitious young professional in her twenties. She works with the non profit or foundation which promotes a circular economy approach to textiles. The foundation works with people who depend on Cantomanto for their livelihoods.
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I was born and raised in a town called Takaradu. And When I was 17 I got into Harvard to study bioengineering. And I guess deep down inside I still feel like I have to pay off that debt. Maybe that's why I'm. I came back to Accra.
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And what do many young people in Accra feel about their economic prospects?
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So a lot of people, a lot of young people especially are into circularity and are into sustainability, but also from the point of view of just being in survival mode, there are young people who have to go and clean out the drainage and pull out the plastic from the rivers and the oceans because our city's flooding.
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And what about the jobs market?
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Just as a whole on the planet, Young people everywhere are terrified of being unemployed. But interestingly in Ghana, so we can get all of this education, but our options are more limited. And so there is perhaps more of a reluctance to enter a lot of these more labor intensive jobs that would have been great 10, 30 years ago. So even if you are a cacao farmer, you're tied down by the weight of global prices. Even if you are a gold miner. There's just so many layers there. And so it's just a very complicated place where our economy is still trying to figure its place in the global economy. And we're young people still trying to figure our place in this economy. So maybe it's harder for us. But I've also seen like I've. Ghanaian people are some of the most creative people I've ever known. And I've seen people find jobs and beauty and art in the most unusual places. It's just so beautiful being in Accra and just seeing how people have found, yeah, so many amazing things in that feeling of, I would say maybe fear of the future, but also just very much living in the now and trying to create happiness and joy.
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What we have now.
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Well, let's travel now from Ghana with its young and growing population to Korea where the birth rate has been declining and the population is one of the oldest in the world. Korea, of course, is one of only a few countries to have transformed from a low income country to a high income country.
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Hello everyone, I am Ju Young Yang at the KDI Korea Development Institute and I'm an economist.
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Ju Yong tells me why in many ways an aging population is the result of, of good healthcare, access to services and Economic growth, it is a success story.
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So definitely more access to healthcare or even public health care service is more available in my age compared to my parents, my grandparents and even my parents age.
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And what about the birth rate? How do you see these conversations play out amongst your friends and family? For example, right after World War II.
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And Korean War actually Korea's fertility was quite high. So the government had this campaign where oh, don't have too much children, Only two children is enough. So for a household, if you have too many children, it's hard to invest individual. There's definitely some young folks who say, oh, I just don't want to have any children even though I get married. Raising children itself is quite expensive. In Korea, a Korean government has been spending quite a lot to promote facility especially for young generation. So that and also in almost every municipality in Korea, they provide baby check giving money to raise their children.
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And how do you feel, Ju Yeong, about working longer potentially into old age? Is that something you think about even though you're only in your 20s yourself?
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Sometimes I do think I need to work if necessary, if needed, even after I retire. And sometimes I talk with my colleague about extension of retirement age and then we all say, oh, I'm yeah, that's a good idea. I would glad to work longer if that is possible.
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Thanks Juyoung and Katya, great to hear from them both. So a snapshot there of a really interesting global picture. But what does this mean for development and why is data so crucial? I caught up with one man who knows a thing or two about the stats. We're joined today by Craig Hammer from the Development Data Group. Craig, could you tell us a little bit about your job here at the World Bank Group and how did you get there?
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Sure, Tony, and thanks for having me. Well, the Development Data Group and the office of the World Bank Group Chief Statistician is a wonderful place to work if you are obsessed with the intersection of data and decision making as I am. And I have the benefit of working with a lot of people who are similarly obsessed. I also manage the new Data360 platform which is the Bank's gateway to development. Data brings together about 300 million development data points into one place to help drive evidence based decision making. And so it's a wonderful place and a great opportunity to put data to work for development and I'm lucky to work there.
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Sounds like a really interesting team. Can you give us an example of something a partner might look up on the Data360 platform? Sure.
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I mean, what can't you look up the DC60 platform? It's the locus of the World Bank's development data on a range of key development topics. If you're interested in jobs, you can look at youth employment rates from country to country. You can compare countries both to each other to their regions, you can look at global trends. We have time series data that goes back 50 plus years. It's a wealth of information and it is meant to help power decision making in our client countries and around the world.
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Fantastic. So when we think about the global population, most of us assume the population's always growing, and we've heard so much about aging countries, but what are the trends now in terms of population age and birth rates?
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It's a great question. So what we know is that the global rate of population growth is slowing down. So in 2020, the population growth rate slipped to under 1% for the first time in 70 years. So that means in some parts of the world, you have some countries where you have an aging population, but in other parts of the world, you have a younger population. And this really matters for the work of the bank to think about what type of information and policies matter most in ways that were relevant to those two realities. So take for example, the United States. The median age in the US right now is 38. The median age in Western European countries is 42. Median age in Japan is 48. What do you think the median age is in sub Saharan Africa?
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30, maybe 19. Wow.
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So you have aging populations in some parts of the world, notably the richer parts of the world, and you have people in Sub Saharan Africa, a larger number of young people. Now this is an opportunity. With the right types of policies, with the right types of access to education and healthcare and infrastructure, the Sub Saharan African countries can transform the number of young people in their countries into an engine for growth. This is why it's called the demographic dividend. We've seen this before in South Korea, in China, where the application of enough support and resources, training, skills development can transform a large number of young people into engines for growth. It doesn't happen by itself. And what's really important right now is we have about 25 years before the population of Sub Saharan Africa doubles. It's going to go up to about two and a half billion people from about 1.4 right now. And so planning forward, putting in place the right types of policies, driven by data and evidence are crucial right now. And that's also a mixed story right now as well.
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That is fascinating. In the D.C. area, everywhere I look There are senior living centers popping up. And so when you're talking about this, I'm just imagining, does Africa have enough schools and vocational training centers for this age boom?
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So I mean, it's another interesting combination of realities where this is in part a bit of a human success story. People are living longer in parts of the world because they have access to healthcare and medicine and science. And there are, the result is you have a large number of older populations living in parts of the world. And it's another interesting conversation to be talking about where dependencies may be as we think forward in the next 20 to 25 years. They say Africa has the capacity to be the breadbasket of the world. If we're thinking about access to new opportunities, if we're thinking about agribusiness, we're thinking about job growth creation. Sub Saharan Africa has, has huge potential to be able to feed the world and provide opportunities to support and care for aging populations in other parts of the world.
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Thank you, Craig. What does this mean in terms of policy, in terms of development?
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Well, if we're thinking about this, the demographic dividend, it really requires substantial investments in education, in healthcare and infrastructure in sub Saharan African countries that will enable these populations, these younger populations to really flourish, to contribute to and benefit from economic growth in their societies. And there is a good indication about where the largest amount of growth will happen. As we are thinking about the rates of population growth in some parts of the world, we know that five of the eight countries where most of the population growth will happen are in Africa. It's Nigeria, Ethiopia, Egypt, DRC and Tanzania. And so there's an opportunity to think about what the levels of investment in education and healthcare and infrastructure in those countries are, in particular, not excluding other countries in the region, but understanding forward that there'll be many, many more young people in these countries in the next few decades and planning forward by organizations like the World bank in partnership with countries can really, really these the countries themselves to benefit from their growing populations and for the countries and the young people who live there to rise to their potential.
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You talked a bit in the beginning about your obsession of the link between data and decision making process. So what is the role of data in this in terms of why does it matter that we have accurate and up to date data on these issues?
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Because data is the raw material that drives decision making. I think that what we say is data can really power development through evidence based decision making and policy making processes. You have to know where your populations are and what they are experiencing in order to be able to plan for them and create policies that meet them where they are and provide what requirements they have. So if we're thinking about how much data there is in the world right now, I think you've probably heard many people that there's more data right now produced in the last year than has been ever produced in human history before. That's correct. But just again, to stay in the sub Saharan African context or the broader development country context, we know, for example, that we don't have data on birth registrations for more than 200 million children around the world. You know, in the United States you're born, you get a Social Security number and you are on the grid for public services. That's how you get access to education. That's how you can get access to health care. There are more than 200 million children around the world whose births have not been registered. This is a break on how these children will rise to their potential in their future. We don't have comparable reading assessments for more than 750 million children around the world. We don't have data on stunting for more than 300 million children around the world. There is this gap that there are these gaps that have to be filled in order for institutions like the bank and our country partners to be able to provide the value that that these children need.
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How is the World bank working to address these challenges?
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Well, to stick with this question of how we fill gaps on children, adolescents and youth, the World bank and UNICEF are embarking on a new partnership to be able to identify which are the most mission critical data gaps. It's a program called the Minimum Data Package for Children, adolescents and Youth. It doesn't exactly roll off the tongue, but it tells you exactly what it is. It's what are the most important foundational data that are necessary to drive and enable decision making that would benefit and enable flourishing of children, adolescents and youth across developing countries. And it's important for the Organization, for the World bank and for our partners to invest more in closing these data gaps and in putting those data to work for policy and decision making processes that are going to enable the job growth revolution in Sub Saharan Africa and around the world.
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Greg, thank you again. This has been incredibly insightful. I've learned so much and it's really great to better understand how data drives decisions both for the World bank group and our partners. Let's find out a bit more about that partnership with UNICEF that Craig mentioned and some new research called Children and Monetary Poor Households. Sarah Hague in Nairobi is UNICEF's Regional Advisor on social and and economic policy in east and Southern Africa, Sarah. A new joint analysis by the World Bank Group and UNICEF finds that sub Saharan Africa remains the epicenter of extreme child poverty. In 2024, over 52% of children lived on less than $3 per day, virtually unchanged from 2014. As we have been discussing, Africa is the only continent where the young population is expected to grow significantly by 2050. What does all of this mean for development?
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So, firstly, thanks for having me. It's a pleasure to be here. So, indeed, this is a joint World Bank UNICEF publication. We've got a new poverty line which estimates world poverty for children a little bit differently than we've done before. And globally, it's a bit of a positive story. So we can see across the world that we have managed to reduce the numbers of poor children living in extreme poverty by around 100 million over the last 10 years. So that's sort of the big headline for this publication, that we've gone from around one in four children globally living in extreme poverty to around one in five. So 100 million children are not in poverty today than they would have been 10 years ago. So that's good. But it does mean that as things progress, it gets harder, right? It gets harder to reduce poverty over time. It's children living in more isolated areas. And what this publication also confirms is that ironically, even though children are more vulnerable to poverty, you know, they're the group that you perhaps most want to protect from poverty. They're much more likely to be living in poverty today. So they make up around 30% of the global population, but children represent half of the population living in extreme poverty. So sounds pretty unfair. And then you were asking about Africa, Tony. And so that's where I'm based. I'm here in Nairobi, covering the east and southern Africa region. And I think there are some concerns in relation to the progress in Africa. The level of poverty has not really dropped. It's stayed pretty stable over the past 10 years. But that means we've started to see the concentration of child poverty here in Africa. So other regions have made faster progress. So it means that the majority of children living in child poverty around the world, they're now in Africa. They're now African children. So around 10 years ago, around half of poor children were African children. Now it's 3/4 of children globally that live in extreme poverty. They're here in the African continent. But there's a positive story there as well, which I can also talk about, because there has Been a of lot. A lot of progress in this continent, too.
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Well, I'm curious to hear. Please tell us what progress has been made.
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We looked at 45 countries in Africa in this publication. 28 of them are seeing reductions in child poverty. So that means, on average, child poverty across the continent is staying stable. But the majority of countries are making progress. They are reducing child poverty. And some countries are making huge progress. If we look at Benin, for example, they've managed to slash child poverty rates over the last decade. Even just in three years, they managed to cut child poverty by 30%. And there are lots of other countries like that, Cote d', Ivoire, Namibia, Rwanda, Senegal, Togo. So there are these positive stories there. But when you average everything out together, there are larger countries which are in very difficult situations, big countries with big child populations, and they're facing a lot of fragility, a lot of conflict. And of course, they're not reducing child poverty. So those countries drag down the overall average. But for me, I think it's a positive story.
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How can we prioritize children in efforts to reduce extreme poverty? What does that look like exactly?
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It's either a very simple answer or it's a very complicated answer. So it depends which one you want. But I think the simple answer is a bit like I was just saying, there are countries that are doing it. There are countries that have achieved not small reductions in child poverty, but as much as 50, 60% cuts in child poverty over the past 10 years. So if you look again at Benin or Cote d', Ivoire, these are countries that are seeing relatively high levels of economic growth. They're focusing on the efficiency of public spending, and then they've done a lot of work in putting in place key policies which are often missing or completely underfunded in other countries. So we all know about the benefits of education, primary health care and so on, but we don't often go into the details and think about particular policies which are very underfunded but can have a real impact on reducing child poverty. That things like early childhood education, so getting children ready for school before they get to their primary level, or things like childcare, which is good for the children, but it's also good for the parents, particularly the mothers, and frees up women to go out to work, or things like social protection, family benefits. If you've had children, you need that income support, you need that financial support to help you raise your children. And unfortunately, in a lot of countries across the continent, we're just not seeing the level of coverage of these Types of policies. If you take social protection as an example, on average in low and middle income countries, they spend around 5.4% of their GDP on social protection. Whereas in this region where I am in eastern southern Africa, it's only 2% of GDP. So we're just not spending enough on some of these lesser known, very targeted policies that could really support children to get out of poverty. And I think the last thing I'll add on to answer your very difficult question, by the way, is that it also comes down to governance.
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A UNICEF report last year identified the role of public finance in driving equitable development across the continent. What key factors do governments need to address in relation to public finance, bearing in mind megatrends such as demographics, climate change, and technology?
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Okay, that's another big question. So indeed, we did a publication last year with colleagues from the Learning for Wellbeing Institute, and we look at very simply at one thing. How is public finance distributed by age? So we looked at Africa as a whole and we compared it with all of the countries in the G20. When we looked at all of the countries in the G20, we found that on average, those countries spend fairly equal amounts across the life cycle of a child, from zero all the way up to 18. Then when we looked at Africa, we saw a completely different story. The vast majority of spending in Africa on average goes to all older children. So that's largely education spending, secondary education spending. Just 6% of national social spending on children was going to the under five. So it's about a third or a quarter of what G20 countries were spending on average, proportionally speaking. So these megatrends that you were talking about, climate change, it's increasing vulnerability. Technology, it presents a potential huge opportunity. But if we're not investing in children now, we're gonna have real trouble later down the line preparing for those opportunities later. And that's a question, I think, of demographics.
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A final quick thought. What impact do aging populations, which is the general trend in terms of world demographics, have on the future of children?
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There's different stories in different continents, right? We do have a more aging population in Europe and Asia, in America and so on in Africa. We're talking about the potential demographic dividend to come. So I'm sure you know this statistic because everyone keeps repeating it, that by 2050, Africans will make up one third of the world's workers, right? So one third of people in the labor force globally will be Africans. So there's a lot of hope that this huge labor force is going to bring a return. It's going to bring a dividend to the continent. And I absolutely hope this as well is it's just it's not going to be automatic. So we need to have something in place now to make sure that this future workforce that by 2050 those people have the skills and the human capital to be able to deliver on that demographic dividend. So who is the Labor Force in 2050? It's going to be, you know, the babies and the very young people, the very young children who are being born now. So if we're not investing in them now, if social spending is not targeting the youngest children, if key policies like early childhood education, childcare, family benefits, if they're not there in place across these countries in Africa, then we're going to really struggle to be able to deliver on that demographic dividend in the next couple of decades.
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Many thanks again to Sarah and to Craig. That's all for this episode. Please like and subscribe. We'll see you soon.