Various studies on the policy implications of demographic change in national and Community policies LOT 5 Global Population Ageing, Migration and European External Policies Final report Contract VC/2005/0637 November 2006 Bo Malmberg Institute for Futures Studies Stockholm Sweden 1 Team of experts Bo Malmberg Kristof Tamas David Bloom Rainer Munz David Canning 2 © Institutet för Framtidsstudier, 2006 ISBN [Klicka här och skriv ISBN nr] ISBN [Klicka här och skriv ISBN nr] Textbearbetning och produktion: [Klicka här och skriv] Omslag: Carlsson/Neppelberg Tryck: [Klicka här och skriv] Distribution: Institutet för Framtidsstudier 3 Executive Summary During the last decades, it has become increasingly clear that demographic change constitutes one of the most important challenges of the 21st century. One important factor that has placed demographic change high on the political agenda is an increasing awareness of current demographic trends. Another factor that has contributed to the growing interest in demography is an emerging consensus among social scientists that demographic change is a vital trigger for social, economic and political development. The main question in this report is to what extent European external policies should be reconsidered in the light of current demographic challenges. The report is divided into three parts. In the first, introductory part, we take a look at current demographic trends. In the second part, we analyze demographic transitions and their economic, social and geo-political implications. In the third part of the report, European migration policies are in focus. The following points summarize the main findings. Some basic facts 1) Global population, which stood at 2.5 billion in 1950, has risen to 6.6 billion today. Middle-ground projections suggest the world will have 9.1 billion inhabitants by 2050. 2) These past and projected additions to world population have been, and will increasingly be, distributed unevenly across the world. Today, 95 per cent of population growth occurs in developing countries. The population of the world’s 50 least-developed countries is expected to more than double by the middle of the 21st century, with several poor countries tripling their population over the period. By contrast, the population of the developed world is expected to remain more or less steady at around 1.2 billion, with population increase in the US but stagnation or even declines in most European countries. 3) While global population continues to increase, with medium or high fertility combining with falling infant and child mortality to produce swelling cohorts of young people, that of Europe is changing in a very different way. Fertility constantly remaining below replacement level will lead to a shrinking of the region’s population, and increasing life expectancy is tilting the demographic balance from young to old, with large potential impacts on living standards. 4) The crude birth rate in both developed and developing regions has decreased by about half over the last fifty years, which means, of course, a much greater absolute reduction in developing regions. The net result of these reductions is that the crude birth rate in developing regions is now similar to that of the developed regions fifty years ago. 4 5) The reduction in mortality in developing countries since 1950 has been very rapid – so rapid that the crude death rate in developing countries is now lower than in developed countries. 6) In 1950, the total fertility rate among developing countries was over 6. Now it is below 3 children per woman. 7) Europe's situation is quite different. Halfway through the 20th century, Europe’s total fertility rate stood at almost 2.9 children per woman. Today women have an average of less than 1.5 children, well below the replacement rate of 2.1. 8) For the world as a whole, life expectancy increased from 46 years in 1950-1955 to 65 years in 2000-2005. It is projected to rise to 75 years by the middle of this century, with considerable disparities between the wealthy industrialized countries, at 82 years, and the least developed countries, at 67 years. EU25 9) The number of people over the age of 60 in the world, currently at around half the number of those aged 15 to 24, is expected to reach 1 billion (overtaking the 15-24 age group) by 2020 and almost 2 billion by 2050. The proportion of individuals aged 80 or over is projected to rise from one per cent to four per cent of the global population by 2050. Demographic aging is taking place in both developed and developing countries. In the industrialized world, the proportion of people aged 60 or over will increase from 20 to 32 per cent by 2050. In the developing world, it will rise from 8 to 20 per cent. 10) As the experiences of several regions during the past century show, an initial fall in mortality rates creates a boom generation in which high survival rates lead to many more people at young ages than in earlier generations. When fertility falls the age structure of the population then shows a "bulge" or baby-boom age cohort. This creates particular challenges and opportunities for countries, such as a large youth cohort to be educated and, later, an unusually large working-age (approximately ages 15-64) population and the prospect of a “demographic dividend”. Lee and Mason (forthcoming 2006) describe two aspects of this dividend: falling fertility, leading to there being more workers per capita and therefore potentially more resources to devote to development and to family welfare, and the extra savings that are generated when people expect a longer retirement period. In addressing some of the problems and opportunities arising from a large youth cohort (ages 12-24), Jimenez and Murthi (forthcoming 2006) stress the importance for long-term economic growth of investing in education and health of the young, and the need to ease entry into the labour market for this group. EU25 11) Migration also alters population patterns. Globally, 191 million people live in countries other than the one in which they were born. On average during the next 45 years, the United Nations estimates that over 2.2 million individuals will migrate annually from developing to developed countries. 12) A significant number of working-age people in developing countries are underemployed relative to the opportunities they perceive in developed countries. At the same time, developed countries face a declining share of working-age people and a large number of elderly who need care. These facts could lead to higher rates of migration than are predicted by the United Nations. Current immigration levels in Europe, North America and Australia also indicate that this UN estimate might be too conservative. 13) The literature on the causes and effects of international migration indicates that there are still many unanswered questions. There is only fragmentary empirical evidence on the effects of emigration on economic development. Available, comparable statistics are meagre and often of poor quality. Research suggests however that (1) whether migration enhances or impedes development differs from place to place and from time to time. Policies thus need to be adapted to national 5 and regional conditions. (2) Migration is often an integral part of poor people’s alternative livelihood strategies. There is sufficient evidence indicating that migration through remittances can reduce poverty. Migration may also lead to increased inequality if remittances strengthen feelings of relative deprivation among the excluded poor. (3) Job creation and decent working conditions seem to be key issues for improving the social and economic environment in developing countries. Better matching between labour market and education policies could contribute with positive economic growth effects as well as counteract brain drain. Development cooperation could play an important role in this regard. Aid is however not sufficient to reduce emigration pressures in the medium-term perspective. There is no consensus in international trade theory whether trade and migration are substitutes or complements. Recent studies show however that various technological trends enhance trade, and should thus indirectly foster migration. Geopolitical implications of the demographic transition 14) This study explores the possibility that demographic change can be a driving force behind global change. The approach is based both on general considerations concerning the role of demography in social and economic development, and on research results that demonstrate the importance of population change. 15) 15) The general argument rests on three observations: (1) since 1800, the world population has grown from 954 million to 6.6 million people. Life expectancy has increased from less then 30 to around 65 years. The birth rate has declined from 28 per thousand in 1750 to 9.0 per thousand in 2000-05. These demographic shifts are of such a fundamental character that they easily can be seen as one of the most important factors behind the transformation of the modern World. (2) At the time countries emerge from the decline in mortality and fertility associated with the demographic transitions, they tend to become much more similar then they are when they enter into the transition. Therefore, it is easier to explain the outcome as a result of demographic change, than to explain demographic change as a reaction to a specific set of social and economic factors. (3) Research on the decline in mortality and fertility shows that the diffusion of social and cultural innovations, and not only economic growth, play an important role. This lends further support to the notion that demographic change as such can trigger social and economic development. 16) Until the 1990s, economists and social scientists were unable to reach a consensus regarding the effects of population growth on economic development. As a consequence, demographic effects were often ignored as an explanatory factor.