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Report. the Demographic Dividend: an Opportunity for Ethiopia's ETHIOPIAN THE DEMOGRAPHIC ECONOMICS DIVIDEND: ASSOCIATION AN OPPORTUNITY FOR ETHIOPIA’S OCTOBER 2015 TRANSFORMATION www.prb.org ETHIOPIAN ECONOMICS ASSOCIATION Acknowledgments This report benefited from the analysis and thoughtful review and comments of many individuals. Assefa Adamassie and Seid Nuru of the Ethiopian Economic Association (EEA) were responsible for the overview of Ethiopia’s economic situation, programs and policies, and analysis of changes as relevant to the demographic dividend. John F. May of the Population Reference Bureau (PRB) provided the demographic analysis alongside the review of evolving public health efforts in Ethiopia. Shelley Megquier of PRB led the overall editing and review process for the report, contributing to the demographic dividend framework guiding the effort. Scott Moreland of Palladium provided and interpreted results from the DemDiv simulation tool. Thanks are also due to the following individuals for their helpful comments and contributions: Marlene Lee, program director, Academic Research and Relations, PRB; Peter Goldstein, vice president, Communications and Marketing, PRB; Heidi Worley, senior writer/editor, PRB; Jean-Pierre Guengant, director emeritus of Research, Research Unit University of Paris-I, Panthéon-Sorbonne and Research Institute for Development (IRD), Paris; and Sahlu Haile, senior scholar at the David and Lucile Packard Foundation. This publication was made possible by the generous support of the David and Lucile Packard Foundation. The contents are the responsibility of EEA and PRB, and do not necessarily reflect the views of the David and Lucile Packard Foundation. Suggested citation: Admassie, Assefa, Seid Nuru Ali, John F. May, Shelley Megquier, and Scott Moreland. 2015. “The Demographic Dividend: An Opportunity for Ethiopia’s Transformation,” Washington, DC: Population Reference Bureau and Ethiopian Economics Association. © 2015 Population Reference Bureau. All rights reserved. THE DEMOGRAPHIC TABLE OF CONTENTS DIVIDEND: AN OPPORTUNITY FOR ETHIOPIA’S TRANSFORMATION OCTOBER 2015 EXECUTIVE SUMMARY ............................................................................ 2 INTRODUCTION ........................................................................................ 2 Box 1: What Is a Demographic Dividend? ......................................3 List of Frequently Used Acronyms WHAT ETHIOPIA HAS ACCOMPLISHED ................................................. 4 CPR Contraceptive Prevalence Rate Progress in Social Sectors....................................................................... 4 CSA Central Statistical Agency Table 1: Infant and Child Mortality Rates in Ethiopia .......................4 EDHS Ethiopian Demographic and Health Survey Box 2: The Health Extension Program ............................................5 FP Family Planning GDP Gross Domestic Product Demographic Changes ............................................................................. 6 GTP-I Growth and Transformation Plan I Table 2 : Total Fertility Rates in Ethiopia ..........................................6 HEP Health Extension Program Table 3: Contraceptive Prevalence Rates in Ethiopia Among HEW Health Extension Worker Currently Married Women ...............................................................6 MoFED Ministry of Finance and Economic Development Figure 1: Population Pyramids for Ethiopia in 1990, 2005, and MOH Ethiopia Federal Ministry of Health 2030 (projection) ............................................................................7 PASDEP Plan for Accelerated and Sustained Development Box 3: What Triggered the Fertility Decline in Ethiopia? ..................8 to End Poverty PSNP Productive Safety Net Program Economic Performance ............................................................................ 9 RH Reproductive Health Table 4: Highlighting Ethiopian Policy Frameworks.......................10 TFR Total Fertility Rate Figure 2: Per Capita GDP in Ethiopia ...........................................11 Figure 3: Share of Different Sectors in Ethiopian GDP Growth .....12 NEXT STEPS TO CAPTURE A DEMOGRAPHIC DIVIDEND ..................12 How Big a Payoff Is the Demographic Dividend? ................................13 Box 4: Modeling Future Development Outcomes and DemDiv Model ..............................................................................13 Figure 4: Ethiopia 2050: Combined Investments Can Reduce Employment Gap ..........................................................................14 Figure 5: Ethiopia 2050: Investment Per Capita ...........................15 Figure 6: Ethiopia 2050: Projected GDP Per Capita Under Three Scenarios ...........................................................................15 Strengthening the Enabling Policies ....................................................16 Table 5: Family Planning Unmet Need, Use, and Demand for Spacing and for Limiting in Ethiopia .........................................17 CONCLUSION ..........................................................................................18 REFERENCES ..........................................................................................19 POPULATION REFERENCE BUREAU Executive Summary This report explores the potential for a demographic education, and economic sectors. Finally, the report explores dividend in Ethiopia. In the past two decades, Ethiopia some new pathways needed to consolidate and expand has experienced an impressive decline in fertility, enjoyed ongoing development efforts. strong economic growth, and made great strides in poverty reduction. Ethiopia has established proactive public policies Ethiopia has made remarkable progress in social sectors and to address its demographic patterns, such as programs to seen rapid demographic changes during the past decades. reduce infant and child mortality, improve education, and School enrollment at all levels has increased considerably, increase access to family planning (FP). As mortality and particularly for Ethiopian girls. In health, progress has been fertility levels decline, Ethiopia’s working-age population impressive as well. Life expectancy at birth has increased may grow in relation to the number of young dependents, and fertility has decreased from 7.2 children per woman in opening a window of opportunity for the accelerated 1990 to 4.1 children in 2014. This fertility decline has been economic growth known as a demographic dividend. triggered by a rapid expansion of contraceptive coverage Human capital investments and vigorous job growth are both (modern methods) during the same period. Last but not least, crucial to achieving the economic growth associated with a the country has also achieved significant improvements in its demographic dividend. The need to make timely investments economic performance. in human capital and the economy in order to realize a demographic dividend warrants an exploration of Ethiopia’s Ethiopia may be on the path to reach its demographic development policies and frameworks. window of opportunity and capture the potential benefits of a demographic dividend. For this to happen, however, the country By revisiting and reflecting upon the main arguments and will need to continue to improve social policies, accelerate recommendations of the 2007 World Bank report, “Capturing its demographic transition, and implement policies to foster the Demographic Bonus in Ethiopia: Gender, Development, economic growth. Improvements in female education will be and Demographic Actions,” this report examines what crucial, as well as the expansion of modern contraceptive Ethiopia has achieved in recent years and identifies areas that use to further decrease fertility. In addition, economic policies need further action and investment. This report takes stock of should encourage labor market flexibility, savings programs, socioeconomic progress, demographic change (with a special expansion of labor-intensive sectors (such as agriculture and focus on fertility transition), economic growth, and economic manufacturing), and stronger public-private partnerships. policies. The report uses the DemDiv simulation to illustrate the potential size of a demographic dividend in Ethiopia. The results of this exercise show that the greatest potential gain stems from the synergy among policies across health, Introduction The impact of population on economic development has the Demographic Bonus in Ethiopia: Gender, Development, been a subject of major political and academic debates.1 and Demographic Actions.” It examines what Ethiopia has Some researchers have argued that high fertility and rapid achieved in the last 10 years and reflects on areas warranting population growth inhibit development. Others have argued further actions and investments. that rapid population growth can actually promote economic prosperity.2 More recent studies have found that population In the mid-to-late 20th century, four countries in East growth has an ambiguous effect on economic development.3 Asia (Hong Kong, Singapore, South Korea, and Taiwan) To a large extent, the debates have focused on the effect of experienced rapid rates of economic growth—taking part in population size on economic growth, with little attention paid what is commonly known as the Asian Miracle. In addition to to the age structure of the population. the obvious contributors to economic growth, such as sound economic policies, a closer examination of the Asian Miracle The impact of population growth on economic development
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