Booms, Busts, and Echoes
| Author | David E. Bloom and David Canning |
| Position | Professor of Economics and Demography/Professor of Economics and International Health at the Harvard School of Public Health |
How the biggest demographic upheaval in history is affecting global development
For much (and perhaps most) of human history, demographic patterns were fairly stable: the human population grew slowly, and age structures, birth rates, and death rates changed very little. The slow long-run growth in population was interrupted periodically by epidemics and pandemics that could sharply reduce population numbers, but these events had little bearing on long-term trends.
Over the past 140 years, however, this picture has given way to the biggest demographic upheaval in history, an upheaval that is still running its course. Since 1870 death rates and birth rates have been declining in developed countries. This long-term trend toward lower fertility was interrupted by a sharp, post-World War II rise in fertility, which was followed by an equally sharp fall (a "bust"), defining the "baby boom." The aging of this generation and continued declines in fertility are shifting the population balance in developed countries from young to old. In the developing world, reductions in mortality resulting from improved nutrition, public health infrastructure, and medical care were followed by reductions in birth rates. Once they began, these declines proceeded much more rapidly than they did in the developed countries. The fact that death rates decline before birth rates has led to a population explosion in developing countries over the past 50 years.
Even if the underlying causes of rapid population growth were to suddenly disappear, humanity would continue to experience demographic change for some time to come. Rapid increases in the global population over the past few decades have resulted in large numbers of people of childbearing age (whose children form an "echo" generation). This creates "population momentum," where the populations of most countries, even those with falling birth rates, will grow for many years, particularly in developing countries.
These changes have huge implications for the pace of economic development. Economic analysis has tended to focus on the issue of population numbers and growth rates as factors that can put pressure on scarce resources, dilute the capital-labor ratio, or lead to economies of scale. However, demographic change has important additional dimensions. Increasing average life expectancy can change life-cycle behavior affecting education, retirement, and savings decisions-potentially boosting the financial capital on which investors draw and the human capital that strengthens economies. Demographic change also affects population age structure, altering the ratio of workers to dependents. This issue of F&D looks at many facets of the impact of demographic change on the global economy and examines the policy adjustments needed in both the developed and the developing world.
The global population, which stood at just over 2.5 billion in 1950, has risen to 6.5 billion today, with 76 million new inhabitants added each year (representing the difference, in 2005, for example, between 134 million births and 58 million deaths). Although this growth is slowing, middle-ground projections suggest the world will have 9.1 billion inhabitants by 2050 (see "Global Demographic Trends").
These past and projected additions to world population have been, and will increasingly be, distributed unevenly across the world. Today, 95 percent of population growth occurs in developing countries. The populations of the world's 50 least developed countries are expected to more than double by the middle of this century, with several poor countries tripling their populations over the period. By contrast, the population of the developed world is expected to remain steady at about 1.2 billion, with declines in some wealthy countries.
The disparity in population growth between developed and developing countries reflects the considerable heterogeneity in birth, death, and migration processes, both over time and across national populations, races, and ethnic groups. The disparity has also coincided with changes in the age composition of populations. An overview of these factors illuminates the mechanisms of population growth and change around the world.
Total fertility rate. The total world fertility rate, that is, the number of children born per woman, fell from about 5 in 1950 to a little over 2.5 in 2006 (see Chart 1). This number is projected to fall to about 2 by 2050. This decrease is attributable largely to changes in fertility in the developing world and can be ascribed to a number of factors, including declines in infant mortality rates, greater levels of female education and increased labor market opportunities, and the provision of family-planning services.
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Infant and child mortality decline. The developing world has seen significant reductions in infant and child mortality over the past 50 years. These gains are primarily the result of improved nutrition, public health interventions related to water and sanitation, and medical advances, such as the use of vaccines and antibiotics. Infant mortality (death prior to age 1) in developing countries has dropped from 180 to about 57 deaths per 1,000 live births. It is projected to decline to fewer than 30 by 2050. By contrast, developed countries have seen infant mortality decline from 59 deaths per 1,000 live births to 7 since 1950, and this is projected to decline further still, to 4 by 2050. Child mortality (death prior to age 5) has also fallen in both developed and developing countries.
Life expectancy and longevity. For the world as a whole, life expectancy increased from 47 years in 1950-55 to 65 years in 2000-05. It is projected to rise to 75 years by the middle of this century, with considerable disparities between the wealthy industrial countries, at 82 years, and the less developed countries, at 74 years (see Chart 2). (Two major...
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