Monday, November 16, 2015

Population Imbalance Dangerous to Economic Growth and Social Cohesion:

Demographic Transition:
Records of demographic transitions across the globe have shown almost irreversible trends leading towards low fertility, low mortality and high living expectancy regimes.  Last about two thirds of century, especially period after the Second World War has seen revolutionary trends in population growth, stabilization and falling fertility. Most of the countries in Europe, Japan, USA, Australia and Canada have been recording lower than replacement fertility, low levels of mortality and high life expectancy.  It takes at least two child births in the life of a married couple, or 2.1 births per woman to sustain the human population.     
China and India have been two large economies that experienced unprecedented high levels of fertility during the mid-period of 20th century. Yet the data below suggests that China achieved a lower than replacement fertility by 1995 itself although its had much higher fertility than India’s in 1970 (see below). In India the ‘total fertility rate’ is still far too high at 2.5; thereby the projections suggest that by the year 2030 India’s population will cross that of China to occupy the top spot of the most populous country in the world. Now that one child policy is relaxed in to two-child policy in China it is expected that the population stabilization can occur somewhat earlier and by 2030 it is expect to have a population of 1.45 billions.

Population in Millions of China and India over years
(with 2 child policy)

Multiple Sources and Projections
Average number of births per woman over the years
China –‘late, long, few’ policy
China- One Child Family (urban) Rural exceptions
China-Urban 1.3 | Rural <2 o:p="">

Multiple Sources
China’s One Child Policy:
China has withdrawn its controversial one-child policy due to the realization of imminent prospects of an ageing society and a growing shortfall in the workforce. According to UN estimates, nearly 440 million people in China would be over 60 by 2050, signaling a sharp decline in the labor pool. Recently the working population between the ages 15-59 slid by 3.71 million in one year alone.

Three strong implications of the population imbalance are : (a)  labour shortages; (b) lower sex ratios affecting women’s status and increasing family stress; and (c) increase in the ratio of old-age dependency.
The rapid decrease in the birth rate, combined with an improving life expectancy, has led to an increasing proportion of elderly people and an increase in the ratio between elderly parents and adult children. In the absence of old-age pensions, approximately 70 per cent of the elderly are financially dependent on their offspring. In China, this problem has been labelled the "4:2:1" phenomenon, meaning that a couple (two) are responsible for the care of one child and four parents. The government has eased access to government pensions and has launched schemes to encourage saving for private pensions in an attempt to reduce the burden of the 4:2:1 phenomenon. In addition, urban couples who are themselves both only children are now allowed to have more than one child.  Yet the recent policy liberalization allows only for two children!

The sex ratio (male: female live births) is 1.03 to 1.07 in industrialized countries. In China, this ratio has increased from 1.06 in 1979, to 1.11 in 1988 and 1.17 in 2001, with even higher ratios in rural areas. In rural areas, the sex ratio is 1.05 for the first birth and rises steeply subsequently. In urban areas, the sex ratio is 1.13 for the first birth and peaks at 1.30 for the second birth showing that some urban Chinese make the choice to perform sex selection with the first pregnancy, since they are allowed only one child. In rural areas, most couples were permitted to have a second child, especially if the first is female. So if the second (or subsequent) child is female, the pregnancy often ‘disappears’, allowing the couple to have another child in an attempt to have a son.

China and India:
China and India are experiencing rapid economic growth. Both have huge poor as well as rural agrarian populations. Neither country provides an effective social security net for the elderly. Both realized that population control is essential to increasing per capita GDP. In both societies there is a strong cultural preference for sons. Both are facing declining sex ratios through use of sex selective abortions.

Labor needs for an economy growing fast are immense. In today’s world when life expectancy is growing to higher levels, there has to be fare balance between the able bodied labor with the aging people on the one hand and the children and adolescents on the other. A well-educated and skilled labor force is the necessity of a nation which is experiencing fast pace of development such as India and also China.  But as one can see below India has still been experiencing high fertility and huge child and youth population compared with China. Note that China has relatively far too lower proportion of child population upto the age of 20 years and also has huge older population above the age of 50 years. Thus a lower proportion of able bodied middle aged has to take the brunt of meeting the essential needs of both the young and the old.  At this juncture it is difficult to say which of the two age distributions are virtuous; the seemingly better age structure in India can be curse if the huge population created additional pressure on resources and public services.

However, not far from now, just two generations ago, both India and China were poor and population growth was phenomenal caused by decline in diseases of the masses such cholera, plague, smallpox, polio as well as almost no deaths caused by famines. There has also been a slow but certain reduction in infant mortality which has caused the life expectancy to reach about 65 years even in India.

Just as the less coercive Chinese  ‘late, long and few’ policy was slowly but steadily reducing fertility, similarly an Indian policy of a mix of incentives and dis-incentives, such as family ration for the female child attending school; monitory incentives for girl child enrolled in higher school grades may impact fertility decline in the long run.

The importance of population size of India has specially significance to the economics in the west including the USA.  Given below replacement level fertility in most of Europe and high dependence on migrant labor in the USA; it is extremely essential that English speaking skill labor is available for the world to draw upon. While China could use its labor force during the past four decades of high economic growth rates; its future growth is dependent upon the sustained supply of youth and skilled workers. In spite of fast pace of technological innovations and applications to labor saving manufacturing and services; there are a certain minimum amount of labor demand which is difficult to be domestically sources in the European economics.  Thus the so-called curse of high population and high fertility in India seems to be turned to be a virtue but not for the Indians – but for the western world.


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