6th SAES - Presentation by Biswajit Dhar (RIS, India) on 'Demographic Change, Brain Drain, and Human Capital in South Asia

7/29/2019 6th SAES - Presentation by Biswajit Dhar (RIS, India) on 'Demographic Change, Brain Drain, and Human Capital in South Asia'

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Biswajit Dhar

Sayan Samanta

Demographic Change, Brain Drain, andHuman Capital: Development Potentials

in Services-Driven South Asia

Presented at the 6th South Asia Economic Summit, 2-4 September 2013, Colombo.


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South Asias Demographic Transition

Services Sector led Growth and Employment

Human Capital Scenario

Skilled Migration and Development Potential-Critical Issues

Conclusion-Demographic Dividend?

Structure


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More than 55% of the incomes are generated in theservices sector

High rate of skilled migration from smaller countries

Economic growth experiences and reasonably high

future development potential

Ongoing demographic change and the challenges to

future development potential

Increase in modern and traditional services exports Future supply of skilled labour

Demographic dividend?

Key Characteristics of South Asian Economies


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Similar demographic experiences (exceptionAfghanistan, Maldives and Sri Lanka)Decline in IMR - average of 147.6/1000 live births in 1960s

48.3/1000 in 2011Decline in TFR- 6.0 births per woman in 1960s 2.7 in 2011.

Increase in Life Expectancy- 43.3 years in 1960

65.7 years in2011Decline in population growth- 1.3 per cent in 2011.

Afghanistan continues to record high IMR and TFRMaldives and Sri Lanka are at the other end of the

spectrum

Population in Sri Lanka is growing only at 1% per year Endogenous factors such as female health and

education have fueled the pace of decline in fertility

South Asias Demographic Transition


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Key Features of Population Growth in SouthAsia

Countries Life expectancy at birth,total (years)

Fertility rate, total(births per woman)

Mortality rate, infant (per1,000 live births)

Population growth(annual %)

2000-11 1960s 2011 2000-11 1960s 2011 2000- 1960s 2011 2000-11 1960s 2011

Afghanistan 46.9 32.8 48.7 6.9 7.7 6.2 83.5 231.5 72.7 3.1 2.2 2.5

Bangladesh 67.0 48.4 68.9 2.6 6.8 2.2 48.5 156.6 36.7 1.3 3.0 1.1

Bhutan 64.8 38.5 67.3 2.9 6.7 2.3 52.8 198.1 42.0 2.3 2.5 1.7

India 63.5 45.5 65.5 2.8 5.8 2.6 55.3 144.4 47.2 1.4 2.1 1.3

Maldives 74.2 40.3 76.9 2.2 7.2 1.7 21.7 189.9 9.2 1.8 2.5 1.9

Nepal 65.6 40.2 68.7 3.3 6.1 2.7 49.6 172.1 39.0 1.5 1.9 1.1

Pakistan 64.2 49.6 65.4 3.8 6.6 3.3 67.3 152.7 59.2 1.9 2.6 1.7

Sri Lanka 73.6 59.8 74.9 2.3 5.0 2.3 13.3 64.5 10.5 0.8 2.4 1.0

Standard

Deviation

0.1 0.2 0.1 0.4 0.1 0.4 0.6 0.4 0.8 0.4 0.1 0.3


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Working age population is expected to increase significantlyin most South Asian countries, thus resulting in steepdeclines in the dependency ratio Raises the spectre of reaping demographic dividend

In the ensuing decades, dependency ratios will be on adeclining slope for all countries, except for Sri Lanka Convergence in dependency ratio by 2050 (exception Afghanistan

and Sri Lanka) In Sri Lanka, share of aging population is already on the increase Afghanistan will lag behind in the lowering of the dependency ratio

All other countries will experience bottoming out of the dependencyratios by 2040

India, Pakistan and Sri Lanka, the dependency ratios would bebottoming out at a relatively higher level

Changes in Composition of Working Population


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0

20.0

40.0

60.0

80.0

100.0

120.0

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Bangladesh Bhutan India Maldives Nepal Pakistan South Asia

Trends in Dependency Ratios


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0

20.0

40.0

60.0

80.0

100.0

120.0

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

Afghanistan Sri Lanka South Asia

Trends in Dependency Ratios


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Labor force participation rate, total (% of totalpopulation ages 15-64)

Countries 1990s 2000-10 2011

Afghanistan 50.5 49.7 50.3

Bangladesh 75.1 73.0 73.5

Bhutan 64.8 71.2 73.9

India 62.5 61.2 57.7Maldives 52.3 62.9 68.3

Nepal 87.6 86.7 86.0

Pakistan 51.3 53.5 55.1

Sri Lanka 60.4 59.9 59.5

East Asia & Pacific 79.9 78.4 77.7South Asia 62.9 61.8 59.3

World 70.8 70.0 69.3


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Challenges to growth and employment in the service

sectorIn South Asia, services contribute 55% to the regions

output, but absorb only 27% of the workforceSince the 1990s, share of services in GDP increased by

10%, but share of workforce increased by just 3%Sri Lanka - employment share of services 40% exceeds

the average for South Asia

Need to ensure skilled labour force to fuel the growth ofmodern, efficient sectorsIs the education sector responding to this imperative?

Service Sector-led Growth, Employment andHuman Capital in South Asia


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0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

1994 2000 2005 2010

(%o

ftotalemployment)

(%o

fGDP)

India Sri Lanka South Asia India Sri Lanka South Asia

Services Sector in South Asian Economies


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Female Work Force Participation in Services

Countries Employees, services,

female (% of female

employment)

Labour force, female (% of

total labour force)

Labour participation rate,

female (% of female

population ages 15+)

1990 2000 Latest

available

1990 2000 2010 1990 2000 2010

Afghanistan N.A. N.A. N.A. 15.2 13.6 15.6 15.5 13.4 15.5

Bangladesh N.A. 12.1 19.4@

38.8 37.1 39.7 61.7 54.3 56.9Bhutan N.A. N.A. 28.0 36.4 38.6 41.5 49.6 53.5 65.5

India N.A. 13.7 17.0 27.5 27.9 25.4 34.8 34.3 29.0

Maldives 42.9 39.0 56.1 19.4 33.7 41.9 20.2 37.4 55.1

Nepal N.A. N.A. 13.3 47.5 48.7 50.5 80.0 81.9 80.3

Pakistan 13.5 18.1 12.9 12.7 15.2 20.6 13.4 16.0 22.4

Sri Lanka N.A. N.A. 27.2 31.5 33.1 32.5 36.3 37.2 34.6

South Asia N.A. 13.6 17.2 28.0 28.3 27.1 35.8 35.0 31.7


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Female workforce participation remains a major concernAt 21%, South Asia is way below the global average of 40%Only Sri Lanka and Nepal exceed the global average, while

Bhutan, Maldives and Bangladesh are closer to the globalaverage

India and Pakistan remain the laggards

Limited data on female employment in services.Maldives- more than 56% in 2006Maldives and Bangladesh almost at par with the global average

(2000-2012) India has seen an increase - 17% in 2010 from 13.7% in 2000Pakistan, low at 12.9%

Female Participation in Workforce


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Education Scenario

Countries School enrollment (%) Ratio of girls to boys in

primary and secondary

education (%)

Primary Secondary Tertiary

1990 2000 2010 1990 2000 2010 1990 2000 2010 1990 2000 2010

Afghanistan 29.3 19.5 97.1 10.6 N.A. 45.5 2.1 N.A. N.A. N.A. N.A. 63.8

Bangladesh 81.3 N.A. N.A. 20.7 48.2 51.1 4.1 5.5 N.A. 75.5 N.A. N.A.

Bhutan N.A. 77.4 111.1 N.A. 40.7 65.8 N.A. N.A. 7.0 N.A. 86.1 101.6

India 91.2 93.8 112.0 N.A. 45.3 63.2 5.9 9.4 17.9 N.A. 78.8 96.3

Maldives N.A. 131.5 106.3 N.A. 52.8 N.A. N.A. N.A. N.A. N.A. 101.5 N.A.

Nepal 110.2 117.8 N.A. 32.2 35.0 N.A. 5.0 4.1 N.A. 56.7 77.0 N.A.

Pakistan 55.3 70.4 94.9 20.9 N.A. 34.1 3.0 N.A. N.A. 49.0 N.A. 79.6

Sri Lanka 110.4 N.A. 98.8 71.9 N.A. 100.2 N.A. N.A. 15.5 102.0 N.A. 101.6

South Asia 85.9 89.5 108.4 35.3 43.6 58.4 5.3 8.0 15.7 67.8 79.5 95.0

Low & middle

income

countries

99.6 98.9 107.1 41.4 53.7 66.1 7.4 12.1 22.5 83.1 90.5 96.7


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*Data for Maldives and Sri Lanka are for 2002 and 1998.#Data for Bangladesh is for 2009; for Bhutan, Maldives and Sri Lanka data are for 2011; for all others, thedata are for 2010

Public spending on education, total (% of GDP)

Country Name 2000* Recent#Afghanistan NA NA

Bangladesh 2.4 2.2

Bhutan 5.5 4.7

India 4.3 3.3

Maldives 6.3 7.2Nepal 3.0 4.7

Pakistan 1.8 2.4

Sri Lanka 3.1 2.0

South Asia 2.7 2.8

World 3.9 4.7


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Alhough overall education outcomes showimprovements over time, South Asia lags behindEast Asia and the Pacific by some distance

For the future growth process to be inclusive, accessto quality education is essential

The major challenge in this regard is to modernizethe education sector and quality education deliveryto future generation

Lack of employment opportunities are compoundedby problems of employability of the population inthe working age-group

Challenges in Education


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More than 26 million people born in South Asian

countries are living outside their countries of birth.Rate of migration is higher from smaller countries.

Rate of skilled migration is also higher from smallercountries.Rate of skilled migration-Sri Lanka 30% and Afghanistan-

23.3%India and Bangladesh-4.3% skilled migration

Patterns of Migration from South Asia


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Destinations of migrant populationWest Asia -34%OECD-24%

Skilled migrants head for the OECD countries; semi-

skilled largely to West Asia

The Implications:Remittances and Brain GainHigh rate of skilled migration from this region contributes

critically to the formation of Diaspora networkDiaspora network and impact on direct service delivery

Migration from South Asia


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Migration from South Asia

Country Stock ofMigrants as %of population

Migration rateof tertiary-educated

population-

2000

Stock ofimmigrants as %

of population

Females as% of

immigrants

Afghanistan 8.1 23.3 0.3 43.6

Bangladesh 3.3 4.3 0.7 13.9

Bhutan 6.3 0.6 5.7 18.5

India 0.9 4.3 0.4 48.7

Maldives 0.6 1.2 1 44.7

Nepal 3.3 5.3 3.2 68.2Pakistan 2.5 12.6 2.3 44.7

Sri Lanka 9.1 29.7 1.7 49.8

South Asia 1.6 10.2 0.7 45.6


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In 2011, foreign remittances received by South Asiancountries were larger than all other major forms of

inflowsVery large for Nepal and Bangladesh, 22% and 11% of

GDP respectively (2011)Play an important role in narrowing the current account

deficit in IndiaRemittances may lead to income poverty reduction in the

source countries but may or may not ensure better accessto public services.

Benefits of Migration


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Remittances, FDI and ODA

Countries Net ODA and official aid received as% of GDP

FDI, net inflows (% of GDP) Net remittances as % of GDP

2011 2000-10 1990s 1980s 2011 2000-10 1990s 1980s 2011 2000-10 1990s 1980s

Afghanistan 37.2 40.3 NA NA 0.5 1.9 NA NA NA NA NA NA

Bangladesh 1.3 2.1 3.8 6.5 1.0 0.9 0.2 NA 10.8 8.2 3.4 2.8

Bhutan 7.8 10.5 20.2 12.5 0.9 1.5 NA NA -4.8 -4.1 NA 0.0

India 0.2 0.2 0.5 0.7 1.7 1.8 0.4 0.0 3.2 2.9 1.8 1.0

Maldives 2.1 3.4 8.3 13.3 13.1 7.2 2.3 0.8 -9.9 -7.7 -6.2 -1.5

Nepal 4.7 6.0 9.4 10.0 0.5 0.2 0.2 0.0 22.0 14.7 0.8 0.0

Pakistan 1.7 1.7 1.9 2.8 0.6 1.9 0.9 0.4 5.8 4.3 2.5 7.2

Sri Lanka 1.0 2.4 4.4 8.4 1.6 1.5 1.3 0.7 7.7 6.7 6.1 5.2

South Asia 0.7 0.8 1.2 1.6 1.6 1.8 0.5 0.1 4.0 3.5 2.1 1.8

World 0.2 0.2 0.2 0.3 2.4 2.8 1.6 0.7 0.2 0.1 0.0 0.0

Low &

middle

income

0.7 1.0 1.3 1.4 3.0 3.4 2.2 0.6 1.4 1.6 1.0 0.7


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Diaspora entrepreneurshipIndias experience: associations such as The Indus

Entrepreneurs and Silicon Valley Indian ProfessionalAssociation assisted the Indian IT entrepreneurs with

business start-upDiaspora can foster human capital accumulation in

the home country in two major waysRemittances may directly augment incomes and can

therefore ease the liquidity problems of the beneficiary

householdsDiaspora can improve the average level of education in

the home country through knowledge spillovers

Contribution of the Diaspora


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Falling dependency ratios present huge opportunities to thecountries in South Asia, but can the demographic dividend bereaped?

The changing composition of the GDP necessitates impartingadequate skills to the young population so that they can be

considered employable by the skill-intensive service sectors Education levels of the population are still at a much lower

levels relative to those in the other regions which caneventually deny the South Asian countries the benefits ofdemographic dividend

Mismatch between the skills imparted and skill needs High rate of skilled migration from the region resulted in the

formation of the Diaspora network, who have contributed tothe development outcomes of South Asian economies

Key Messages


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Thank you

Documents

6th SAES - Presentation by Biswajit Dhar (RIS, India) on 'Demographic Change, Brain Drain, and Human Capital in South Asia