J.D.

SCHOOL OF LIBERAL ARTS, NMIMS

CAPSTONE PROJECT

THE DEMOGRAPHIC TRANSITION

PRANAV GUPTA
THIRD YEAR
A022

THE DEMOGRAPHIC TRANSITION

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1. Introduction
What is the role of public policy in demographic transition?
This paper commemorates, in an informative fashion, the phenomenon of demographic
change, and the experiences different parts of the world have had with it through an
analysis of literature that has been presented on the subject. A fairly recent addition to
knowledge, the concept of demographic transition has offered several theoretically as well
as empirically sound answers to questions regarding growth and development among
different nations.
This section reviews literature that briefly explains the concept of demographic transition,
how it is subjective with respect to the country within which it occurs, and what are the
factors that drive the nature and pace of the transition. Section 2 highlights the role of
public policy in bringing about the demographic transition through a review of papers that
explore the phenomenon in different parts of the world.
1.1 The Demographic Transition: The Age Structure Advantage
Human population growth remained uneven and slow up till 1800, when the world
population reached the one billion mark. Then, still slow, but at a steadier pace, the
population grew to reach 2.5 billion in 1950. Beyond this point population grew
exponentially and more than doubled in the next 50 years, touching the 6.5 billion mark in
2005 (Bongaarts, 2009). There are 7 billion people in the world today. Around 2070, the
world population will be 10 times larger than it was in 1800. Fig. 1 shows the population
growth of the world since the beginning of time.

The recent rapid demographic change observed in various parts of the world is the result
of a universally occurring phenomenon called the demographic transition. This transition
is accompanied by a developmental process that transforms agricultural economies into
industrial ones (Bongaarts, 2009). At the start of the transition, the population growth rate
(the difference between birth and death rates) is close to zero as a result of high birth as
well as death rates. At the end of the transition as well, the population growth rate is zero
due to low birth and death rates.

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 The demographic transition can be explained in three steps. Let us first imagine a nation
where both the birth and the death rates are high, and hence the population growth is zero.
Couples give birth to a large number of children since only a fraction of them survive.
Healthcare facilities in this society are deplorable.
Due to advancements in healthcare technology as a result of trade or new discoveries in
medicine, etc., the death rate begins to fall. The infant mortality rate also decreases by
virtue of this. The decline in birth rates generally occurs later as information related to
lower child mortality takes time to trickle down to the individual level. Thus, the decline
in birth rates is inertial, as opposed to the relatively quicker decline in mortality rates. The
population growth rate increases at this point, where the death rates have already declined,
but fertility continues to remain high, leading to a “baby boom” (Bloom and Canning,
2013).
As information about improved health care reaches the household level, couples realise
that they no longer have to discount for infant deaths. Child survival rates have gone up.
Hence, they start giving birth to less children. Consequently, birth rates fall (Bloom and
Canning, 2013).
As the baby boomers grow up, the size of the working population increases leading to an
increase in the GDP of the nation. Since birth rates have already fallen, the size of the
dependant population becomes smaller, as there are lesser mouths to feed and educate.
With fewer children to support, parents spend substantially on educating their children
(Bloom and Canning, 2013) and can save more for their retirement. This further expands
the pool of human resource in the country, thereby adding to worker productivity. A skilled
and educated class of young workers emerges, waiting to be employed in technical, high
salaried jobs.
People reach higher standards of living, and birth rates remain low, because they give birth
to lesser children as future investments. Female participation in the workforce increases
(because of less child rearing responsibilities) and consequently, the nation yields positive
returns, also dubbed the demographic dividend.
1.2 The Pace of Transition
In several countries, the demographic transition takes years to occur and yield returns,
while in several other countries, specifically the developing world, the transition has
occurred at a very fast pace. The transition occurred in Europe and North America between
1850 to 1950, while it occurred in Asia much later, and with a much larger intensity (Bavel,
2013). When erstwhile Europe and North America was developing, they did not possess
any set model that they could follow, since they were the first continents to embark on this
process of development. In modern times, the Asian economies are developing in a highly
globalised and integrated world, where the “developed” world’s experience has already
been widely documented, including what they did right and what they did wrong. The
developing world can learn from Europe and America’s mistakes. Moreover, technology
has a big role to play in every country’s transition. While the modern developed world had
to pave its own path as far as this issue is concerned, the modern developing world can
simply acquire technology through trade.
Certain authors say that technology leads demography (Khan A. , 2008); (Lucas, 2002).
This theory finds that technology increases the return to human capital. Thus, besides the
betterment of medicine and hygiene, technology is another factor that gives a push to the
transformation of the population, in terms of increasing its capabilities. For example,

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 during the industrial revolution the return to investment in human capital was relatively
low, keeping in mind the costs. The advancement of technology during the revolution
divided workers into skilled and unskilled, and the skilled workers commanded a higher
wage due to a skill premium. These skilled workers could afford to invest more heavily on
human capital of their children. As a result, both the increase in total factor productivity
and returns to human capital increased real wages, and thereby standard of living. Children
who started to acquire technical education as a result of higher wages earned by their
fathers, also began contributing to the fields of science and technology, equipped with their
knowledge, rendering the inverse also true, i.e., demography leads technology (Khan A.,
2008). The cyclic nature cannot be isolated at any given point, with newer technologies
enabling populations to flourish, while the emerging population contributes to better
technology.
Since the fastest transition in the history of the developing world has been that of East
Asia, while the slowest is predicted to be that of Sub-Saharan Africa, a review of these two
regions follows in the succeeding sub-section.
1.2.1 East-Asian Miracle
Child mortality rates in Asia went down at a very fast pace after the 1940s. This in part
can be explained by the fact that Asia escaped four or five decades of relative isolation,
that heralded new forms of public policy, technology, etc. Example: Penicillin was
discovered in 1927, one of many drugs that were developed in the West during this period
and could be easily imported (Bloom, 1998). Also, food security and nutrition improved
as the agricultural sector developed, and food was imported through trade, reducing the
incidence of childhood deaths. This set the transition in motion. These countries are South
Korea, Malaysia and Singapore, where fertility began to decline 15 years after the decrease
in child mortality (Bloom, 1998).
In other Asian countries, the transition has been relatively slower (Bloom, 1998). This
decline in fertility can be attributable to the slow advancement of the contraceptive
industry in certain cultures. Also, trade couldn’t speed up the process for relatively closed
economies, like India before 1991. (Bloom & Canning, 2006)
Certain authors argue that it is due to family planning by government intervention in the
East Asian economies that substantiated the decline in fertility to the extent at which it
occurred. The demographic dividend has been responsible for one-third of the increase in
income in East Asia between 1965 and 1990 (Bloom, 1998).

1.2.2 Sub Saharan Africa

The African demographic transition has been by far the slowest in the world. It is predicted
to be three generations long in comparison to one generation for other regions, and even
then, in magnitude it is predicted to be smaller than that of other regions (Paulo
Drummond, 2014). An explanation for this is the brain drain, or the emigration of skilled
workers to other countries in pursuit of better opportunities (David E. Bloom, 2013). The
benefits that could be reaped by the nation are then, reaped by a different economy, simply
due to mobility of human capital and higher standards of living in the host economy.
1.3 Onset of the Transition in a Global Perspective: A Comparison

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 This section explores and reviews literature that has proposed theories to explain why the
demographic transition occurred first in certain countries, while lagged behind in others.
Europe and Asia are of Importance here since the transition occurred first in Europe, and
most recently in Asia.
1.3.1. Asia
The demographic change began occurring in Asia much later than it did in Europe and
North America. Bloom conducted a study in 1998 that offered to explain why Asia and
Africa lagged behind their Western counterparts. The educational, technological and
health investments that were developed and put into place in Europe were not prevalent in
Asia till the 1940s. The adoption of these practices before the 1940s was restrained due to
various factors as de-globalisation, world wars, the Great Depression, and wars of
independence against colonial rule (Bloom, 1998). Once this transmission did take place,
it took place at a very fast rate, as no new technology or policy systems had to be developed
from scratch. All that was needed to be done was a tweaking of already existent systems.
One more point of importance here is that this process was aided by international
organisations that did not exist prior to the 1940s. This was one factor external to Asia
itself, that sped up the catch-up process (Bloom, 1998)
1.3.2 Europe
The demographic transition first occurred in Great Britain for a wide array of reasons, a
combination of fortunate endowment and opportunistic utilisation. It was technology that
led demographic change in this case as well but for technology to pave such a path, Britain
had the ideal environment. Since it was the biggest colonial power, it had advantageous
terms of trade. The agricultural revolution between 1500 and 1800 modernised agriculture,
with surplus labour moving to urban areas. Industry, which was new, was characterised
by high wages, which is the first point of difference between erstwhile Britain and its other
European counterparts (Allen, 2009). Higher wages meant more could be saved by the
people, and thereby translated into investment. The second point of difference is that
energy was very cheap in Britain (Allen, 2009). Iron and coal production lay at the heart
of this, mostly financed by the money that came in through trade. This, coupled with high
wages, set the stage for the revolution: The coal industry tried to meet London’s growing
demand for inexpensive fuel, that could replace the expensive labourer. As the coal
industry increased its output, an energy situation unlike anywhere else in Europe was
created (Allen, 2009).
Britain managed to prevent the spread of its technical knowledge to retain its economic
advantage: Until 1825, British artisans were forbidden to leave the country; export of
important machinery and parts was prohibited till 1842 (Spielvogel, 2016). Nevertheless,
it wasn’t able to control emigration and exports by legislation. As a result, both through
legal and illegal channels, technical knowledge spread to the rest of the continent. Once
they acquired it, the French and the Germans began spreading this knowledge East and
south (Spielvogel, 2016) and the whole continent became industrialised.
1.3.3 Africa
The delayed onset of the African demographic transition has been explained by the
comparison of an African country, Nigeria, with an East Asian Country, Indonesia (David
E. Bloom, 2013). The comparison is apt since both countries have oil driven economies
and predominantly Islamic cultures.

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 In terms of GDP per capita, in the 1960s, Nigeria was ahead of Indonesia. Today, the GDP
per capita of Indonesia is more than double that of Nigeria. This is because while East
Asia has harnessed its economic dividend, the fertility transition in Nigeria has begun to
take place quite recently (David E. Bloom, 2013). Since there was a considerable lag in
the time taken for medical advances and family planning practices to reach Africa, the
demographic transition did not commence till the mid-1980s (Paulo Drummond, 2014).
2. Impact of public policy: Making the Transition happen
This section reviews literature that examines the role of public policy in bringing about the
demographic transition.
2.1 Policy and Age Structure
The Demographic dividend presents a window of opportunity to be exploited by the
country in which it presently occurs. Different impacts of the demographic transition
across countries has been observed, thereby reiterating that the magnitude and realization
of the dividend is subjective in nature, and isn’t independent of the country within which
it occurs (Bavel, 2013). It is, in fact, highly dependent on a combination of factors.
It has been sufficiently said that the bringing about of this change, that is the decrease in
the death rates and a subsequent inertial decrease in the birth rate requires certain
prerequisites, in terms of the stage of development the country is in, and the level of
participation the government assumes. (Bloom and Canning, 2006). For example, a
decrease in death rates is a consequence of improved sanitation, advancements in health
and hygiene, and affordability of medical services by the people. All three depend on
policy restructuring (health and education) by the government. Similarly, a change in the
birth rates is a result of higher disposable incomes and the people's perception of whether
the environment is conducive enough to raise a family. This again, is impacted by policy
and the level of development the society has attained.
A country specific example can be that of post-war USA. The demographic dividend
resulted because of an increase in the female labour force participation (Matthias Doepke,
2007). The men had been away at war, and war requirements had pushed women into the
labour market. Older, more experienced women crowded out younger women from the
market, who started getting married sooner, and giving birth to more children in the post
war period. After the war, when the US economy picked up again and the overall female
participation increased, the overall fertility rate declined. The baby boomers grew up 20-
30 years later increasing the size of the workforce, while the low fertility rate led to a very
low dependency ratio, thus benefitting the economic conditions of the country. (Matthias
Doepke, 2007).
Another example worth mentioning is that of India and China. Before the 1980s, the
growth in both India and China was slow. After the 1980s, growth in both the countries
accelerated, more dramatically in China and relatively modestly in India. China eventually
overtook India, and now has a substantially higher per capita income (Bloom & Canning,
2006). Policies can be responsible for the overthrow of India by China.
But, China’s demographic dividend has a slight catch. Nilekani in 2009 noted that in
China, the dividend was brought about artificially and at a faster pace through the One
Child Policy, which was an initiative by the government wherein married couples were
not allowed to have more than one child. This would mean lesser children, and a
subsequent decline on dependency. But, the Chinese population is now ageing rapidly.

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 Because of the very same policy that harnessed the dividend, working people in the coming
future will be lesser than half of the ageing population.
2.1.1 Family Planning Programmes
Bloom wrote on the use of family planning policies and their implications on fertility.
According to him, family planning has a deep impact on the decisions taken by couples.
In several countries, the use of contraceptives is not encouraged culturally or religiously,
or the family might not want the female to rely on contraceptive pill usage at all for fear
of side effects. In this case especially, there is an unmet need for family planning policies
since these women risk getting pregnant due to abstain from contraceptives.
Demographers think that in the presence of suitable family planning, these women could
be educated about the use of contraceptives with positive effects. As a result, family
planning cannot be dismissed as a means to reduce the fertility rate. The key here is that
the government decisions needs to be flexible with regards to the setting in which it is
implemented, considering factors like culture, norms and religion. (David E. Bloom, 2013)
3. Research Gap in the Literature and Research Questions
The major focus of this paper is on whether the demographic transitions is also dependent
on institutional, development and political factors. For example, approximately twenty to
thirty years after the baby boom took place, America derived high economic dividends
(Matthias Doepke, 2007). This could be due to the presence of employment opportunities
that could be filled by the surging number of youth.
The demographic transition is a universal phenomenon and as per empirical evidence, has
occurred for several countries. It is intriguing why the magnitude of the said transition is
different for different countries. Since this paper reviews ample literature that supports the
fact that the demographic transition is brought about deliberately, government policy is
one factor that can be responsible.
The demographic dividend could go wrong in the absence of employment opportunities
and become a curse with a high level of dependent people with wasted potential.
The Indian population is so large that one out of every 6 person in the world is an Indian.
th

The economic returns that India yields will depend on the BIMARU states. These are the
states of Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh. These are highly populated
states, but have remained persistently backward (Vasundhara Thakur, 2012). On the other
hand, states like Tamil Nadu and Kerala have already derived most of their economic
dividend by now and the working age ratio there is already declining (Vasundhara Thakur,
2012). This difference is suggestive of the gap in governance, as although there is one
central government, state policies differ. Thus, there is a possibility that the high difference
in policies of these states is implicative of the difference in the nature of their respective
demographic transition. This can be explored through research on this subject.
One problem that has been responsible for the downplay of the dividend is the brain drain,
or the outmigration. Governments concentrating on employment generation programs to
harness economic returns should also be thinking about policies that give residents enough
initiative to work within the country and not outside it. This is challenging, as already
developed countries offer attractive opportunities, as well as a better standard of living.
The role that governments play in exploiting the opportunity of the demographic dividend
hasn’t been fully explored by the literature reviewed in sections 1 and 2, which can form
the basis for future research.

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