CAMBODIAN CORNER

Development, Trade and Foreign Affairs

CAMBODIA: Demographic Dividend and Aging Population

By Khov Ea Hai

Phnom Penh, Jan 11, 2017

Demographic dividend occurs when the proportion of working people in the total population is high because this indicates that more people have the potential to be productive and contribute to growth of the economy. Based on United Nations Population Fund, demographic dividend is “the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the non-working-age share of the population (14 and younger, and older than 64).” Further argued that, “A country with both increasing numbers of young people and declining fertility has the potential to reap a demographic dividend.”[1] Because there are less people to support, it therefore has a wide space for rapid economic growth with less burden at that time of more people come in workplace.

To achieve the demographic dividend, the country will have to go through at least four different stages of demographic dividend: Pre-Transition, Early Transition, Late Transition, and The Realization of Demographic Dividend. [2] The pre-transition is the period of high mortality and high fertility rates, but it results in a very young age structure. The early transition is when the mortality rate is declining and most parents choose to have fewer children. And, it is therefore caused the Population age structure shifting. On the top of that, at the late transition, the size of the working-age population grows significantly while the share of young dependent population shrinks. As consequence of these changes, the demographic dividend is realized. Nonetheless, one shall be noticed that it is not the large youth population itself that brings a coming demographic dividend into realization, but it is in fact the transition from both high birth and high death rates to both low birth and low dead rates.

During the 1980s-1990s, Cambodia had experienced its highest population growth as in average the number of new children born per woman was relatively about four to six which is known as “baby boom period,” and the women in reproductive age was around from 14 to 49.[3] At that time, it was the context where the challenges were essentially characterized by high maternal mortality, high infant mortality, and high under-five child mortality rates. Still within this early stage, the number of Cambodia’s children had risen rapidly as mortality started to fall gradually over the years. It has formed the structure of dominant young-age population over the total number. On the top of that at an intermediate stage, from early 2000s the total fertility rate per woman has significantly begun to decline, causing to reduce the number of children per woman. Till nowadays, the share of the working-age population, who were born during 1980s-1990s, has been indeed increasingly ready come into the workplace. In that connection, Cambodia has been currently somehow at the stage of realizing the demographic dividend where the size of the working-age population bigger than both young dependent and senior dependent population (see the table below). It is therefore expected to hold a potential for more productivities contributing to resilient economic growth.

Table: Trends in Dependency Ratio, Cambodia[4]

trends-in-demographcy-ratio

Decline in Fertility is imperative to attain the demographic dividend, but it is eventually caused the aging population at the later stage of development.[5] This development leads to the subsequent change in the age structure of the country’s population by causing a smaller and smaller young dependent population in relation to the working-age population. Both low mortality and fertility rates increase the share of the older population and decrease younger population, so it becomes a process which known as population aging. The aging population consequently bring higher costs for spending on social assistance and social security in terms of social protection policies. Then, it has significant impact on the economic performance at large since less and less working-age population. For Cambodia, “given the future population trends and age-transition, demographic dividend is likely to taper off after 2038. Then, the contribution of dividend is likely to decrease and median age of population that is young now is expected to increase. The decade of 2028-2039 will witness negative growth of young population 0-14 years of age for the first time ever. The rapid fertility decline between 1998 and 2008 is the cause of this negative growth of young population.”

graph-of-demographic-trend

(Source: National Population Policy of Cambodia from 2016-2030)

When countries are confronting with aging population issue, they usually have two options: (1). injecting more immigrants into the countries, and (2) less immigrants, yet promoting higher fertility rate. Either of these, based on advanced countries’ experiences so far, they have proofed the different challenges. The injection of more immigrants into the countries may help to balance the number of population and accelerate growth, but it has so far brought Brexit and Trump Phenomena since more and more people are increasingly sensitive and cautious with the movement of people across the borders. The criticism on immigration issue has increasingly raised its tune on national identities, languages, social issues, and security matters. Meanwhile, restraining the flow of immigrants results the slow growth as less dynamic work forces in the economic engines. At the same time, the policies to promote higher fertility rate per woman tend to bring no higher than the replacement rate (the average number of children that a woman has in a lifetime) in which it has stood less than 2 over many years although lots of policies were introduced. It has confirmed the difficulties to reverse the trend of fertility rate per woman. Once it went down, it is hardly to go up due to a wide range of issues coming from high costs of living, affordability for having children, education matters, modern lifestyle, health and safety. More or less, it is strategically becoming choices for states to focus on the development of the total fertility rate or the replacement fertility rate per woman as it needs to be at least 2.1 in order to replace the number of their parents and to maintain the size of working population since it has significantly impacted on economic growth, social protection, and prosperity at the end of the day.

Reference:

[1] Overview of Demographic Dividend, United Nations Population Fund, http://www.unfpa.org/demographic-dividend

[2] State of World Population 2016, United Nations Population Fund, http://www.unfpa.org/swop

[3] National Population Policy, Royal Government of Cambodia, 15 Aug 2003

[4] Calculated from Census Projection Report, 2010, Extracted from National Population Policy of Cambodian from 2016-2030

[5] James Gribble, and Jason Bremner, “The Challenges of Attaining The Demographic Dividend,” Policy Brief, Population Reference Bureau, Sept 2012,

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This entry was posted on January 11, 2017 by in Development Policy and tagged , .

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KHOV EA HAI

KHOV EA HAI

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