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Demographic, Social, and Economic Drivers
Eric Kemp-Benedict
Global Drivers Topic Working Group
Chiang Mai, 12 Sept 2011
DEMOGRAPHICS
Demographic Drivers
• Natural growth– The demographic transition
• Migration– Who? Why?– Out-migration, in-migration, rural-urban
• Population structure– AIDS
• Density– Pressure on land and water resources– Inheritance and division of land
http://www.nssgeography.com/worldissues%20web/Unit%20population/What%20is%20the%20Demographic%20Transition%20Model.htm
Demographic Profile of Botswana, with and without AIDS, 2005 & 2020
http://www.iss.co.za/pubs/papers/107/Paper107.htm http://www.ifad.org/operations/regional/pf/aids_1.htm
Population Pressure
• Rising population density leads to…
– Malthus
• Land degradation
• Impoverishment
– Boserup/Simon
• Innovation
• Productivity improvement
• Environmental protection– Kates et al.
• Yes
Demographics: Approaches
• UN population projections– National (to 2050/2100)– By age group and gender– Urbanization (to 2035)
• National government projections• Cohort models• Note
– International labor migration is well-studied but not well-modeled
– Regional migration often treated with a “gravity model”
ECONOMICS
Economic Drivers
• Income– Level
• GDP: total economic value– Productive activities or
– Income or
– Consumptive activities
• GDP per capita
– Growth rate
• Prices– Level
– Volatility
– Terms of trade
• Economic structure– Agriculture and
mining, industry, services
• Structure of trade– Primary goods, manufactured
goods, services
• Investment– Inflows, outflows, domestic
• Heterogeneity– Between regions
– Between urban and rural
– Between groups
– Between individuals
Basins Along the Development Trajectory
Kemp-Benedict, Eric, Simon Cook, Summer L. Allen, Steve Vosti, Jacques Lemoalle, Mark Giordano, John Ward, and David Kaczan. “Connections between poverty, water and agriculture: evidence from 10 river basins.” Water International 36, no. 1 (2011): 125.
Savings, Investment, and Exports• A basic relationship in international economics is that savings
minus investment equals net exports:
• So, if savings are relatively low, and a country brings in FDI, it must be a net importer: it is importing machinery to make its goods
GDP as Consumption GDP as Production
Consumption+
Savings+
Imports
=
Consumption goods+
Investment goods+
Exports
C + S + M = C + I + X
S – I = X – M- Capital Account Current Account
Balance of Trade
Does it Happen in Reality? Yes…
Economics: Approaches
• Previous studies• National government
projections• Historical comparison
– Will be like the past– Will differ from the
past, but be like country/basin X
• Partial economic model– Growth model
• Capital accumulation• Exogenous or endogenous
growth
– Sectoral/partial equilibrium
– Empirical/econometric
• “Full” economic model– General equilibrium– Disequlibrium– Necessarily omit key
aspects of real economies
A Simple Growth Model
Y = Y agric+ Y non-agric = πagric Aagric+ πnon-agric Lnon-agric
Lnon-agric= Purb f active,urb r part, urb
yurb=Y urb
P urb
, y rur=Y rur
P rur
UN population projections
Historically based, World Bank, or scenario (e.g., Malthus-Boserup continuum)
Historically based, FAO, and scenario
SOCIAL
Social Drivers
• Norms and values
– Generational experience
• Social capital
• Social inequality
– Class/income
– Ethnic/linguistic/religious
– Gender
– Etc.
Global Social Drivers
• Contact with relatives who have moved away
• Exposure to foreign ideas and norms (television & radio, news, internet, school)
• Professional exchanges
• Tourism and other foreign travel (either outward or inward)
• Commodities and services
• Foreign domestic investment
• Foreign aid & international NGOs
Changing Norms
• Societies & people carry a bundle of (potentially conflicting) identities
• New identities can be added, and old ones attenuated (and even lost)
• Time scales:– Switching identities
• Can be very rapid• The raw material for “political entrepreneurs”
– Adding and losing identities• Typically slow, ~2 generations• Might only be hidden/latent
Inequality
• Generally does not change• When it does change, can be
– Internal reforms (gradual): US, UK, China
– Revolutionary reforms (rapid): Soviet Union, Cuba, revolutionary France
• Affected by– History (particularly colonial history)– Labor markets and economic structure– Politics
• Extractive vs. redistributive vs. “reinvestment”
Social: Approaches
• Narratives
• Formal qualitative models
• A handful of quantitative models, maybe
PULLING IT TOGETHER
Links
• Demographic transition– Economic level population growth
• Gravity model– Relative wage level & population migration
• Social capital– Inequality (& income level) social trust
• Globalization and development– Trade & labor migration norms & values
– Economic growth norms & values
Assets and Institutions Along the Development Trajectory
Kemp-Benedict, Eric, Simon Cook, Summer L. Allen, Steve Vosti, Jacques Lemoalle, Mark Giordano, John Ward, and David Kaczan. “Connections between poverty, water and agriculture: evidence from 10 river basins.” Water International 36, no. 1 (2011): 125.
Summary
• Importance– Demographic, economic, and social drivers are important and interconnected
• Future– Demographics: much built-in inertia, but the details are highly uncertain– Economics: considerable uncertainty and variability, with bounded rates of
change– Social: rapid change is possible, but typically change is on generational time
scales; future is highly uncertain, but there is a “globalism” syndrome
• Modeling– Might not be necessary: take off the shelf, use historical rates, rely on
narrative; otherwise, simple models may do the trick
• Responses and adaptation– Demographics: migration, innovation– Economics: diversification, storage, foreign reserves, capital controls, [price
supports, tariffs, subsidies, import controls]– Social: adoption/assimilation of imported ideas, resistance
ADDITIONAL
Trade Imbalances, 1960
http://rs.resalliance.org/2008/09/11/shipping-containers/
Trade Imbalances, 2000
http://rs.resalliance.org/2008/09/11/shipping-containers/