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On 15 January 2009 the Minister for Development Cooperation asked the Advisory Council on International Affairs (AIV) to prepare an advisory report on population and development cooperation. The AIV was invited to formulate recommendations indicating how the Ministry of Foreign Affairs could respond more effectively to demographic trends, in the interests of sustainable development. More specifically, the minister asked the AIV to answer the following questions:

1. What major problems and opportunities do demographic trends present for the attainment of the Millennium Development Goals (MDGs)?

2. How can Dutch foreign policy respond more effectively to these problems and opportunities in respect of each of the eight MDGs, with special attention for innovative approaches (IS 2.0), including making innovative use of existing foreign policy instruments and putting forward suggestions for new instruments?

Demographic trends require renewed national and international attention

Major demographic changes have occurred since the end of World War II in 1945. During that time, the global population has more than doubled. In the twentieth century, almost 90% of this increase occurred in less developed countries. Between 2008 and 2050, the world population will continue to grow, from 6.8 billion to 9.2 billion, despite an overall decline in the global fertility rate. The population will grow by 2.3 billion in less developed countries and by 0.1 billion in more highly developed countries. Less developed countries will thus account for almost all of this growth. The population of 29, largely least developed countries is likely to double and in some cases treble. Africa, which has the world’s highest regional birth rate, is likely to record the most rapid population growth between now and 2050.

The population explosion that will take place in some countries and regions between now and 2050 will not only seriously compromise our ability to meet the MDGs, including the poverty reduction goal, but will more generally pose a threat to the environment and peace and security. In some countries, it will also strongly intensify pressure to migrate, directly affecting both South-South and South-North migration. As mentioned, this population increase will take place almost exclusively in developing countries, notably in Sub-Saharan Africa, South Asia, the Middle East and North Africa. Yet despite this substantial population rise, these regions will see a decline in their annual population growth rates from approximately 2% in 2000 to 1% in 2050. By 2030-2035, another demographic trend – the progressive ageing of the population – will become a relevant factor in these regions. It is already playing a role in industrialised countries and in a number of big emerging economies such as China and South Africa. By 2050, 22% of the global population will consist of people aged 60 and over, compared with just 10% in 2000. Approximately 80% of people aged 60 and over will be living in developing countries, compared with 60% in 2000.

Demographic trends such as high fertility rates (that is, a high average number of children per woman) and the resulting high population growth will have major consequences for developing countries, including fragile states. Not only will these developments hamper our ability to meet the MDGs by the target date of 2015, they will also make it difficult for us to attain future development goals after 2015. So in addition to pursuing a policy for the immediate future, the Netherlands must also develop strategies which offer an effective long-term response to population issues.

In view of its importance, it is therefore remarkable that the issue of demographic trends is still so low on the international agenda and plays no significant role in national policymaking. On the other hand, it is implicitly taken into account in Dutch policy relating to specific MDGs. However, it is rarely addressed in the wider context of economic growth and sustainable development or of peace and security.

Demographic transition

Demographic transition is the shift that populations make from high birth and death rates to low birth and death rates. A decline in mortality rates (which always occurs first) combined with high continued fertility rates initially leads to population growth. This is the start of the demographic transition process. The phase a country has reached in the transition process is reflected in the age composition of its population: young, rapidly growing populations, followed by populations with a low dependency ratio, and finally a progressively ageing population. The changing ratio of young people (aged below 15) to the working population (15 to 65) and the elderly (over 65) during the demographic transition has major implications for both government policy and development prospects.

Urgent themes

The AIV has identified and examined a number of urgent, development-related themes, which are not necessarily all directly linked to the demographic transition, but in which demographic variables do play a role: maternal mortality, education for girls, HIV/AIDS, sex education, migration/mobility and urbanisation, the risk of conflict in connection with a young population with no training or job prospects, and ageing and poverty.

The different phases of demographic transition and their policy implications

Each phase of the demographic transition has its own specific profile and therefore requires a specific government policy. At the same time, account must be taken of the next phase in the transition process so that a timely response can be provided to the changes that are about to occur. Good governance and enhancing institutional quality are also necessary preconditions for ensuring a favourable outcome of the demographic transition.

Phase I Young, rapidly growing populations

Countries that have entered this phase are characterised by high fertility rates and large youth populations. Annual population growth is generally at least 2%, and over 40% of the population is aged below 15. Most developing countries, including fragile states, are in this phase.

There are clear links between high fertility rates and poverty. Countries where a higher proportion of people are living in poverty often have high fertility rates. Women who are frequently pregnant and spend a large part of their lives looking after children find it difficult to participate in education or the formal labour market. High fertility rates are also associated with a higher prevalence of child and maternal mortality. Lack of access to contraception (an unmet need for family planning) is a major factor underlying the high fertility rates of countries with this profile.

Education of girls has a strong beneficial effect on development and health and is closely linked to reduced fertility rates. Better educated and informed women are likely to use contraceptives earlier and have fewer children, are less likely to die as a result of pregnancy or childbirth (lower risk of maternal mortality) and make a greater and more productive contribution to economic growth. Their children are also less likely to die in infancy or to spend their lives in poverty.

In this phase, government policy should as a rule concentrate on reducing the fertility rate through promoting social rights such as SRHR (notably access to family planning), health and education, especially for girls. SRHR (public information and family planning) should be made an explicit part of an integrated health system and be built into education and other development programmes.

Another policy priority is to create better prospects for the high proportion of young people aged below 15 through education and training and by boosting productive employment. A large youth population, especially of young men, with no training or prospects is a potential source of political and social conflict: in other words, a threat to regional as well as national peace and security. Lack of means of livelihood will also increase migratory pressure.

Countries with young, rapidly growing populations include the world’s most fragile states. These countries are also the focus of other kinds of international cooperation programmes which provide emergency aid, help with reconstruction, aid in strengthening institutions and the rule of law, and ‘soft power’ for the military and peace missions. Such programmes should also make structural provision for SRHR, with specific attention for access to family planning.

Phase II Populations with a low dependency ratio

Populations with a low dependency ratio are characterised by a declining proportion of young people under 15 and a growing proportion of people of economically productive age. This is caused by a decline in fertility rates. The ‘demographic dividend’ to which this gives rise can help to accelerate the growth of per capita income, national savings and the national economy. This is the point at which a country has an opportunity to both significantly accelerate its economic growth and invest in the future; in other words, to create the provisions it will need at a later stage in the transition process when its population starts to age. However, the benefits of the demographic dividend are not realised automatically. The large potential workforce that is created during this phase must be matched by a corresponding demand for labour and a supply of productive employment. Without the right policy, the extra supply of labour could lead to unemployment, with a potential risk of political and social instability. The pressure to migrate would also increase.

One prerequisite for generating a demographic dividend is for countries to practise good governance and invest in institution building. The ability to benefit from the demographic dividend and reduce the negative future impact of an ageing population is enhanced by improved health care and a more secure food supply, increased access to education and training, efficient labour markets, private sector development, free global trade, a stronger financial sector and better pension systems through the creation of pension funds.

Phase III Ageing populations

In this phase, an ageing population can result in a substantial decline in per capita income, especially among older people themselves. The effects of this decline are mitigated by the fact that despite this loss of income, per capita consumption among the older population can be maintained by a net income transfer to this group via the government. Other welfare-promoting factors that could offset the decline in income among older people include a healthier population, increased labour participation by women and older people, and immigration.

Clearly, if insufficient provision is made for the effects of ageing in the second phase of the transition process, older people will experience a dramatic reduction in their economic and social security later on.

The demographic transition will eventually lead to smaller families. Fewer children and continued poverty could undermine care for, and the income security of, older members of the population. This is especially true in developing countries, where it is mainly younger family members who support and care for their older relatives. The traditional family support system could thus come under pressure, particularly as a result of migration and HIV/AIDS.

For most people in developing countries, the absence of any pension provision creates a substantial lack of income security in later life. This is especially true of small farmers, rural labourers and people working in the informal sector. Often it means having to carry on working to an advanced age for lack of an alternative source of income. More attention must be given not only to income security but also to health care for older people.

A policy to mitigate the effects of an ageing population must also take account of the fact that most of the countries concerned have a disproportionately high number of older women, a disparity that widens with age. Many of these women were already more vulnerable when they were younger and were therefore unable to make any provision for their old age. Reasons include lack of training, the fact that they had to spend most of their lives caring for their families, and social and cultural deprivation, such as lack of access and titles to land.

Demographic transition and its consequences for the MDGs and national policy in developing countries

These developments and trends have major implications for the countries concerned. They affect the national budget, health care, education, the environment and climatic conditions and domestic social and political stability. In contrast to what was once assumed, the demographic transition influences economic growth and hence per capita income growth. Changes in the age composition of the population are a central factor. The MDGs are particularly likely to be met in countries whose population structures are characterised by falling dependency ratios and where the positive effects of the demographic dividend can be realised.

If countries are to successfully enter this phase, they must promote social rights such as SRHR, health and education, especially for women and girls, and pursue policies promoting good governance and higher quality institutions. An integrated healthcare system with attention for preventive care, sex education and family planning is crucial, as is integrating SRHR into education and other development programmes. This will reduce both fertility rates and maternal and child mortality. The resulting decline in the proportion of young men could eventually also yield a peace dividend.

If the MDGs are to be met in the phase in which the demographic dividend can be realised, the following policy areas must be tackled alongside the priorities mentioned above:

- education and training;

- creating productive employment;

- widening access to financial services;

- equal access to training, financial services and the labour market for women.

Demographic trends and Dutch policy on the MDGs

The Netherlands does not explicitly address demographic trends in either its foreign or development cooperation policies. An exception is policy on gender (MDG 3) and on SRHR (MDG 5), which is partly geared to meeting the goals set by the Cairo agenda.

Earlier sections of this report clearly show that MDGs 2 (universal primary education), 3 (gender equality), 4 (reduce child mortality), 5 (reduce maternal mortality and promote SRHR) and 6 (combat HIV/AIDS) are highly interdependent and play a key role in influencing demographic trends such as birth (declining fertility rates) and death rates. Working towards these MDGs will ultimately lead to a reduction in birth and death rates, enabling a country to enter the phase in which the dependency ratio declines and the possibility of a demographic dividend arises, with – under the right conditions – positive benefits for poverty reduction (MDG 1), peace and security and the environment. However, most developing countries are still at the stage of declining mortality rates combined with high continuing fertility rates. The AIV believes that the Netherlands’ policy to promote social rights such as SRHR (notably access to family planning), health and the education of women and girls in particular can act as a springboard for the further development of these countries.

In 2007 the current Minister for Development Cooperation announced that he would be stepping up policy on equal rights and opportunities for women (MDG 3) and on sexual and reproductive health and rights (MDG 5). This would be done as part of a wider focus on health care, to include measures to combat child and maternal mortality (MDGs 4 and 5). The minister said that reducing maternal mortality and promoting reproductive health for everyone would remain spearheads of Dutch policy. The Netherlands’ contribution will primarily take the form of helping to strengthen healthcare systems, with specific attention for SRHR and HIV/AIDS prevention (MDG 6). The AIV believes that the minister has made the right decision in choosing this policy intensification on SRHR, which is an internationally sensitive issue.

Between 2007 and 2009, bilateral budgets for the three budget items (5.3, 5.4 and 5.5) corresponding to MDGs 3 (promote gender equality), 6 (combat HIV/AIDS) and 4 and 5 (reduce child and maternal mortality and promote SRHR) rose by 20%. The budgets for MDGs 4, 5 and 6 were increased by 12% and the budget for MDG went up by more than 800%. The total projected bilateral budgets for 2009 are €475 million for MDGs 4, 5 and 6 and €37 million for MDG 3.

Total actual spending on MDGs 4, 5 and 6 through the multilateral, bilateral and non-governmental channels has remained stable in recent years. On average, the non-governmental channel has absorbed 29% of expenditure, the multilateral channel 44% and the bilateral channel 27%. In 2008, actual expenditure on MDGs 4, 5, and 6 through the multilateral, bilateral and non-governmental channels came to €567 million. The Netherlands made little or no financial contribution to MDG 3 prior to 2007; such allocations as were made were confined to the non-governmental channel. In 2007 this commitment was trebled, with practically all of the increase going once more through the non-governmental channel. In 2008 the Netherlands doubled its financial contribution to MDG 3 and increased the share of bilateral funding. In 2008, actual expenditure on MDG 3 through the multilateral, bilateral and non-governmental channels totalled €68.9 million.

The relevant budgets show that in 2007-2009, the Netherlands targeted most of its policy efforts at MDG 6 (combating HIV/AIDS). MDG 6 accounted for an average of 65% of the total budgets for MDGs 4, 5 and 6. Interestingly, the multi-year estimate for 2013 shows that this allocation has barely changed (66%). Despite the links between HIV/AIDS and SRHR, the allocation of funding in the context of Dutch policy appears to be heavily weighted towards HIV/AIDS at the expense of SRHR.

The Netherlands must nevertheless be congratulated on its efforts to promote SRHR, especially in the context of what is a highly sensitive ideological international debate. The Netherlands provides a unique added value in this regard due to the credibility earned from the results of its own domestic policy: a very low prevalence of teenage pregnancies and HIV/AIDS and low levels of abortion, despite the fact that abortion is both legal and offered largely free of charge.

The AIV notes that between 2007 and 2009, bilateral budgets for major Dutch commitment to universal primary education (MDG 2) have risen by 15%. €515 million was set aside for MDG 2 in 2009, almost 20% of total expenditure that year. Of this ODA, 54%was spent on education and gender and 46% on the health MDGs. These breakdowns will remain unchanged for 2013. The AIV observes that the Netherlands’ substantial investments in MDG 2 in recent years are crucial in enabling developing countries to respond to demographic trends.

The latest Global Monitoring Report (2008) shows just how timely these efforts continue to be. It concludes that urgent action must be taken to meet the MDGs by 2015. The prospects are poorest for achieving MDGs 4 and 5 (reduce maternal and child mortality). Progress in attaining universal primary education, food security, gender equality and basic sanitation is also seriously behind schedule. The situation in fragile states is the most critical. Sub-Saharan Africa is lagging behind in meeting all the MDGs, including MDG 1, despite the fact that many countries in the region are achieving higher growth rates. South Asia is on track to attain MDG 1 but is not making enough progress to meet the human development MDGs.

The complex interrelationship between demographic trends and the MDGs shows how significant these developments are for a country. Only through an active response to demographic trends, partly through measures designed to meet the MDGs, can sustainable development be achieved. Failure to respond will have a direct adverse effect on poverty reduction and on social and political stability. An active approach to good governance and the quality of institutions is also essential.

Recommendations

Together with climate change, demographic trends will be among the greatest challenges facing mankind in the 21st century. Both will have far-reaching consequences in various ways. The AIV believes that far more attention should be focused both nationally and internationally on how demographic trends relate to economic growth and sustainable development, peace and security, scarcity, energy consumption, the environment, migration and mobility, and human dignity. Demographic trends and the associated transition processes should also be given much more government-wide attention so that the Netherlands can respond positively and adequately to the global changes that will occur between now and 2050.

The AIV recommends that the Netherlands place demographic trends high on the agenda as a global issue within the new structure of the Ministry of Foreign Affairs, which is now being created. It should not be the preserve of any one specific social, economic or environmental department, to avoid a one-sided focus on any one of these policy areas. An integrated approach that addresses all these dimensions and guarantees policy coherence is essential. The AIV therefore recommends the appointment of a high-level Ambassador for Population Issues and Sustainable Development at the Ministry of Foreign Affairs. From this overarching position, the Ambassador could ensure that the issue is integrated into the full spectrum of national policy and given international prominence. Once it is sufficiently embedded in policy, the post could be discontinued.

In the AIV’s view, policy to promote social rights such as SRHR (notably access to family planning), health and education for women and girls in particular could act as a springboard for social and economic development. In the light of the 2009 budget and the 2007-2008 Results in Development report, the AIV believes that the Minister has set the right priorities but that even more could be done, both nationally and internationally, through bilateral, multilateral and non-governmental channels. In addition to the important work being done by the Netherlands to promote SRHR, Dutch efforts should also focus strongly on a broader approach that takes account of the consequences of demographic transition processes for developing countries.

Active measures should be taken to increase awareness among political leaders and administrators in developing countries of the impact of high fertility rates and the associated population increase on economic growth, sustainable development and political and social stability. Unfortunately, some political leaders regard rapid population growth as a way of extending their power base. In reality, it only heightens the risk of poverty, hunger and domestic unrest.

Demographic trends and transition processes should be included in the Netherlands’ policy dialogue with partner countries and should form part of the Multiannual Strategic Plans, country profiles and PRSPs. This will make it easier for countries to respond more effectively and swiftly to demographic trends.

Demographic transition processes have major implications for government policy and development outlooks. Account must be taken of the changing age composition of the population (the ratios between young people under 15, a working population between 15 and 65 and an ageing population over 65) that occurs in the different phases of the demographic transition process. Good governance and enhancing institutional quality are also necessary preconditions for ensuring a favourable outcome of the demographic transition.

Policy to promote social rights such as SRHR, health and education for women and girls in particular can act as a springboard for development. Integrated healthcare systems with a focus on preventive care, sex education and family planning are vital, as is integration of SRHR into education and other development programmes. This will reduce both fertility rates and maternal and child mortality. The resulting decline in the ratio of young men could eventually also yield a peace dividend.

Peace operations and policy on fragile states must allow sufficient scope for a structural approach to SRHR, with a specific focus on family planning. This increased scope should also be reflected in additional financial resources.

Despite the substantial efforts being made by the Netherlands to promote SRHR and the close links between SRHR and HIV/AIDS, the allocation of funding for Dutch policy appears to be heavily weighted in favour of HIV/AIDS at the expense of SRHR. The AIV recommends allocating a higher proportion of funding to SRHR.

If the MDGs are to be achieved in the phase in which the demographic dividend can be realised, men and women must be given better access to the labour market, training and financial services. Equal access for women and girls plays a major role in this respect.

The AIV has formed the impression that the mainstreaming of ageing in national development strategies, as advocated in the Madrid International Plan of Action on Ageing, is not progressing well. The Netherlands should therefore address this problem in its policy. It should also offer technical assistance to developing countries to help them establish public and private pension funds and other provisions for old age. Investments in institutional structures are needed to provide for the large number of vulnerable elderly people, including a disproportionately high proportion of women, who will soon be in need of income security. Microinsurance policies could also be introduced as part of a microfinancing system.

The Netherlands could call on the European Union to specifically address the consequences of demographic trends for sustainable development and include the issue on the agenda of its political dialogue with developing countries.

Demographic trends, especially transition processes and the resulting age composition of the population, are an urgent priority for development cooperation and should be made an integral part of the Minister for Development Cooperation’s modernisation agenda. Most developing countries, including fragile states, will continue to experience high fertility rates and rapid population growth for some time to come. This will impede their progress in meeting the MDGs by 2015 and will undoubtedly also undermine efforts to attain future targets after 2015. So in addition to pursuing a policy for the immediate future, the Netherlands must also develop strategies which offer an effective long-term response to population issues.

The anticipated decline in GNP will inevitably also reduce the ODA share of the Netherlands’ development cooperation budget (0.8% of GNP). This will require choices in making the unavoidable cutbacks. The AIV urges that when considering where to apply these cost-cutting measures, the government maintain its vital contribution to SRHR, health, education and gender as far as possible. Otherwise, the direct effects of such cutbacks could inhibit sustainable development in developing countries for many years to come.