Getting the Diagnosis Right: Population Growth, Development and Foreign Aid in Ethiopia

Tsegaye Tegenu, Stockholm University 02/22/10

In your webpage (http://www.aigaforum.com) I read Ato Zerihun Retta’s response to Eamon Delaney’s view on population growth and development in Ethiopia. Even if I do not have the time to dwell at length, I felt uncomfortable to let the discussion pass without presenting my own line of thinking and understanding of the issues. I am doing research on population economics in Ethiopia (see references below) and know the difficulty of synthesizing population growth and development. My comments focus on two important points which one must consider when discussing about population growth and development in countries such as Ethiopia.

First population growth is neither good nor bad by itself. What makes it good or bad is the type of population that is increasing and the kind of development policy the country is following. In the case of Ethiopia the population that was increasing in the period between 1950s and early 1990s was the child population (age group 0-14). For instance, as of 1985, it was estimated that 47% of the country’s population were children, 0-14 years of age and 27% were between the ages of 15 and 29. This means you have you have more consumers than producers. Increase in the number of children forces a change in the family behaviour: higher consumption levels, low labour supply and low capital accumulation. At the level of state, there is greater responsibility to provide basic services such as education and health care. The use of almost all the goods produced and value added generated to immediate consumption strains the capacity to save. The high dependency burden shifts the pattern of investment to a welfare type of investment (health, education, housing, etc.) from directly productive type of investment (plants, factories, etc.). Hence the level and composition of net investment resulting from the effects of increased dependency burden would tend to reduce growth in total output or per capita income (for details see Tsegaye 2004).

Since 1994/95 the age structure of the Ethiopian population has changed. The country has started to experience an increase in working age population and an associated decline in the dependent age population. Between 1995 and 2000 the annual growth rate of the working age population and the young dependent population appears to run on an equilibrium position (a stationary state, balanced at a knife-edge). Since 2001the young dependent population is displaced from its position as a result of the increase of the working age population. In 2008 the country has a total population of 79 million and 48 percent of the adult population is in the age group 15-29. This means an increase in the labour force looking for education, employment and housing. For instance in 2005 in the rural area the labour force is estimated about 32 million and each year one million people are added in the labour force. (for details see Tsegaye 2008).

The question is now what kind of development policy is the country following. Ideology (be it left or right) should not be the start for formulating the country’s development strategy. My view is that the age structure of the population should be the starting point for the formulation of the country’s development programs and growth policy strategy. I do not think that the current development strategy of the country can counter the negative effects of population growth and pressure in Ethiopia. Following the examples of China and India, the development strategy of Ethiopia should be based on Green Revolution and Rural Industralization. That is the only way out: a complete structural transformation of the economy. Get rid of small scale farming and create small manufacturing growth centres in rural areas. Small farms cannot be the engine of agricultural growth at a time when labour force growth is characterized by young age (56% of the labour force) with fertility rate of 5. 5 children per woman and household types of higher consumption requirements (56,7% of the total agricultural households). For details see Tsegaye and Bo (on population pressure).

This leads me to the second point which I would like to emphasise. When we speak about population dynamics, we are not speaking about distribution of contraceptives and population control. This is a wrong understanding of the issue. Speaking about population growth/pressure means speaking about the type of population that is increasing, its size multiplied by its needs, and the speed at which it is increasing (growth rate). In other words we are speaking about a running race in which we can lose or catch up depending our development strategy and policy. Using a simulation model, the government has to know the time period in which its policy brings about the intended effects and this has to be contrasted with the speed at which the type of population is assumed to grow. You do not have the resource to waste for trial and error learning. My observation is that even with the right policy in place, governments cannot keep up with the race. The Indian government is a good example. It cannot easily cope up with the population pressure, even if it is willing not to lose the race. So, population dynamics means size, weight and speed.

Finally I would like to say few words on the relationship between development aid and population growth in receiving countries. To what extent and under what circumstance is a given aid approach relevant, efficient and effective? The answer depends on the given country context and objectives of the donor. The traditional way of aid approach is called helping (mostly financial aid). Richer countries give poorer countries aid to help them to make a better future for themselves. This approach works when countries are found in a child phase: continued rapid increase in the number of preschool age children and young people age between 0-14. Because of the child burden all the goods produced were consumed and there was no saving. That means there was no national capacity for trade in this period and in this respect donor’s aid was important in assisting development. This situation has now partly changed. The labour force has grown and it will increase from 52% in 2008 to 60% in 2030. The modalities of assistance should also change and take the form of a transfer of technical knowledge and promotion of bilateral trade. Depending on the shift in the age structure, the modality of delivering development assistance should change from aid relationship (financial assistance to children) to knowledge transfer and trade relationship (Tsegaye 2008, Swedish text).

References

1. Tsegaye Tegenu (2004), “Socio-economic and Environmental Effects of Age Transition in Ethiopia: 1950-2000”, in Proceedings of the First International Conference on the Ethiopian Economy. Edited by, Ethiopian Economic Association, V.III.

2. Tsegaye Tegenu (2005), “Process of Population Pressure and Creation of Livelihood Resources, Activities and Positions: Retrospective Life History Study of Farmers in Sodo District of Ethiopia”, paper presented at the research conference on Structures of Vulnerability: Mobilisation and Resistance, Stockholm, January 12-14, 2005.

3. Tsegaye Tegenu (2007), Ungdomens Kontinent, I Framtider, N.3. Institute för Framtidsstudier. Stockholm. (Swedish text)

4. Malmberg, B and Tegenu, T. (2007), Population pressure and dynamics of household livelihoods in an Ethiopian Village: an elaboration of the Boserup-Chayanovian framework, in Population and Environment. Retrieve from www.springerlink.com/index/u9uk234661788215.pdf

5. Tsegaye Tegenu (2008), Demographic based future studies: Ethiopia as case study, IF, Stockholm (Swedish text)

6. Tsegaye Tegenu (September 2008), Labor Force Growth, Employment Characteristics and Mobility Conditions in Rural Africa. Paper submitted to the Expert Group Meeting on Age Structural Transition and Development Policy and Planning. Vienna.

7. Tsegaye Tegenu (2008), Labour Force Growth and its Effects on Ethiopian Rural Economy: A Study of Growth Policy Options. (Internet)

8. Tsegaye Tegenu Bo Malmberg (forthcoming) Interpreting Expansion of Mass Education in Rural Ethiopia: Explaining Driving Forces, Intersectoral Linkages, Farmers’ Value Priorities and Attitude Changes. Department of Human Geography, Stockholm University.

9. Tsegaye Tegenu Bo Malmberg (forthcoming), Explaining Drivers and Consequences of Population Pressure in Rural Ethiopia: A Study on Economic Performance, Conditions of Structural Transformation and Policy Options. Department of Human Geography, Stockholm University.