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Economic effect of increased family planning and reduced fertility in Uganda

Economic effect of increased family planning and reduced fertility in Uganda

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  • 1. Family Planning, Human Development and Growth in Uganda Jouko Kinnunen, VATT Hans Lofgren, WB Dino Merotto, WB Presented at the Twelfth Annual Conference on Global Economic Analysis Santiago, Chile June 10-12, 2009 THE WORLD BANK GOVERNMENT INSTITUTE FOR ECONOMIC RESEARCH (VATT), Finland &
  • 2. Background & Motivation
    • Extremely high fertility & youthful population in Uganda -> why a problem?
    • Development & public expenditure planning needs of GoU
    • Opportunity to expand the WB MAMS model
    • Discussion on the role of fertility within development economics
    • Recent changes in the (US) political stand on Family Planning
  • 3. Research Questions
    • What macro and MDG attainment effects would increased (and effective) family planning (FP) services have in Uganda?
    • Does the way of financing the increased (?) public expenditure on FP matter?
    • Sensitivity to FP cost estimates
  • 4. Current situation
    • Total fertility rate close to 7 children
    • Dependency ratio 110 percent ([0-14&65-]/[65+])
    • Unmet demand reported by 41% of hhds
    • Current contraception prevalence 24%
    • 2 out of 7 children unwanted
    • High pressure on land use – potential for conflicts
    • Pressures on public expenditure on health and education
    • High dependency of GoU on foreign aid (= tax receipts)
  • 5. Economics & Demographics
    • Per-capita GDP & Population growth – a debated issue
    • Age structure affects economy: labor supply,private & public consumption, investments, productivity
    • Human development & Demographics closely linked: MDGs, social services
    • Increasing number of CGE models with demographic modules available
  • 6. MAMS of The World Bank
    • MAMS, Maquette for MDG Simulations
    • Used in ~35 developing country applications
    • Poverty reduction and MDG attainment strategies, development planning
    • Recursive-dynamic one-country model
    • Government services modeled in relatively detailed fashion: public sector modeled as a producer as well a consumer
    • Productivity impact of public infrastructure included
    • MDGs covered: MDG1 (headcount poverty rate, other measures), MDG2 (n et primary completion rate) reduced under-five and maternal mortality rates (MDGs 4 and 5), increased access to improved water sources (part of MDG 7)
    • www.worldbank.org/mams
  • 7. The demographic extension
    • Population modeled with one-year age cohorts per gender
    • Fertility and Mortality modeled with two-tier Constant elasticity and Logistic functions (mimics modeling of the MDGs within MAMS)
    • Constant Net migration rate per age group
  • 8. The dynamics of the demographic extension Population(sex,age) at time t (beginning of the year) Fertility (age of mother, sex of child) Mortality (sex,age) Migration (sex, age) Population(sex,age) at time t+1
  • 9. Constant Elasticity function (1st tier)
  • 10. Mortality rate
  • 11. Fertility rate
  • 12. Our BASE scenario 2003-2030
    • Annual GDP growth 6.2 % (recent average growth rate)
    • Growth in government consumption levels out due to demography & completed reforms within primary education
    • Improvements in all MDGs covered
    • Only the poverty rate (MDG1) is attained by 2015
    • TFR reduces from 7.3 in 2003 to 5.6 by in 2030
    • Population growth rate 3.08% btw 2003-2030, roughly equal to UN medium variant projection
    • Dependency ratio, mortality and fertility higher than in the UN
  • 13. Real growth of GDP components, percent under BASE scenario 2009-2030
  • 14. MDG attainment
  • 15. Policy simulations: increased Family Planning
    • Gradual increase in FP services from 2007 on which reduces fertility by 20% (of what it otherwise would be at that year) :
      • fp-ftr adjustment in foreign transfers
      • fp-tax adjustment in domestic taxation
      • fp-db adjustment in domestic borrowing
      • fp-fb adjustment in foreign borrowing
  • 16. Results of the FP scenarios
    • Small macro effects: sligtly slower GDP growth, higher export share of GDP, clearly higher consumption per capita
    • FP increases public expenditure during the first years, but decreases it rapidly from
    • Tiny differences btw FP scenarios, demographic results almost identical
    • ” Domesticity” of the clearing variable for government expenditure plays a role: the most favorable macro effects when increased fiscal space is used to tax cuts
    • Population in 2030 declines from 61.0 m to 53.7 m
  • 17. Population under BASE and FP-ftr
  • 18. Development of Total Fertility Rate (TFR)
  • 19. Base scenario FP-tax scenario Women Men
  • 20. Final-year EV per capita as % of per-capita consumption
  • 21. Sensitivity to cost of FP
    • Even ten-fold annual cost of protection ($15 to 150$) does not change the qualitative result of the study – desirability of FP
    • The desirability of the FP hinges on other than economic values
    • Government expenditures lower than under BASE first in year 2023 instead of 2016
  • 22. Change in Government Expenditure when Annual Cost of Protection per Couple is: $15 $30 $150
  • 23. Final Conclusions & Remarks
    • From the point of view of Ugandans’ welfare, the case of FP is very strong
    • MDG attainment is advanced by the FP
    • In the medium to long run, additional fiscal space is created by the FP
    • FP initiatives need not necessarily be very costly
    • Integration of economywide and demographic models desirable
    • Possible further studies within this framework: AIDS, other questions of health economics, inclusion of morbidity (labor supply) and several mortality reasons separately
  • 24. Thank Your for Your Attention! ¡Muchas Gracias por su Atención!