The Middle East's demographic transition: what does it mean?

Laipson, Ellen

"[F]rom Morocco to Iran ... [b]irth rates are falling, and the baby boom that characterized the 1960s and 1970s has given way to a potentially more favorable situation. The population growth is occurring not in the ranks of under-15-year-old dependents, but in the ranks of the working- age population (15 to 64 year olds)."

Today's Middle East conjures up an image of masses of young disaffected males loitering in hot, densely populated cities with crumbling infrastructure and dim prospects for jobs. This picture is true-for many cities around the Mediterranean littoral--Casablanca, Algiers, Cairo and Gaza. Farther east, in Baghdad and Riyadh, the problem is also acute, but not as visible. Many believe this demographic reality is a contributing, if not determining, cause of the rise of support for the violent extremism of Osama bin Laden and Palestinian suicide bombers.

Yet professional demographers and political economists focus on a different story. For them, the important message is the demographic transition occurring across the Middle East--from Morocco to Iran. Birth rates are falling, and the baby boom that characterized the 1960s and 1970s has given way to a potentially more favorable situation. The population growth is occurring not in the ranks of under-15-year-old dependents, but in the ranks of the working age population (15 to 64 year olds). Middle Eastern states have in fact pursued effective family planning policies. It is important, therefore, amidst the unrelentingly depressing news of failed politics and peace processes, to examine more closely this demographic shift and to analyze whether it holds the key to a more promising future for the region.

Why is it promising for a state that the largest segment of its population is working adults? The concept is the demographic dividend or demographic gift. (1) According to this theory, the ratio of dependent groups (under 15 and over 65 years old) to working- age cohorts can shape the economic fortunes of a society. If a government prepares for a shift in the country's dependency ratio (e.g., from a large youth cohort to a large working-age cohort) through appropriate economic and social policies, the availability of a greater pool of workers can generate economic growth and lead to higher standards of living. Several East Asian countries experienced this demographic gift in the 1960s and 1970s. During this period, when the baby boomers moved into their working years with fewer young dependents coming in behind them, the circumstances were ripe for sustained economic growth. The availability of a larger work force became an engine for higher productivity and output.

This success also depended on economic and social policies that encouraged private sector expansion. One of the key policy instruments that worked for Japan, Korea, Taiwan and Singapore was investment in education. Even when the population shifted, the share of spending on education remained constant, so that the state was effectively investing more per student than it did when it had higher dependency ratios. (2)

It cannot be assumed that all the right circumstances prevail in the Middle East, and many economists are indeed worried about the ability of governments to generate employment opportunities for first-time job seekers, in addition to the swollen ranks of the already unemployed. (3) The potential ramifications of the demographic transition for the economics, domestic politics and regional relations of the troubled Middle East are both positive and negative.

LET'S DO THE NUMBERS

A quick review of the demographic history of the region is startling. The population of the region from roughly A.D. 1000 to 1800 remained stable at approximately 30 million. Today it is nearly 400 million. (4) The period of fastest growth occurred between 1875 and the present. Growth is predicted to continue until 2025, although the rate is gradually declining in most countries of the region. Significantly, the latter half of this period has been characterized by the political upheavals and external crises of the post-independence era. In other words, the rapid expansion of population has taken place in circumstances of political distress and poor governance.

It is estimated that by 2050, the population of the Middle East will reach a stasis point of about 700 million. These projections may even understate the progress being made across the region in bringing birth rates down; economists and demographers would be pleased if the 700 million figure in fact turned out to be too high.

Projections of population growth must take into account not only how many births occur but also how general health conditions are affecting mortality and morbidity rates. In the Middle East, the decline in births per woman has been impressive, but its net impact on population growth has been muted by the improvements in care for the elderly and the increase in life expectancy throughout most of the region. While the number of young dependents as a group is not increasing as rapidly as earlier, the number of elderly dependents is growing. This is a sign of success in public health systems and can be a source of economic activity in prosperous states, generating new service sector employment to support the needs of a healthier, older population. Of the two dependency groups, young children and those over 65, the latter can also contribute more to political and social stability. In the Arab world, the United Arab Emirates are expected to have the largest percentage of elderly within two decades and Yemen the smallest.

The UN Development Program (UNDP) Human Development Report suggests that there is a correlation between high birth rates and failure to thrive economically. (5) The Middle Eastern countries ranked highest on the human development scale also have the lowest population growth rates. Four Middle Eastern countries rank in the category of "high human development" in the UNDP's Human Development Index: Bahrain, Kuwait, United Arab Emirates and Qatar. While Kuwait's annual population growth rate has remained at 2.5 percent on average since 1975, the others are due to experience dramatic drops when figures for the period 1975 to 1999 are compared with projections for 1999 to 2015. Bahrain's rate drops from 3.5 to 1.5, UAE's from 6.8 to 1.5, and Qatar's from 4.9 to 1.4.

Eleven Middle Eastern countries--including Iran, Jordan and Israel--are categorized as "medium human development"; each, with the exception of Lebanon, is also experiencing significant drops in population growth rates. (Lebanon's has increased from an abnormally low 0.9 percent during the civil war years to 1.3 percent). Yet Saudi Arabia's growth rate, while still declining, is unusually disturbing. It is expected to drop from 4.2 percent (1975-1999) to 3.0 percent (1999-2015), and the Saudi population, which grew from 7.3 million in 1975 to 19.6 million in 1999, is projected to reach 31.7 million by 2015.

The birth rate of Yemen, the only Arab state in UNDP's "low human development" category, will remain constant at 3.9 percent for the two time periods under consideration.

THE IMPACT ON ECONOMICS (6)

Demographic growth clearly has a profound impact on all aspects of economic life and on a nation's potential for future development and prosperity. Population growth has consequences for natural resources and the environment, and countries can lose the struggle for ecological balance when societies grow too fast. Two of the most obvious consequences are water and food. For the Middle East, water is the resource most severely affected by population growth; virtually the whole region will experience conditions of serious water scarcity over the next decade. (7) The Middle East is also more dependent on food imports, driven by the impact of urban sprawl and water scarcity on arable land, and this affects trade balances, foreign exchange policies and capacity to grow.

Population pressures can create a vicious cycle whereby governments struggle to generate economic growth that merely matches or lags behind demographic growth. The state then finds itself working hard to tread in place, unable to raise the overall standard of living and often unable to meet basic demands for schooling, housing and health care. Many Middle Easterners recognize this pattern and delay marriage because of housing shortages and not-infrequent drops in access to primary schools. The disturbing longer-term implications of a decrease in basic public services have profound consequences for stability. Additionally, although economists predicted that the potentially rich states of the Middle East would enjoy quality-of-life standards akin to those of the newly industrializing countries, circumstances in the region today more closely resemble those of the most densely populated and poor countries of the world. Iran, for example, once thought to be on a course similar to Brazil's, today endures conditions more akin to those of the Indian subcontinent.

For the Arab world, the daunting challenge of the demographic gift is job creation. The demand for work from the swelling ranks of young people far exceeds states' capacity to create jobs. The World Bank estimates that over the next ten years, the Middle East-North Africa (MENA: Arab world plus Iran) region will need to create 37 million new jobs for first-time job seekers, plus 19 million jobs to eliminate current unemployment. This means that the current workforce would have to expand by two-thirds over the next decade, a virtual impossibility. (8) International financial institutions are also advising states to continue structural changes that actually reduce the number of public sector jobs at the same time that total job creation is an urgent requirement. States, therefore, pursuing what may appear to be conflicting goals, need to manage their transitions to a more market-driven employment picture with great care and international technical assistance.

Chasing the East Asian Tigers: The Tunisian Case

Have any Middle Eastern countries shown signs of bucking this trend and following the promising Asian model? The best case to examine is Tunisia--a small, homogeneous Mediterranean state long known for its progressive social and economic policies, despite a lack of parallel progress in political reform and openness. Tunisia's economic statistics and policies suggest that the nation has successfully pursued most of the necessary steps to derive clear economic benefits from a decline in population growth rates.

Due to the vision of its founding president, Habib Bourguiba, Tunisia was one of the first countries to promote family planning. But it did not do so in a vacuum; it also promoted education for girls and employment for women, policies that have proven to reinforce or multiply the effects of family planning. Meanwhile, Tunisia encouraged the development of the private sector through measures to attract foreign investment, accelerate privatization, develop the financial system and liberalize trade policies. (9) A third key area was investment in education. Tunisia ranks above its peer economies worldwide (the 75 countries ranked by UNDP as "medium development") in terms of public expenditures on education, both as a percent of GNP and as a percent of total government expenditures. (10) It spends 7.7 percent of its GNP, as compared to an average of 4.7 in other medium development states, and the government allocates 19.9 percent of its budget for education, well above its peer economies' average of 15.7 percent. President Ben Ali has sustained the commitment to economic reform and growth since his accession to power in 1987.

Altogether, Tunisia has enjoyed strong economic growth rates through the 1990s, averaging nearly 5 percent per year. It has utilized its association status with the European Union and consciously modeled itself on the East Asian tigers. Tunisia, not wanting to rely on its modest natural resources (phosphates, agricultural products), has emphasized human capital development instead. It has also been less negative about globalization than many other Arab states, although some argue that its receptivity to integration may have peaked and it will not be able to sustain strong growth rates, given the global downturn and its own constraints. (11)

Regardless of whether the nation is able to sustain these economic conditions, Tunisia's success will not have a profound impact on the region. The wider regional environment, including chronic instability in the Arab-Israeli zone, will continue to affect tourism and investor confidence adversely, even in Arab states not immediately adjacent to the Palestine arena. Tunisia's failure to pursue more proactive democratization measures simultaneously has also tainted the state's reputation and may inhibit some Europeans, in particular, from deepening their ties to the North African state. Finally, its small size sets natural limits on how far Tunisia can grow economically and how complex an economy it can support. Therefore, the country is unlikely to act as an engine or catalyst for favorable economic growth among its larger neighbors.

Jordan, Egypt and Morocco are the only other Arab states that have begun to take advantage of favorable demographic trends. Like Tunisia, they have made strides in lowering fertility rates, causing a shift in the population profile, creating a more favorable environment for business and investing significantly in education. Literacy rates are improving from startlingly low levels to those more standard for medium-development countries. For Egypt and Morocco, however, where a relatively smaller portion of the population has benefited from wise economic policies, inequality of income is still a serious challenge.

DEMOGRAPHY AND DOMESTIC POLITICS

Demographic pressures have political dimensions. Societies that fail to provide for expanding populations develop a political dynamic to cope with decline and disappointment. For example, Morocco experienced riots in 1981 that quickly turned anti-regime, prompted by a seemingly innocuous change in tuition policies for young Moroccans attending school. The policy change clearly reflected the state's inability to manage the youth bulge, but the students who swarmed into the streets were, ironically, luckier than many of their compatriots who had no access to education at all. In those years, the percentage of children able to attend primary school was declining; the state could not train teachers or build schools fast enough to keep up with population growth. The Casablanca rioters shouted antimonarchic slogans, nearly unprecedented for Morocco, and created an atmosphere of uncertainty about the kingdom's stability that lasted for several years.

To minimize the likelihood of violence, other states in the Middle East have pursued various strategies for managing demographic change (and even use these policies to pursue other political objectives). Egypt and Tunisia, both of which experienced food riots and labor unrest in the 1960s and 1970s, eventually turned to economic reform aimed at generating employment. In effect, the two governments shifted some of the responsibility for job creation and economic activity to the private sector and changed the politics of population pressure while keeping their public sectors quite large.

Meanwhile, in Saudi Arabia, demographic pressures have led to changes both in economic policies and, more indirectly, in the political culture. Saudi per capita income has dropped sharply from its highest levels in the early 1980s. (12) In a society once proud of its generous social welfare structure, Saudi officials have spent most of the past decade scaling back many of the entitlements to free utilities, free education and free health care. The high birth rate and fluctuations in oil prices led to sustained budget shortfalls that could be addressed only by providing fewer services per citizen. In addition, the government has taken some incremental steps to increase accountability, build stronger institutions and address royal succession procedures, perhaps in an attempt to respond to a less comfortable and more politically restless population.

Middle Eastern states also face challenges when they try to deal with the most basic tasks of collecting data or conducting a population census. Lebanon, the state with the greatest ethnic and sectarian diversity, has not conducted a census since 1932 because those in power do not want to acknowledge the obvious demographic shift from a near-even split between Muslims and Christians to a heavily majority Shi'a Muslim demographic reality. Iraq has also been unwilling to provide hard data on what is widely assumed to be a majority Shi'a population; Kurds, Turcomans and Assyrians also almost certainly overstate their numbers to preserve their political status in anticipation of a more normal state of affairs there.

Israel faces existential issues through the nearly inevitable evening of population shares between Jews and Arabs within the current state boundaries. An Israeli demographer asserts that in 2002, Jews have become a minority in the larger geographic area he defines as all of Western Israel or the land west of the Jordan River (i.e., Israel plus the territories). Within this area, Arab children outnumber Jewish children. (13)

Several states in the region have manipulated demography for political purposes. The Middle East may rank with the Balkans as an arena for what one author calls the "demographic struggle for power." (14) Expulsions, forced migration and internal displacement of diverse groups in the region all occurred in the twentieth century. Historians continue to debate how much of Palestinian migration out of historic Palestine was spontaneous and how much was forced by Zionist policies. Meanwhile, Kurds in Iraq and Turkey have been subjected to internal displacement and harsh treatment. In the case of Iraq, many scholars have characterized the state's Anfal campaign and the use of chemical warfare against the Kurdish town of Halabja during the Iran-Iraq war as genocide. (15)

DEMOGRAPHY AND REGIONAL STABILITY

It is difficult to judge whether and how the demographic factor plays into a state's decision to wage war, but it is plausible to speculate that demographic pressures and an inability to sustain living standards during periods of rapid population growth have indeed contributed to the politics of these decisions, even unconsciously. Governments often use national security threats to rally a restive population, and in modern Arab history, mass mobilization initiatives have been a boon to regime survival.

For example, Iran's ability to sustain itself during the nearly decade-long war with Iraq was determined by the depth of its convictions, to be sure, but perhaps also by the availability of a seemingly endless supply of young people to send to the front. The world watched in horror as reports of battlefield deaths came in with lists often containing combatants as young as 12 to 14 years of age. Remarkably, the revolutionary government was able to implement an ambitious family planning program at the end of that war because the society, having sustained high birth rates and declining economic standards throughout the war years, responded to incentives to improve family welfare.

Interestingly enough, demographic truth is also shaping the history of that tragic war; historians are discovering that the casualty counts were overstated, at least on the Iranian side. Iranian scholars currently estimate 450,000 to 780,000 dead, whereas earlier estimates of battlefield deaths were higher, counting as dead thousands who were later discovered to be prisoners of war. (16)

Likewise, the renewal of violence in the Israel-Palestine conflict contains several demographic subplots. It cannot be denied that the struggle is an existential one for both societies; Israel is fearful that the true agenda of suicide bombers and their patrons is the destruction of the Jewish state, and the Palestinians are equally apprehensive that their self-determination will be denied. Within that psychological context, work and residence permits for Jerusalem, the debate over refugees' rights to return and the ultimate status of Jewish settlements on Palestinian land are powerful emotional issues that have transcendent meaning as well as impact on the daily lives of ordinary people. The demographic realities are especially hard for Israelis, who are fully aware of the difference in birth rates, and this explains the political tolerance of a largely secular society for high birth rates among socially conservative religious communities. The current and growing perception of a zero-sum competition for survival and sovereignty over this small territory could well be the catalyst of an even more violent phase of the decades-long struggle.

CAN WESTERN POLICIES AFFECT DEMOGRAPHIC CHANGE?

Increasingly demography is recognized by foreign policy and national security experts as one of the key drivers of the political and economic fortunes of nations. It is slowly moving from a discrete social science to a more integrated component in assessing security, stability and regional dynamics in different parts of the world. Interestingly, societies that are losing population (i.e., the aging of Europe, Japan, Russia) pose policy challenges as compelling as those whose populations are growing too fast.

However, policy makers live in the present and are more likely to focus their energies on policy interventions that can show results in the short to medium term; in the United States, this time frame is normally defined by the four-year presidential term. Therefore, it is often hard to interest policymakers in issues that are playing out over decades, not months and years.

Even those who are convinced that demography matters do not know what to do about it. At one level, governments may not want to intervene in what are essentially private matters, especially family size and fertility rates of other countries. In the past few decades, debates over birth control, abortion and coercive one-child policies have demonstrated amply how highly political these issues are, potentially affecting relations among states.

At present, the approach of Western policymakers is to think more broadly about engagement with the Muslim world, such as supporting constructive economic and educational policies that may mitigate some of the adverse effects of population pressure without getting too close to social and cultural issues that could create a backlash. Educational reform, an increase in cultural exchanges, and a more explicit policy to encourage political liberalization could, over time, improve the productivity of the demographic gift generation and lead to greater economic opportunities.

This holistic, integrated approach converges with the important conclusions of the new Arab Human Development Report, released in July 2002. The report, based on inputs from Arab intellectuals and experts from diverse disciplines, makes bold prescriptions about the cure for the Arab world's social and economic ills. It calls for improvements in human rights and human freedoms, the empowerment of women and the diffusion of knowledge as critical to the future of the region. It takes into account achievements in demography, economic restructuring and educational reform but concludes that these best efforts are insufficient in an atmosphere short on personal freedom. (17)

The US intervention in Afghanistan, as well as Treasury Secretary Paul O'Neill's travels with rock star Bono in Africa in June 2002, have also reawakened a dormant debate over economic development that may have some consequence for policies affecting demography. Over the past twenty years, traditional aid approaches, such as working closely with governments on large infrastructure projects, have given way to a much greater emphasis on market and business-led growth strategies. The latter approach produced modest results in some places, helping countries like Morocco, Tunisia, Egypt and Jordan sustain their commitment to privatization and other instruments of economic reform.

But in countries where the living conditions have steadily declined and where populations have no skills or access to the rest of the world, US policymakers have expressed a renewed willingness to go back to basics and refocus on building infrastructure. Secretary O'Neill was particularly seized with clean water as an objective that could produce measurable results in a short timeframe. This is the old-fashioned way of thinking about development, and one that may well meet the most fundamental needs of the poorest societies. It can have an immediate impact on demography, when, for example, the mortality of children under five drops as disease incidence lessens, and mothers wait longer in between pregnancies due to greater confidence about each individual child's survival.

In conclusion, demographic realities are important drivers of politics and economics and must be integrated into many aspects of public policymaking and national security decisions, even if it is difficult to prove that demography, more than any other factor, will determine the fate of nations. The Middle East's demographic behavior in the 1960s and 1970s has set in motion a political and economic destiny for most states in the region that is far less promising than independence-era leaders had expected. Rather late in the last century, they came to understand the critical importance of achieving a better balance between human and natural resources and to understand the limits of the states' ability to generate economic growth that would stay ahead of the sheer numbers of mouths to feed. An improved demographic picture for future decades is now in place, but it is clear that only a small group of Middle Eastern states have begun to adjust their government policies to take full advantage of the demographic gift that has produced such impressive results in Asia.

Notes

(1) See Nancy Birdsall, Allen C. Kelley, and Steven W. Sinding, eds., Population Matters: Demographic Change, Economic Growth, and Poverty in the Developing World (Oxford: Oxford University Press, 2001) pp. 111-112.

(2) See essay by Richard P. Cincotta, "Global Trends 2015--A Demographic Perspective," in U.S. National Intelligence Council, Global Trends 2015: Excerpts, Commentaries, and Response, Woodrow Wilson International Center for Scholars Environmental Change and Security Project Report, no. 7 (Summer 2001) pp. 65-66.

(3) Tarik M. Yousef, "Macroeconomic Aspects of the New Demography in the Middle East and North Africa," paper delivered at the World Bank's Annual Bank Conference on Development Economics--Europe (Paris: 27 June 2002) p. 4.

(4) See United Nations Development Programme (UNDP), Arab Human Development Report 2020: Creating Opportunities for Future Generations (New York: United Nations, 2002) p. 38. Available online at <http://www.undp.org/ rbas>.

(5) See the Human Development Index in UNDP, Human Development Report 2001 (New York: United Nations). Available online at <http://www.undp.org/ hdr2001/back.pdf>.

(6) The author is grateful for the assistance of Huss Banai in researching this section. Mr. Banai, a student at York University in Toronto, was an intern at the Henry L. Stimson Center in summer 2002.

(7) National Intelligence Council, Global Trends 2015 (Washington, DC: NIC, December 2000) pp. 27, 29. Available online at <http://www.odci.gov/nic>.

(8) "Will Arab Workers Prosper or Be Left Out in the 21st Century?" Regional Perspectives on World Development Report 1995 (Washington DC: The World Bank, 1995).

(9) For an interesting treatment of the tradeoffs between economic liberalization and political liberalization, see Emma Murphy, Economic and Political Change in Tunisia: From Bourguiba to Ben Ali (New York: MacMillan Press and St. Martin's Press, Inc., 1999).

(10) See UNDP, Human Development Report 200l, pp. 170-172.

(11) Clement M. Henry and Robert Springborg argue that the regime in Tunisia, in part because it lacks legitimacy, relies on a few trusted capitalists, "rather than capitalism as a concept and practice." Clement M. Henry and Robert Springborg, Globalization and the Politics of Development in the Middle East (Cambridge: Cambridge University Press, 2001) p. 136.

(12) In 1980, per capita income was over $18,000. It dropped dramatically in the early 1990s and is estimated at about $10,500 for 2000. See UNDP, Human Development Report 2001, p. 179.

(13) Arnon Soffer, Israel, Demography 2000-2020: Dangers and Opportunities (Haifa, Israel: University of Haifa, 2001) p. 21.

(14) See Milica Zarkovic Bookman, The Demographic Struggle for Power: The Political Economy of Demographic Engineering in the Modern World (London; Portland, OR: Frank Cass, 1997) for a comparison of demographic engineering in the Balkans and other regions.

(15) For more on the Anfal campaign, see Human Rights Watch, Iraq's Crime of Genocide. The Anfal Campaign against the Kurds (New Haven, CT: Yale University Press, 1995).

(16) Anthony Cordesman, The Lessons of Modern War: The Iran-Iraq War (Boulder: Westview Press, 1990) p. 177.

(17) Arab Human Development Report 2002.

Ellen Laipson is the president and chief executive officer of the Henry L. Stimson Center in Washington, DC. From 1997 to 2002, she served as vice chairman of the National Intelligence Council (NIC), the U.S. intelligence community's strategic analysis center. She also previously served as special assistant to the US permanent representative to the United Nations, as director for Near East and South Asian affairs at the National Security Council and as an analyst of Middle Eastern affairs in the Department of State and for the Congressional Research Service. Ms. Laipson holds an MA from the Johns Hopkins School of Advanced International Studies.