Chindia's Demographic Time Bomb?

♠ Posted by Emmanuel in ,, at 11/02/2007 03:50:00 PM
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Bloomberg columnist Bill Pesek is on a roll nowadays as this is the second straight column of his featured here. I've had some posts on the possible future consequences of the lopsided gender imbalance in China [1, 2]. Although there is a ban on sex-selective abortion in place and officials vow to get tough on those who violate the ban, the gender imbalance there keeps worsening. India also suffers from the same problem due to, among other things, the still-widespread tradition of dowry in which the family of the bride is obligated to give that of the groom a bounty that would-be parents want to avoid. China and India have the dubious distinction of being #1 and #2 in gender imbalances worldwide. As I have already written more about China and its imbalance, let us focus here on India.

The chart above is taken from a page where you can drill down further to the district level to see demographic imbalances in India. Just as China has, India banned sex-selective abortion back in 1996 but this law has proven difficult to enforce. Meanwhile, the Times of India decries this imbalance in modern India:

It's long been a matter of shame for 'modern' India — and just keeps getting worse. Despite booming growth rates and rising literacy, more and more girl children are being killed at or before birth. Fresh statistics show 80% of India’s districts have recorded a decline in sex ratios since 1991.

The worst offender is Punjab, where the ratio of girls has dropped from 875 in 1991 to 798 girls for every 1000 boys in 2001. This chilling data is part of the latest report on "State of the World's Children", due to be released by Unicef shortly.

Punjab is closely followed by Haryana, which has recorded a 60-point drop from 879 girls in 1991 to 819 in 2001, followed by Chandigarh, Himachal Pradesh and Uttaranchal. A surprise entry to this hall of shame is Arunachal Pradesh, where the child sex ratio has dropped from 982 girls to 964. Delhi, with all its cosmopolitan pretensions, has a 47-point drop from 915 girls to 868...

The report is a sweeping indictment of efforts of governments to enforce laws against foeticide as well as killing of newborn girls. Campaigns to encourage people to consider girl children as socially and even economically desirable do not seem to have made much headway either.

The all-India average is 927 girls for 1000 boys which puts the country right at the bottom of the chart internationally. In fact, it fares even worse than countries like strife-wracked Nigeria (965) and neighbour Pakistan (958). According to the report, only China with 832 girls per 1,000 boys ranks below India on this dubious front.

According to sources, the dismal state of affairs is largely due to misuse of pre-natal diagnostic techniques and the consequent increase in cases of female foeticide.

"In prosperous states like Punjab and Haryana, people have both access and money to misuse technology," a source said. Incidentally, the report notes that incidence of female foeticide seem more prevalent in urban areas compared to rural regions. In Punjab, the number of girls in rural areas is 799 per 1000 boys, compared with an even grimmer 796 in urban zones.

Here is the Pesek column on what these imbalances may mean for the development of these countries going forward. It's a serious concern, no doubt:
No matter what one calls it, the desire for sons in China, India and other Asian economies is causing a dangerous gender gap. In China, for example, 120 boys were born for every 100 girls in 2005, according to a new United Nations report. This growing testosterone glut is something investors making long-term bets on Asia should be monitoring, and closely.

``Sex ratio imbalances only lead to far-reaching imbalances in society,'' Thoraya Ahmed Obaid, head of the UN Population Fund, said in Hyderabad, India, on Oct. 29. ``We must carry forward the message that every human being is born equal in dignity, worth and human rights.''

Tell that to the ever-growing numbers of families from Beijing to New Delhi and from Hanoi to Kathmandu actively avoiding the birth of daughters. It's a cultural phenomenon governments have yet to address sufficiently and one that could have unexpected economic side effects.

The preference for boys often boils down to economics. Sons tend to support parents in their old age, while daughters are often seen as a liability. Families sometimes need to pay a dowry when daughters marry. In some cultures, sons perform last rites when parents die and continue the family name.

It's a bit of Darwinism in reverse. Families are conducting a kind of unnatural selection process to get ahead economically. Yet hundreds of millions of households engaging in such an experiment may backfire on entire economies. Guilmoto, who wrote the UN report, says men will outnumber women by 23 million in India and by 26 million in China by 2030. Some estimates are even higher.

In the 1990s, economist Amartya Sen drew attention to the phenomenon of ``missing women.'' Improved census data now allow us to see how much the trend is growing and could undermine Asian growth, productivity and lead to bigger budget deficits. It might even lead to an increase in violence.

This latter risk was detailed in the 2004 book ``Bare Branches: Security Implications of Asia's Surplus Male Population.'' In it, Valerie Hudson and Andrea den Boer warned that Asia's shortage of women is giving rise to an entire generation of young men with no prospects of finding a mate. They argue that biology, sociology and history suggest the imbalance will lead to crime and social disorder.

Farfetched, perhaps, yet the UN warns that the focus on sons in countries such as China, India, Nepal and Vietnam may fuel sexual violence and trafficking in women. The UN notes that if Asia's overall sex ratio were the same as the rest of the globe, in 2005 the region would have had 163 million more females.

Here, China and India should be the largest concern for investors. Multinational companies are relying on increased consumer demand in the two most-populous nations. So are investors, who are betting on strong economic growth, rising productivity and an ample supply of increasingly skilled labor.

``To address the socio-economic basis for the preference for boys, both societies need to reduce the dependence of parents on their male children, while improving the economic standing of daughters,'' says Jing Ulrich, chairman of China equities at JPMorgan Chase & Co. in Hong Kong. ``This will require improvements in social security and policies to improve education and female participation in the workforce.''

One consequence of Chinese becoming richer may be more sex selection, not less. Improving ultrasound and amniocentesis technology is making it easier for parents to abort girls, and reports of female infanticide are becoming routine. The same is true of India; the wealthier the region, the wider the gender divide is likely to be.

What also concerns the UN is what all those single men will do with their desire for female companionship. Sadly, the real winner could be the human-trafficking business amid increased demand for prostitution and the outright purchase of mates.

China's government is beginning to address the issue. Earlier this year, the Communist Party vowed to take ``tough measures'' to control the imbalance. Yet China needs to become more aggressive in tackling a problem that's partly at the root of President Hu Jintao's push for a ``scientific outlook on development.''

Hu wants to spread the benefits of China's 11.5 percent growth. At the moment, the lack of safety nets -- public help with education, health care and pensions -- means that sons are the safety net. Having a boy is your retirement plan and until that changes, Chinese may welcome fewer and fewer daughters.

Among the biggest obstacles is the not-in-my-backyard dynamic that demographers confront in Asia. It's recognition by parents that it's important to have more girls -- just as long as someone else has them. Breaking this NIMBY mindset will require tremendous political will and spending in the years ahead.