Presentation Oct 29
Building Building Human Human Capital Capital in in an an Aging Aging Mexico: Mexico: Demography, Demography, Workforce Workforce Development, Development, and and Economic Economic Competitiveness Competitiveness Overview Overview Presentation Presentation by by CSIS CSIS CSIS-CONACYT CSIS-CONACYT ROUNDTABLE ROUNDTABLE Washington, Washington, DC DC October October 29, 29, 2004 2004
Mexico Mexico is is about about to to undergo undergo aa stunning stunning demographic demographic transformation. transformation. Mexico is still a demographically young nation, preoccupied with a young nation’s problems—modernizing its economy, creating jobs, and raising living standards. Mexico, however, is about to age dramatically. Today, there are nine times as many children in Mexico as elders. By mid-century, there could be as many elders as children.
When When the the age age wave wave has has run run its its course, course, Mexico Mexico will will be be as as old old as as the the United United States. States.
P e r c e n t o f th e P o p u la tio n
20%
Elderly (Aged 65 & Over), as a Percent of the Population in Mexico and the United States, History and UN Projection, 1970-2050
15%
US
10%
Mexico
5%
0% 1970
1980
Source: UN (2003)
1990
2000
2010
2020
2030
2040
2050
Two Two demographic demographic forces. forces. The first force is FALLING FERTILITY. Mexicans are having fewer babies—and this shrinks the relative number of young in the population. Since the mid-1960s, Mexico’s fertility rate has fallen from 7.3 to 2.2. In many urban centers, it has sunk beneath 2.1—the “replacement rate” needed to maintain a stable population over time.
Behind ’s Age Behind Mexico Mexico’s Age Wave: Wave: A A dramatic dramatic decline decline in in fertility fertility rates. rates. 8.0 7.0 Mexican Total Fertility Rate, 1960-2004
6.0 5.0
Mexican Total Fertility Rate
4.0
1960 1970 1980 1990 2000 2004
3.0 2.0 1.0
7.3 6.8 4.7 3.4 2.4 2.2
0.0 1960
1964
1968
Source: CONAPO (2002, 2004)
1972
1976
1980
1984
1988
1992
1996
2000
2004
Two Two demographic demographic forces. forces.
The second force is RISING LONGEVITY. Mexicans are living longer—and this increases the relative number of old in the population. Over the past fifty years, life expectancy has risen from 51 to 73—putting Mexico on a par with many developed countries.
Behind ’s Age Behind Mexico Mexico’s Age Wave: Wave: An An equally equally dramatic dramatic rise rise in in longevity. longevity. 75 71
Mexican Life Expectancy at Birth, 1950-2005
73
73
70
70
68 65
65
62 60
60
58 55
55 51 50
45 1950-55 Source: UN (2003)
1955-60
1960-65
1965-70
1970-75
1975-80
1980-85
1985-90
1990-95 1995-2000 2000-05
Today’s great powers became affluent societies before they became aging societies. Mexico may grow old before it grows rich.
The costs of Mexico’s coming age wave still loom far over the horizon. For the next twenty-five years, Mexico will experience a “demographic dividend” in which the impacts of aging will be mostly positive.
The The number number of of dependents dependents per per workingworkingage age adult adult will will steadily steadily decline. decline. 1.00
Total Dependency Ratio of Children (Aged 0-19) Plus Elders (Aged 65 & Over) to Working-Age Adults (Aged 20-64) in Mexico and the United States
0.95 0.90 0.85
US 0.80 0.75
Mexico 0.70 0.65 0.60 2000
2005
Source: UN (2003)
2010
2015
2020
2025
2030
2035
2040
2045
2050
The The share share of of the the population population in in the the working working years years will will reach reach record record highs. highs. 160 Working-Age Population as a Percent of Total
140
1 960 1 980 2000 2020 2040
M illio n s o f P e o p le
120 100
Mexican Population by Age Group, in Millions, Histroy and UN Projection, 1950-2050
41 % 40 % 51 % 59 % 60 %
Age 65 & Over
Age 20-64
80 60
Age 0-19 40 20 0 1950
1960
Source: UN (2003)
1970
1980
1990
2000
2010
2020
2030
2040
2050
The The current current rapid rapid growth growth in in the the workforce workforce will will gradually gradually but but steadily steadily decelerate. decelerate. 25.4% 25%
Percentage Change in the Working-Age Population (Aged 20-64) in Mexico and the United States by Decade, UN Projection, 2000-2050
P e r c e n ta g e C h a n g e
20%
17.5%
15% 11.6% 9.2%
10%
6.3%
5.6% 5%
2.9%
5.7%
2.1%
0% 2000-10
2010-20
2020-30
Mexico
-5% Source: UN (2003)
2030-40
US
2040-50 -3.3%
The The demographic demographic dividend dividend could could bring bring important important economic economic benefits. benefits.
Higher rates of savings, investment, and productivity growth. A shift from labor-intensive (low wage) jobs to capital intensive (high wage) jobs. Growing economic integration between Mexico and the United States.
To realize the potential benefits of its demographic dividend, Mexico must make the right policy choices today.
While While its its population population is is still still young young and and growing, growing, Mexico Mexico needs needs to to … …
Complete the program of economic and political reform that it began in the 1980s. Put in place a broad-based floor of protection against destitution in old age. Invest more effectively in the education and skills of tomorrow’s workforce.
Mexico has begun to engage the human capital development challenge.
Mexico Mexico now now devotes devotes aa relatively relatively high high share share of of national national income income to to education. education. 9.0% 8.0% 7.0% OECD Average 5.6 %
Perc ent of G D P
8.2%
Total Expenditure on Education as a Percent of GDP in Selected Countries in 2001
5.9%
6.0% 5.0% 4.1%
4.2%
Brazil*
Peru
7.3% 6.1%
6.2%
Canada
Argentina
7.5%
4.6%
4.0% 3.0% 2.0% 1.0% 0.0% Japan
*Figure for Brazil refers to public expenditure only. Source: OECD (2004)
Mexico
US
Chile
South Korea
The The number number of of years years Mexicans Mexicans spend spend in in school school is is steadily steadily rising. rising. 9.0 8.0
Average Years of School Completed by the Mexican Population Aged 15 & Over, 1980-2002
7.6
7.8
7.0 7.0
6.5
6.0 5.0
5.4 4.6
4.0 3.0 2.0 1980 Source: Presidencia de la Republica (2002)
1985
1990
1995
2000
2002
Despite recent progress, Mexico still trails the developed countries in most measures of human capital development.
Only Only aa minority minority of of Mexicans Mexicans complete complete high high school school or or college. college. 100% 90%
Percent of Population Aged 25-34 with an Upper Secondary or Higher Education Degree in 2002 75%
80% 70%
61%
60%
52%
51%
50%
20%
50% 41%
40%
40% 30%
89%
87%
95%
94%
32% 25%
21% 11%
14%
15%
17%
10% 0% Mexico
Brazil
Argentina
Chile
Upper Secondary Source: OECD (2004)
OECD Average
US
Canada
Higher Education
Japan
South Korea
Mexican Mexican students students perform perform poorly poorly in in international international educational educational comparisons. comparisons. Mexico’s Rank in the PISA* Assessment of Educational Attainment of 15 Year Olds in 41 Developed and Developing Countries
Mean Score
Score at 95th Percentile
Reading Test
34th
34th
Math Test
35th
38th
Science Test
34th
36th
*PISA = The Program for International Student Assessment Source: OECD (2004)
Mexico’s human capital deficit threatens its economic dynamism, competitiveness, and long-term living standard growth.
Over Over the the past past few few decades, decades, Mexico Mexico has has lagged lagged in in the the global global development development race. race. 395%
China South Korea
234% 191%
Taiwan* 155%
Singapore Chile
99%
Mexico
16% Percent Change in GDP Per Capita by Country from 1980 to 2000, in Constant Purchasing Power Parity Dollars
9%
Brazil
5%
Argentina 0%
50%
100%
150%
200%
250%
300%
Percentage Change in GDP Per Capita *Figure for Taiwan is for 1980-1998. Source: World Bank (2004) and Heston, Summers and Aten (2002)
350%
400%
450%
Mexico stands at a historic crossroads. How it navigates its coming demographic transformation will go a long way toward determining whether it achieves its objective of becoming a prosperous and stable developed economy.
Mexico Mexico is is about about to to undergo undergo aa stunning stunning demographic demographic transformation. transformation. Mexico is still a demographically young nation, preoccupied with a young nation’s problems—modernizing its economy, creating jobs, and raising living standards. Mexico, however, is about to age dramatically. Today, there are nine times as many children in Mexico as elders. By mid-century, there could be as many elders as children.
When When the the age age wave wave has has run run its its course, course, Mexico Mexico will will be be as as old old as as the the United United States. States.
P e r c e n t o f th e P o p u la tio n
20%
Elderly (Aged 65 & Over), as a Percent of the Population in Mexico and the United States, History and UN Projection, 1970-2050
15%
US
10%
Mexico
5%
0% 1970
1980
Source: UN (2003)
1990
2000
2010
2020
2030
2040
2050
Two Two demographic demographic forces. forces. The first force is FALLING FERTILITY. Mexicans are having fewer babies—and this shrinks the relative number of young in the population. Since the mid-1960s, Mexico’s fertility rate has fallen from 7.3 to 2.2. In many urban centers, it has sunk beneath 2.1—the “replacement rate” needed to maintain a stable population over time.
Behind ’s Age Behind Mexico Mexico’s Age Wave: Wave: A A dramatic dramatic decline decline in in fertility fertility rates. rates. 8.0 7.0 Mexican Total Fertility Rate, 1960-2004
6.0 5.0
Mexican Total Fertility Rate
4.0
1960 1970 1980 1990 2000 2004
3.0 2.0 1.0
7.3 6.8 4.7 3.4 2.4 2.2
0.0 1960
1964
1968
Source: CONAPO (2002, 2004)
1972
1976
1980
1984
1988
1992
1996
2000
2004
Two Two demographic demographic forces. forces.
The second force is RISING LONGEVITY. Mexicans are living longer—and this increases the relative number of old in the population. Over the past fifty years, life expectancy has risen from 51 to 73—putting Mexico on a par with many developed countries.
Behind ’s Age Behind Mexico Mexico’s Age Wave: Wave: An An equally equally dramatic dramatic rise rise in in longevity. longevity. 75 71
Mexican Life Expectancy at Birth, 1950-2005
73
73
70
70
68 65
65
62 60
60
58 55
55 51 50
45 1950-55 Source: UN (2003)
1955-60
1960-65
1965-70
1970-75
1975-80
1980-85
1985-90
1990-95 1995-2000 2000-05
Today’s great powers became affluent societies before they became aging societies. Mexico may grow old before it grows rich.
The costs of Mexico’s coming age wave still loom far over the horizon. For the next twenty-five years, Mexico will experience a “demographic dividend” in which the impacts of aging will be mostly positive.
The The number number of of dependents dependents per per workingworkingage age adult adult will will steadily steadily decline. decline. 1.00
Total Dependency Ratio of Children (Aged 0-19) Plus Elders (Aged 65 & Over) to Working-Age Adults (Aged 20-64) in Mexico and the United States
0.95 0.90 0.85
US 0.80 0.75
Mexico 0.70 0.65 0.60 2000
2005
Source: UN (2003)
2010
2015
2020
2025
2030
2035
2040
2045
2050
The The share share of of the the population population in in the the working working years years will will reach reach record record highs. highs. 160 Working-Age Population as a Percent of Total
140
1 960 1 980 2000 2020 2040
M illio n s o f P e o p le
120 100
Mexican Population by Age Group, in Millions, Histroy and UN Projection, 1950-2050
41 % 40 % 51 % 59 % 60 %
Age 65 & Over
Age 20-64
80 60
Age 0-19 40 20 0 1950
1960
Source: UN (2003)
1970
1980
1990
2000
2010
2020
2030
2040
2050
The The current current rapid rapid growth growth in in the the workforce workforce will will gradually gradually but but steadily steadily decelerate. decelerate. 25.4% 25%
Percentage Change in the Working-Age Population (Aged 20-64) in Mexico and the United States by Decade, UN Projection, 2000-2050
P e r c e n ta g e C h a n g e
20%
17.5%
15% 11.6% 9.2%
10%
6.3%
5.6% 5%
2.9%
5.7%
2.1%
0% 2000-10
2010-20
2020-30
Mexico
-5% Source: UN (2003)
2030-40
US
2040-50 -3.3%
The The demographic demographic dividend dividend could could bring bring important important economic economic benefits. benefits.
Higher rates of savings, investment, and productivity growth. A shift from labor-intensive (low wage) jobs to capital intensive (high wage) jobs. Growing economic integration between Mexico and the United States.
To realize the potential benefits of its demographic dividend, Mexico must make the right policy choices today.
While While its its population population is is still still young young and and growing, growing, Mexico Mexico needs needs to to … …
Complete the program of economic and political reform that it began in the 1980s. Put in place a broad-based floor of protection against destitution in old age. Invest more effectively in the education and skills of tomorrow’s workforce.
Mexico has begun to engage the human capital development challenge.
Mexico Mexico now now devotes devotes aa relatively relatively high high share share of of national national income income to to education. education. 9.0% 8.0% 7.0% OECD Average 5.6 %
Perc ent of G D P
8.2%
Total Expenditure on Education as a Percent of GDP in Selected Countries in 2001
5.9%
6.0% 5.0% 4.1%
4.2%
Brazil*
Peru
7.3% 6.1%
6.2%
Canada
Argentina
7.5%
4.6%
4.0% 3.0% 2.0% 1.0% 0.0% Japan
*Figure for Brazil refers to public expenditure only. Source: OECD (2004)
Mexico
US
Chile
South Korea
The The number number of of years years Mexicans Mexicans spend spend in in school school is is steadily steadily rising. rising. 9.0 8.0
Average Years of School Completed by the Mexican Population Aged 15 & Over, 1980-2002
7.6
7.8
7.0 7.0
6.5
6.0 5.0
5.4 4.6
4.0 3.0 2.0 1980 Source: Presidencia de la Republica (2002)
1985
1990
1995
2000
2002
Despite recent progress, Mexico still trails the developed countries in most measures of human capital development.
Only Only aa minority minority of of Mexicans Mexicans complete complete high high school school or or college. college. 100% 90%
Percent of Population Aged 25-34 with an Upper Secondary or Higher Education Degree in 2002 75%
80% 70%
61%
60%
52%
51%
50%
20%
50% 41%
40%
40% 30%
89%
87%
95%
94%
32% 25%
21% 11%
14%
15%
17%
10% 0% Mexico
Brazil
Argentina
Chile
Upper Secondary Source: OECD (2004)
OECD Average
US
Canada
Higher Education
Japan
South Korea
Mexican Mexican students students perform perform poorly poorly in in international international educational educational comparisons. comparisons. Mexico’s Rank in the PISA* Assessment of Educational Attainment of 15 Year Olds in 41 Developed and Developing Countries
Mean Score
Score at 95th Percentile
Reading Test
34th
34th
Math Test
35th
38th
Science Test
34th
36th
*PISA = The Program for International Student Assessment Source: OECD (2004)
Mexico’s human capital deficit threatens its economic dynamism, competitiveness, and long-term living standard growth.
Over Over the the past past few few decades, decades, Mexico Mexico has has lagged lagged in in the the global global development development race. race. 395%
China South Korea
234% 191%
Taiwan* 155%
Singapore Chile
99%
Mexico
16% Percent Change in GDP Per Capita by Country from 1980 to 2000, in Constant Purchasing Power Parity Dollars
9%
Brazil
5%
Argentina 0%
50%
100%
150%
200%
250%
300%
Percentage Change in GDP Per Capita *Figure for Taiwan is for 1980-1998. Source: World Bank (2004) and Heston, Summers and Aten (2002)
350%
400%
450%
Mexico stands at a historic crossroads. How it navigates its coming demographic transformation will go a long way toward determining whether it achieves its objective of becoming a prosperous and stable developed economy.
