Family Planning, Human Development

and Growth in Uganda

Jouko Kinnunen, VATTHans Lofgren, WBDino Merotto, WB

Presented at the Twelfth Annual Conferenceon 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 (net 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)

stockcapitaltureinfrastruc

force;laborofeducatedofshare7a;and2indicatorsMDG

n;consumptiohhdcapitaperlevel;servicecapitaper

indicator

cdemographi

forvariable

teintermedia

;;

;;;

inf

CE

QFINSQFINSMDGVAL

QHPCpoptotQQCEZDEMG

fcapgovflabmdgdmg

10

Mortality rate

valuesmortalitytedisaggregaand

valueMDGaggregatebtwfactoradjustment

indicatortdevelopmengeneralermediate

LOG

mortalitymaternal

thancausesother

forratemortality

ADJMDGZDEMGLOGMORTRATE mrtga

4

;int

4;,

11

Fertility rate

fertility

oneffectservice

planningfamily

valuesmortalitytedisaggregaand

valueMDGaggregatebtwfactoradjustment

indicatortdevelopmengeneralermediate

LOG

childofgender

andgroupage

perolds

forratefertility

FAMSERVZDEMGLOGFERTRATE frtga

1

*4

;int4915

1*,

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

0

1

2

3

4

5

6

7

8

9

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

GDP growth

Government consumption

Private consumption

Exports

Imports

Private investment

Government investment

14

MDG attainment

0

20

40

60

80

100

120

140

160

2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

Poverty rate (%)

Net primary completion rate (%)

Under-five mortality (per 1,000 births)

Maternal mortality (per 10,000 live births)

Access to clean water (% of population)

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-taxadjustment in domestic taxation– fp-db adjustment in domestic borrowing– fp-fb adjustment in foreign borrowing

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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

0

5,000

10,000

15,000

20,000

25,000

30,000

2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

6 to 12 base

6 to 12 fp-ftr

13 to 17 base

13 to 17 fp-ftr

18 to 64 base

18 to 64 fp-ftr

Primary school age

Secondary school age

People in working age (over secondary school age)

18

Development of Total Fertility Rate (TFR)

60

70

80

90

100

110

120

2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029

base

fp-ftr

fp-tax

fp-db

fp-fb

UN Medium variant 2008

19-1300 -1100 -900 -700 -500 -300 -100 100 300 500 700 900 1100 1300

0

4

8

12

16

20

24

28

32

36

40

44

48

52

56

60

64

68

72

76

80

84

88

92

2003

-1300 -1100 -900 -700 -500 -300 -100 100 300 500 700 900 1100 1300

0

4

8

12

16

20

24

28

32

36

40

44

48

52

56

60

64

68

72

76

80

84

88

92

2005

-1300 -1100 -900 -700 -500 -300 -100 100 300 500 700 900 1100 1300

0

4

8

12

16

20

24

28

32

36

40

44

48

52

56

60

64

68

72

76

80

84

88

92

2010

-1300 -1100 -900 -700 -500 -300 -100 100 300 500 700 900 1100 1300

0

4

8

12

16

20

24

28

32

36

40

44

48

52

56

60

64

68

72

76

80

84

88

92

2015

-1300 -1100 -900 -700 -500 -300 -100 100 300 500 700 900 1100 1300

0

4

8

12

16

20

24

28

32

36

40

44

48

52

56

60

64

68

72

76

80

84

88

92

2020

-1300 -1100 -900 -700 -500 -300 -100 100 300 500 700 900 1100 1300

0

4

8

12

16

20

24

28

32

36

40

44

48

52

56

60

64

68

72

76

80

84

88

92

2025

-1300 -1100 -900 -700 -500 -300 -100 100 300 500 700 900 1100 1300

0

4

8

12

16

20

24

28

32

36

40

44

48

52

56

60

64

68

72

76

80

84

88

92

2030Base scenario

-1300 -1100 -900 -700 -500 -300 -100 100 300 500 700 900 1100 1300

0

4

8

12

16

20

24

28

32

36

40

44

48

52

56

60

64

68

72

76

80

84

88

92

2030FP-tax scenario

Women Men

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Final-year EV per capita as % of per-capita consumption

0%

5%

10%

15%

20%

25%

30%

35%

40%

Ruralhouseholds

Urbanhouseholds

Ruralhouseholds

income quartiles1-2

Ruralhouseholds

income quartiles3-4

Urbanhouseholds

income quartiles1-2

Urbanhouseholds

income quartiles3-4

All households

FP - foreign transfers

FP - foreing borrowing

FP - domestic borrowing

FP - taxation

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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

-1000

-800

-600

-400

-200

0

200

400

2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

fp-ftr

fp-fb

fp-tax

fp-db

$15

Change in Government Expenditure

when Annual Cost of Protection per Couple is:

-1000

-800

-600

-400

-200

0

200

400

2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

fp-ftr

fp-fb

fp-tax

fp-db

$30

-1000

-800

-600

-400

-200

0

200

400

2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030

fp-ftr

fp-fb

fp-tax

fp-db

$150

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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

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Thank Your for Your Attention!

¡Muchas Gracias por su Atención!