Fewer babies, more growth?

Who doesn’t love babies? They’re cute and they will grow up to support us in our old age. But there’s a problem – people are having fewer of them. Global fertility rates have fallen by more than one child per woman since 1990, to 2.2 live births in 2024, according to United Nations data. The growing financial burden of people living longer has caused alarm throughout the globe. China dropped its one-child policy in 2016, relaxing it further to allow families to have three children in 2021, yet the UN still estimated China’s 2024 birth rate at only just over one child. Latest data from Britain shows fertility rates are at their lowest since records began in 1939, at 1.41 birth per woman. Other European countries have even lower rates, including countries usually regarded as family-orientated, such as Italy and Spain.  But governments which have looked to replace their own populations with younger immigrants have faced pushback. The Brexit vote in Britain to separate the country from the European Union was linked to the EU’s open immigration policy towards its member countries, and anti-immigrant protests have continued in Britain this year.

However, there’s an upside to falling fertility rates. Emerging markets economist Charlie Robertson sees the lower number of births as a boon for developing countries with young populations such as Kenya.

“It’s incredibly dangerous, the Western media narrative about how awful ageing societies are, implying that high fertility rates are a good thing,” he told Yuvoice in an interview.

In Kenya, where the average birth rate has dropped to just over three, compared with nearly five 20 years ago, growth will be turbo-charged in the next few years because in smaller families, parents can afford to put aside savings. More savings mean more money in the banking system, and when the banks are flush with cash, they tend to lend to businesses at lower interest rates. This makes it easier for businesses to expand, driving economic growth. “It’s impossible to have a big banking system with high fertility,” says Robertson.

Fertility rates have played a major role in Western history. Robertson says Marx was wrong on demographics, as he assumed that the high fertility rates of mid-nineteenth century Britain would continue. This would increase competition for jobs, leaving many jobless and ultimately leading to revolution. Instead, “the fertility rate began to slow and continued to decline, we didn’t reach that tipping point”, Robertson says.

The key to lower birth rates is education. When women are educated, they often have fewer children. “You give them the possibility to have a career, to have a choice,” according to Robertson.

So which developing countries are set to benefit from lower fertility rates? In addition to Kenya, Robertson highlights Egypt as poised for take-off after its fertility rate fell in 2019 below three, the magic number for kickstarting growth. Nigeria, with a fertility rate of 4.4, will take longer to industrialise.

In Asia, a fertility rate of 2.1 in Bangladesh translates into faster growth than in Pakistan, for example, where the rate is 3.5. In Afghanistan, meanwhile, a lack of education for women will guarantee the country has “continuing decades of poverty” according to Robertson, because fertility rates will remain high.

His views are controversial with those who feel that a higher birth rate is helpful for families in countries with no social security net. A recent report from development economics platform VoxDev, for example, shows that when women in Africa have a higher income, they have more children to safeguard their long-term economic security.

On the whole, economists in developing countries are on board with the importance of lower fertility rates, according to Robertson, but “politicians don’t get it”. Maybe baby-hugging is just too attractive a photo opportunity for politicians to discard it.