How are developing countries developing

Every day the number of people on earth increases by 233,280, most of them are born in developing countries. In order for this population growth to develop its positive potential, investments must flow into job creation, education, health and social security.

the authors

Annette Gabriel is a senior sector economist in the Competence Center for Sustainable Economic Development, Education and Health in the KfW Development Bank. Dr. Detlef Hanne as project manager in the Southern and Eastern Africa department.

The global population is growing, and most of all in economically weak countries in Africa and Asia. 1.1 billion people live in Africa, 43 percent of whom are under 15 years of age. In 2050 it is expected to be 2.4 billion.
But will this population growth become a burden for the affected countries? Or is it possible to use the growing workforce for positive development?

The positive overall development in modern economies is essentially boosted by two factors: economic growth and sufficient jobs on the one hand, and a qualified workforce on the other.
The age structure of a country shows how many people can work and how many people have to be cared for by the working population.
The industrialized countries are heading for a situation in which the population is shrinking and aging. These societies are running out of skilled workers. From a demographic point of view, developing countries have a better starting position.

The tigers showed us how to do it

But what does it take to set positive development in motion in these countries? The Asian tiger states - especially South Korea - can serve as an example. You have made an economic and social leap forward since the 1970s.

The per capita income in South Korea rose from $ 81 in 1960 to $ 22,489 in 2011. The average birth rate per woman fell between 1970 and 2009 from 4.5 to 1.2 children.

The positive development in the emerging countries of Southeast Asia was successful because several processes were running in parallel there. Firstly, political reforms created favorable framework conditions for economic development, secondly, manufacturing companies were built, thirdly, through investments in education, qualified workers were made available, and fourthly, functioning health and social security systems were established.

As a first step, life expectancy rose and the birth rate fell as a result of improved basic services. The importance of children for old-age provision decreased. As a result, the proportion of the working population grew, while the number of young and old people to be cared for decreased. A so-called demographic bonus was created.

In a second step, the tiger states succeeded in transforming the large number of the working population into one working for income. The demographic bonus was successfully converted into a demographic dividend and the former developing countries became emerging or industrialized countries.

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The KfW Development Bank division supports numerous projects in the sub-Saharan region around the world.

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It doesn't work without support

However, a number of obstacles make it difficult for many developing countries, especially in Sub-Saharan Africa, to follow the tiger states and create a demographic dividend: Many of these states have too little economic income and therefore no opportunity to stimulate the economy or initiate structural change . Despite the minimal wages, the production costs in Africa are too high to be able to compete on the world market. In addition, Africa is more than 70 percent rural, so that job potentials are more likely in rural areas than in the manufacturing industry such as in the tiger states.

In addition, there is often a weak government in a politically fragile context. Since the particularly large group of young people often only has a basic education and jobs in the formal sector are rare, many look in vain for paid work.

In order to break this vicious circle, most states need external financial and technical support. This is the only way to promote private and public employment initiatives and develop the areas of health, education and social security.

German development cooperation helps in a variety of ways to shape demographic change in partner countries. The project work focuses on promoting young women, for example. A high level of education makes it easier for them to independently plan their families and generate income for the family.

source

The article was published in CHANCEN spring / summer 2014 “Alter”.

To the issue

For example, engineers are trained in Ethiopia through the KfW Development Bank division with funds from the Federal Ministry for Economic Cooperation and Development, workers are trained nationwide in Ghana, and mother-child health is specifically promoted in Kenya. The KfW subsidiary DEG - Deutsche Investitions- und Entwicklungsgesellschaft mbH supports companies that are active in developing countries and thereby creates jobs.

For example, German development finance starts in the key sectors in order to create the demographic bonus and turn it into a dividend. But with all the support that Germany and other industrialized countries provide - the essential efforts must come from the partner countries themselves. Only in this way can the necessary political and economic framework conditions be created and the opportunities offered by population growth be exploited.

Published on KfW Stories on: Wednesday, August 30, 2017

The presented project makes a contribution to these sustainability goals of the United Nations

Goal 3: Healthy life for everyone

Health is at the same time the goal, prerequisite and result of sustainable development. Promoting them is a human imperative - both in industrialized and developing countries. Around 39 percent of the world's population live without health insurance, in low-income countries it is even more than 90 percent. Many people still die of diseases that, with the right treatment, would not be fatal or could easily be prevented with vaccinations. By strengthening health systems and in particular by making vaccines widely available, we can succeed in suppressing these diseases by 2030 and even eradicating them. Source: www.17ziel.de

All member states of the United Nations adopted the 2030 Agenda in 2015. Its core is a catalog with 17 goals for sustainable development, the Sustainable Development Goals (SDGs). Our world should be transformed into a place where people can live in peace with one another in an ecologically compatible, socially just and economically efficient manner.