Family Planning, Human Development and Growth in Uganda

1
Family Planning, Human Developmentand Growth in
Uganda

• Jouko Kinnunen, VATT
• Hans Lofgren, World Bank
• Dino Merotto, World Bank
• Presentation for the Twelfth Annual Conference
• on Global Economic Analysis, Santiago, Chile
• June 10-12, 2009

THE WORLD BANK GOVERNMENT INSTITUTE FOR ECONOMIC
RESEARCH (VATT), Finland
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Background and Motivation

• Extremely high fertility and youthful population
  in Uganda why a problem?
• Development and public expenditure planning needs
  of GoU
• Need to endogenize population in MAMS
• Role of fertility within development
• Recent changes in the international politics of
  family planning

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Research Questions

• What is the impact of increased family planning
  (FP) services on macro and MDG indicators in
  Uganda?
• Does the way of financing the increased (?)
  public expenditure on FP matter?
• How sensitive are the results to FP cost
  estimates?

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Main results

• Major effects of FP
• improved EV welfare for (living) Ugandans
• better outcomes for MDG indicators and
• creation of additional fiscal space in the
  medium- to long-run
• Macro-level effects are otherwise minor
• Domesticity of the adjusting government income
  variable plays a role
• Expected per-capita cost of FP very moderate
• Qualitative results are not very sensitive to the
  cost of FP

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Current situation

• Total fertility rate (TFR) close to 7 children
• Dependency ratio
• population not 14-65/population 14-65 110
  percent
• Unmet demand for contraceptives for 41 of
  households
• 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
• Dependency of GoU on foreign aid (its value
  similar to direct tax receipts)

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Economics and Demography

• Links between growth in per-capita GDP and
  population
• Age structure affects labor supply, private and
  public consumption, investment, and productivity
• Human development and demography closely linked
  MDGs, social services
• Increasing number of CGE models with (at least
  partly) endogenous demography

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MAMS

• MAMS Maquette for MDG Simulations
• Developed at World Bank applied to 35 countries
  (in many cases in collaboration with UNDESA and
  UNDP)
• Used to analyze medium- to long-run impact of
  strategies, including effects on monetary poverty
  and human development (MDG indicators).
• Recursive-dynamic single-country model
• Government services modeled in relatively
  detailed fashion public sector as producer,
  consumer, and investor
• Productivity impact of public infrastructure
• MDGs covered in Uganda application 1 (headcount
  poverty), 2 (net primary completion), 4
  (under-five mortality), 5 (maternal mortality), 7
  (access to improved water)
• For more information on MAMS www.worldbank.org/ma
  ms

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The demographic extension

• Population disaggregated by gender and (one-year)
  age cohorts
• Fertility and mortality modeled with two-level
  constant elasticity and logistic functions
  (mimics modeling of MDGs in MAMS)
• Constant net migration rates

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The dynamics of the demographic extension
Population(sex,age) at time t (beginning of the
year)
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Constant elasticity function (bottom level)
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Mortality rate (top level)
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Fertility rate (top level)
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BASE scenario 2003-2030

• Annual GDP growth 6.2 (recent average growth
  rate).
• Growth in government consumption declines due to
  completed reforms in primary education
• Improvements in MDGs
• In terms of official MDG targets, only MDG1
  (poverty) is attained by 2015
• TFR falls from 7.3 in 2003 to 5.6 in 2030
• Compared to UN medium variant projection
• population growth rate (3.1 2003-2030) is very
  close
• dependency ratio, mortality and fertility rates
  are all higher

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Real growth of GDP components, percent under
BASE scenario 2009-2030
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MDG indicators for BASE
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Policy simulations increased family planning

• Gradual increase in spending on FP starting from
  2007, ceteris paribus reducing the fertility rate
  by 20 in each year (of what it otherwise would
  be at that year) with simulation-specific
  financing adjustments
• fp-ftr foreign transfers
• fp-tax domestic taxation
• fp-db domestic borrowing
• fp-fb foreign borrowing

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Results for FP scenarios

• Small macro effects sligtly slower GDP growth,
  higher export share of GDP, more rapid growth in
  higher consumption per capita
• Impact of FP on public expenditure higher
  2007-2016, lower 2017
• Very small differences in demographic outcomes
  between FP scenarios
• Domesticity of the clearing variable for
  government expenditure matters most favorable
  macro effects when changes (increases) in fiscal
  space are used to adjust (cut) taxes.
• Population in 2030 declines from 61.0 to 53.7
  million

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Average growth rates of macro indicators
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Population for BASE and FP-ftr
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Dependency Ratio
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Total Fertility Rate (TFR)
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Base scenario
Women
Men
FP-tax scenario
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MDG indicators for fp-tax change from BASE
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Change in final-year EV per capita,
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Annual growth rate of per-capita consumption
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Sensitivity to cost of FP

• Even five-fold annual per-couple cost of
  protection (15 to 76) does not change the
  qualitative result of the study FP economically
  beneficial in the long run
• Government expenditures lower than under BASE
  first in year 2023 instead of 2017
• An evaluation of whether FP is desirable or not
  does not only depend on economic outcomes

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Change in Government Expenditurewhen Annual Cost
of Protection per Couple is
76
15
31
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Governments share of GDP with FP unit cost of
76
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Final Conclusions Remarks

• Major effects of FP
• improved EV welfare for (living) Ugandans
• better outcomes for MDG indicators and
• creation of additional fiscal space in the
  medium- to long-run
• Expected per-capita cost of FP very moderate
• Integration of economywide and demographic models
  is often desirable
• Topics for possible future studies using this
  framework (with marginal adjustments) include
  various issues in health economics, including AIDS

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Thank Your for Your Attention!Muchas gracias
por su atención!jouko.kinnunen_at_vatt.fihlofgren_at_
worldbank.orgdmerotto_at_worldbank.org