Philippine Populations, Birth Rates as Growth Engine? Or a demographic time bomb

Birth Rates as Growth Engines

As Japan, many countries in Europe and now China wrestle with shrinking labor pools, a host of emerging nations are grappling with a different problem: how to reel in the benefits of a fast-growing population and avoid having too many people chasing too few jobs.

Swelling populations helped buoy industrializing economies in the U.S. and Europe in centuries past. They transformed South Korea, Taiwan and China in the 1980s and 1990s. Economists call the phenomenon the demographic dividend: It happens when droves of young people enter the workforce and choose to have fewer children or delay parenthood, leading to a sharp increase in spending and a faster-growing economy.

But a young population isn't enough on its own to underwrite a generation of growth, as the Philippines is learning.

When Asia's industrial powers embarked on their economic transformation in the 1970s and 1980s, the Philippines was left behind. Under dictator Ferdinand Marcos, corruption surged, as did grisly insurgencies involving Maoist guerrillas and Islamist separatists. Many Filipinos left. Today more than 10 million of the country's 100 million people work abroad, sending home more than $20 billion a year, providing a lifeline for their families left behind, according to government and central-bank figures.

Other countries have struggled to capitalize on their growing populations. Many Latin American countries enjoyed a similar demographic profile to East Asia's booming economies in the 1980s, but chaotic politics and poor economic planning limited how much they benefited from it.

Today, Africa's leaders face a similar test. The United Nations projects the continent's population will double to two billion people by 2050, while around 40% of the population of both sub-Saharan and North Africa is under the age of 15 today.

The U.N. projects the world's population will expand to 9.3 billion in 2050 from about 7 billion now, with most growth coming from developing nations.

Some African nations are making headway in harnessing the economic potential of a youthful population. In Rwanda, where genocide claimed the lives of some 800,000 people in the 1990s, the government has boosted tourism and services, delivering economic growth rates above 8% for the past five years. President Paul Kagame has encouraged the use of contraceptives, which has contributed to average fertility rates dropping from 6.1 births per woman in 2005 to 4.6 in 2010, according to the World Bank.

Without an effort to boost productivity and create jobs, the demographic dividend can easily become a demographic time bomb.

The Philippines is trying to avoid that fate. This former American colony has one of the highest population-growth rates in Asia, expanding by 1.9% a year, compared with 0.5% in China, according to the Kaiser Family Foundation—and one of the region's highest unemployment rates, at around 7%. To help the country's economy absorb a wave of job seekers, President Benigno Aquino III has made corruption his primary target, figuring that cleaner government is the basic building block for business confidence and job creation.

Tougher oversight has helped reduce wasteful government spending. And the economy is gaining momentum, expanding 6.6% last year.

Among other things, the Philippines has overtaken India to become the world's largest provider of voice-based outsourcing services. Banks such as HSBC, Wells Fargo and Citibank have set up back offices in the islands. To sustain the momentum, the government is paying to train 100,000 people a year in call-center "finishing schools." There they learn to handle customers and perfect their American accents. Recruiters are now heading out to find agents in places such as Davao, where vigilantes used to parade the severed heads of Communist guerrillas through the streets.

"I don't think we've seen this level of collaboration and support before," says Benedict Hernandez, head of the Business Processing Association of the Philippines. "The government used to be a model of inflexibility, but that's all changed in the past year or two."

In another break from the past, Mr. Aquino is going against the wishes of the Roman Catholic Church by promoting wider use of contraceptives. That could reduce the number of children each working-age citizen supports—and help free up the spending power of the new generation now entering the workforce.

Problems remain. Poor infrastructure means the Philippines struggles to draw in the kind of manufacturing investment that economists such as the Asian Development Bank's Rajat Nag say is required for a lasting transformation in the islands. A Communist insurgency also continues despite a peace deal with the largest Muslim secessionist group.

Yet the country is beginning to win over skeptics. In late March, Fitch Ratings upgraded the Philippines's credit rating to investment grade for the first time.

Others are warming, too. David Bonderman, founder of private-equity group TPG Capital, told an investment conference in Hong Kong late last year that "the Philippines, for the very first time in my adult life, is thought to be a place we can do business without counting our fingers afterwards."

Wall Street Journal

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WB and ADB sees 6.2% expanded growth for the Philippine economy in 2013, 2014

World Bank and Asian Development Bank's forecast for the Philippine economic growth for 2013 and 2014

The World Bank expects the Philippine economy to expand by 6.2 percent this year and 6.4 percent in 2014, with the growth to be supported by the country's strong economic fundamentals.

The WB estimate is higher than the ADB forecast of 6 percent for this year and 5.9 percent for next year.

In its "East Asia and Pacific Economic Update" report released yesterday, World Bank cited the Philippines as one of the middle-income countries in the East Asia and Pacific region that outperformed expectations last year.

"The Philippines led the ASEAN-4, accelerating from 3.9 percent GDP growth in 2011 to 6.6 percent in 2012, spurred by robust private consumption, a recovery in government spending, strong performance of the construction sector and of exports," World Bank said.

With the country's robust performance last year, World Bank maintained its outlook for the Philippines, unchanged from the forecasts it made in December 2012.

The World Bank's 6.2 percent forecast for this year is within the national government's 6 to 7 percent growth target for this period.

"In the Philippines, the fundamentals remain strong, policy responses have been appropriate so far, and reform efforts by the government appear sustainable," the report said.

The Asian Development Bank earlier revised upwards its forecast for the Philippines to 6 percent for 2013 from its previous outlook of 5 percent.

For 2014, ADB expects the Philippine economy to expand at a slower pace of 5.9 percent.

ADB said that strong consumption and rising investments are expected to boost the Philippine economic performance this year.

It added that the upbeat business and consumer sentiment will support growth. Fiscal spending will remain robust, along with construction activity, driven by the strong demand for housing and office space.

Both the World Bank and ADB also cited the first investment grade credit rating recently given by Fitch Ratings for the Philippines, which is expected to improve the investment climate.

However, World Bank said that to sustain and increase inclusive growth in the developing East Asia and Pacific region over the medium-term, investments in both infrastructure and in skills must be increased.

The agency said that raising the levels of investment would raise growth prospects in the region.

"In the Philippines, lagging infrastructure development is a long-standing impediment to private investment," the report said.

"Catching up on government infrastructure spending will provide the fiscal spark that is still missing in the country's growth path, although infrastructure spending is gearing up recently. In 2012 it was equivalent to 2.4 percent of GDP, up from 1.6 percent of GDP in 2011," World Bank said.

Presidential Spokesman Edwin Lacierda yesterday said while the World Bank's growth forecast of 6.2 percent for the Philippines is at the lower end of the country's own growth forecast of six to seven percent, it still recognizes that correct measures are being done by the Aquino government to continue to improve and grow the economy.

Lacierda said Malacanang still welcomes the growth forecast of the World Bank but the Aquino government will continue to hope and strive to reach its target of six to seven percent growth this year.

"Certainly, we welcome that. I think that's a lowside of our forecast. Our forecast is around six to seven percent. But, certainly, it's a welcome recognition on the part of World Bank that the Philippines has been taking the correct steps in improving the economy and also in having equitable progress for the—for our countrymen," he said.

The World Bank has maintained its GDP forecasts of 6.2 percent for the Philippines citing that the country continues to show signs of sustained growth.

It also forecasted growth of 6.4 percent and 6.3 percent for the Philippines in 2014 and 2015 respectively.

World Bank also projected that regional growth would rise moderately to 7.8 percent in 2013 and ease to 7.6 percent in 2014.

With report from Malaya Business Insight

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BBC: "Apocalypse Now" Vietnam Village is faked: It was in Baler Philippines

Released in 1979, starring Martin Sheen, Marlon Brando and Robert Duvall (pictured), Francis Ford Coppola's Vietnam war film follows Captain Willard (Sheen) deep into the Vietnamese jungle in search of the renegade Colonel Kurtz (Brando). Now acclaimed as a classic, the film's production was famously beset by a number of disasters, including a tropical storm which destroyed the original set. "We had access to too much money, too much equipment, and little by little we went insane," reflected Coppola in Hearts of Darkness, the acclaimed documentary about the film.

How Apocalypse Now inspired Filipino surfers

When a scene from Apocalypse Now was shot on an obscure beach in the Philippines in the late 70s, little did the film-makers know they were giving birth to the country's surfing culture

"Charlie don't surf," says the reckless and irrepressible Colonel Kilgore, in one of the most memorable lines of the Vietnam War film Apocalypse Now.

Charlie is the American soldiers' derogatory nickname for their enemy, the Vietcong, and the surf-mad colonel is trying to persuade his troops to ride the waves, despite the bombs falling all around them.

Apocalypse Now, released in 1979, depicts the madness and mayhem of conflict, and is widely regarded as one of the most powerful war films ever made.

But it also has another legacy - something that the director, Francis Ford Coppola, could not possibly have intended.

Apocalypse Now was not actually filmed in Vietnam, but in the little fishing town of Baler in the northern Philippines.

As the cameras rolled, local Filipinos like Edwin Nomoro watched from the sidelines.

Nomoro was 10 at the time, and he came down to the beach every day to see it transformed into a battle scene, complete with an entirely fake Vietnamese village and helicopters swooping overhead.

But what excited him most was the sight of the actors surfing - something he'd never seen before.

Watch some video of "Apocalypse Now" movie here..

"When the filming finished, some of the crew left their surfboards behind, and my friend and I picked up the boards and taught ourselves how to surf," he says. "We've been surfing ever since."

At first, Nomoro and his friends found it difficult because there was no-one around to teach them.

Edwin Nomoro saw the film being made: "We've been surfing ever since"

"But we studied it, and learned, and now - no-one can explain what it feels like. Only a surfer knows the feeling," he says, smiling.

Once they got the hang of it, the boys started teaching others, and as word spread, tourists began coming to the little town to learn to ride the waves at Charlie's Point, as it became known.

Nomoro was able to turn his passion into a way of making a living, and more than 30 years on, he still earns money from the industry he helped to create.

"I have several rooms to rent. I also have some surfboards for hire," he says. "It's really improved my life. It helps me feed my family."

Baler is now very different from the sleepy fishing town where Martin Sheen, Robert Duvall and Marlon Brando stayed decades ago.

Several big hotels line the seafront, and more are being constructed. According to the local tourism office, at least 50,000 people came here in 2012.

Most visitors are Filipinos - Manila residents who just want a weekend of surfing - but an increasing number are foreigners.

One of the earliest arrivals was Donny Cope, who turned up in Baler in 1997 with "a surfboard, a backpack and a sense of adventure".

He has stayed at the beach on and off ever since, and now runs a small guesthouse.

"Last year we had surfers from the Czech Republic, Switzerland and a bunch from France," he says.

Baler's success as a surfing centre has rippled out to other parts of the Philippines, such as Surigao, La Union and Pagudpud.

"Baler is the birthplace of Philippine surfing," says Mac Ritual, a local tour guide.

"Other places saw a lot of good things here in Baler, and they also wanted to be popular because of surfing."

Ritual often takes his tour groups to see the main sites featured in Apocalypse Now.

The most famous is a headland where a major attack on the Vietcong was staged. It was nicknamed Charlie's Point in the film, and now even local Filipinos use this name.

Going there now, it's quite difficult to recognise anything from the film.

The fake Vietnamese village was blown up at the time, and the trees which were burnt down as part of a simulated napalm attack have all regrown.

But there's no chance of the beach nearby going back to the way it once was.

All the way along it, people are surfing - beginners screaming excitedly as the waves crash over them, and seasoned professionals perfecting their technique on the breakers.

This town has come a long way since the days of Apocalypse Now.

Perhaps the best way to sum up its changing fortunes is a little shop on the seafront.

Its name? Charlie Does.

BBC news

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