Family Planning, Human Development and 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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Family Planning, Human Development and Growth in Uganda Jouko Kinnunen, VATT Hans Lofgren, World Bank Dino Merotto, World Bank Presentation for the Twelfth.
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Family Planning, Human Development
and Growth in Uganda
Jouko Kinnunen, VATTHans Lofgren, World BankDino Merotto, World Bank
Presentation for 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 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
• 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
Table. Real macro indicators by simulation (% annual growth from 2006 to final 2030)2006 base fp-ftr fp-tax fp-db fp-fb
base totalfp-ftr totalfp-tax totalfp-db totalfp-fb total
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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
• 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