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bne May 2019 Companies & Markets I 11
Central Asia, plus Mongolia, are set to rise considerably by the end of this century, with the fastest growth anticipated in the wider region’s least developed economy Tajikistan, where the population will more than double over the next 81 years.
In 2017, the total population of the eastern EU member states amounted to 103.1mn, considerably higher than the 74.8mn in Central Asia and Mongolia. By the end of this century those figures will be turned on their head, with Central Asia and Mongolia having a combined population of 85.6mn, over 20mn higher than the eastern EU member states, which by that time will have seen their populations shrink to just 64.4mn.
Most states from the wider region followed a similar pattern in the early years of the transition period. Typically populations peaked in 1989 (or 1991 for the post-Soviet states) before suddenly plunging in the early 90s as birth-rates faltered
and death rates skyrocketed amid the economic and social breakdown of the early transition years. This was combined with large-scale migration both within and out of the region.
Yet since then the west and east of the post-communist space have diverged. People marry younger and families are bigger in the majority Muslim Eurasian states, which has enabled their populations to grow even as large-scale emigration continues from some countries.
Meanwhile, birth rates remain low in Eastern Europe and as these countries have joined the EU – or at least been given liberalised visa regimes by Brussels – their nationals have left in droves to seek higher salaries and better lives in the west.
This isn’t just an economically driven phenomenon, as outlined in a bne IntelliNews blog, “Wooing back Southeast Europe’s diaspora”. “The drivers for emigration go beyond poverty and lack of jobs to “a sense of being stuck ... of having no way of going up on the social scale or building a better future for their children”, says Andrei Tarnea, the then director of the Bucharest branch of international non-profit the Aspen Institute, in an interview with bne IntelliNews in 2017.
“It’s not just money and a job, they discover a better governed society with functional administrations. Specifically, they find they don’t have to bribe somebody to get a hospital bed, their children are well taken care of in school, trains and buses run on time... this makes it more difficult for them to return,” Tarnea added.
While it's still early to be sure, officials in Armenia claim that since the velvet revolution of spring 2018, migration has halted. By contrast, a number of participants in the anti- corruption protests in Romania in 2017 and 2018 told bne IntelliNews reporters they were losing hope in their home country, and were considering emigrating.
According to a 2016 International Monetary Fund (IMF) report, in the previous 25 years, nearly 20mn people left Central, Eastern and Southern Europe (CESEE), amounting to the 5% of the region’s population.
The emigration has been dominated by educated and young workers, whose exodus has sharply accentuated the already adverse demographic trends in the region, lowered productiv- ity and slowed economic growth of sending countries.
“The drain of skilled labour has lowered productivity growth and pushed up wages, undermining competitiveness,” the
IMF said in the report. “Empirical analysis suggests that
in 2012, cumulative real GDP growth would have been 7 percentage points higher on average in CESEE in the absence of emigration during 1995-2012, with skilled emigration playing a key contributing factor,” the IMF notes. The report estimates that migration shaved off 0.6-0.9 percentage points of annual growth rates in some countries in South-East Europe (Albania, Montenegro, and Romania) and the Baltics (Latvia and Lithuania).
Going forward, population decline is expected to become
an even greater constraint on growth. The Vienna Institute
for International Economic Studies (wiiw) identified demographics as the first of a list of longer-term issues facing the region. In a webinar in March, wiiw economist Richard Grieveson described the projections from the UN and Eurostat for the region as “pretty dire, especially for the working age population”.
“This kind of demographic decline has never been seen before in peacetime or outside of major famines,” said Grieveson.
While not looking at all the Central Asian countries, wiiw’s latest medium-term economic projections include Kazakhstan and Turkey, both of which have growing populations, in
“It’s not just money and a job, they discover a better governed society with functional administrations”
contrast to the rest of the region. Population growth “is part of the reason why for those countries our forecasts to 2021 are quite positive compared to much of the region,” according to Grieveson.
“Countries where population growth is set to continue well into the future do tend to be fastest growing economies in overall GDP, though not necessarily in per capita terms,” Grieveson added “Demographics are good for GDP but not per capita GDP.”
Indeed, the countries expected to see population growth until the end of the century are typically the least developed of
the post-socialist countries, though some have considerable oil, gas and mineral wealth. And while their workforces are growing, there is no immediate prospect of persuading factory operators and other investors to move from the largely stable, well connected EU member states in Central Europe to remote frontier markets like Tajikistan, which face myriad obstacles
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