August 9 is celebrated in Singapore as National Day. It was on this day in 1965 that it formally separated from Malaysia, and became independent. This city-state is one of the original four tiger economies of East Asia. It transformed itself from poor to rich nation in one generation. It went from third world to first world. The per capita income of a Singaporean measured in dollars, increased by 100 times in the last fifty years. (By comparison, during the same period, per capita income of India has increased by barely 10 times). Its fast growth was achieved by focusing on export led manufacturing growth.
It is also a major international financial centre, and has the world’s third largest oil refinery hub. It is a very busy port, and handles trade (imports and exports), which is twice that of its national GDP. Thus more ships come and go, than are needed by Singapore. The most amazing thing is that it is a very crowded place. The population density is six times that of Bangladesh, and about half of Mumbai’s Fort area on a working day! Yet it hardly feels congested, has an efficient public transport system, and it provides adequate housing to all its residents.
This year on its independence day, Singapore government launched a very unusual advertising campaign. It was asking its citizens to make babies. Do your patriotic duty and spike up the birth rate. There was a rather racy video on Facebook promoted by the government through Mentos.
Singapore has been concerned about its falling birth rate for quite some time. It has tried a variety of public policy tricks. Since 2001 they have a baby bonus. You get a gift of $4,000 for your first and second child, and $6,000 for third and fourth. If you open a savings account in your child’s name, the government doubles the savings, up to $18,000, for every child; even for your fifth and sixth child.This saving scheme adds money into your child’s account till the age of 12. Despite all these incentives, Singapore’s birth rate is falling. (Hence this year it asked young couples to have a patriotic “night out”! )
Soon the population may start falling, and the only way out would be to increase immigration. Singapore has always welcomed educated immigrants, but lately this is causing political friction, as native Singaporeans are unable to get higher paying jobs.Just like Singapore, in India’s richest state of Kerala, the birth rate is falling rapidly. In about ten years Kerala’s population too will start declining. It has a low fertility rate (i.e. fewer children per child bearing woman) and high out-migration. It is also an ageing society, and proportion of elderly is rising.
Kerala is India’s richest state, in terms of income and spending. That’s because almost one third of the state’s income comes from foreign remittances, mainly from the Middle East. So Kerala has an export led growth like Singapore, and its export is human labour. Because of out-migration, paradoxically the state is experiencing severe labour shortage and high labour costs. So in-migration from Bihar and UP is increasing. Kerala’s per capita income is only 5% of Singapore, but both share the same zero population growth challenge. Most rich countries, from Germany, Sweden to Japan are experiencing ageing societies and declining population.
Even Russia has the same problem. China’s population will soon stabilize due to its longstanding one child policy. This phenomenon is an inevitable consequence of affluence, high female literacy coupled with low fertility. (Strangely Iran has high female literacy, but not lower population growth).The solution for Kerala is to welcome Northern immigrants and make its economy less rigid. As for Singapore it needs to keep its doors open for immigrants, because the Mentos advertisement is unlikely to prove potent.