Sunday, March 16, 2008

Economic and demographic change, education, ethnicity and the maintenance of social cohesion in Australia 4 - global context

Note to readers: this is one of a series of linked posts. You will find the introductory post here

Australia is a small open economy in a global world. That world is changing. We all know this. Those changes set a context for change within Australia.

Global population continues to increase.

In 2006 the world's population was 6.5 billion, projected to increase to 9.5 billion by 2050.

During this period Australia is projected to increase its population to 24.2 million, falling from 54th to 65th in the world's population rankings. I actually think for reasons that I will outline shortly, that the Australian population is likely to be far greater than projected because of greater migration. However, the overall country ranking is unlikely to change much.

Population growth and food prices

We presently feed something over 70 million people. To maintain the same proportion, we will need to feed over 100 million by 2050. In fact, we will probably need to feed more.
World demand for food is pressing hard against production limits.

The rise in grocery prices that has affected so many Australians is not just due to the drought, but also to a shift in the terms of trade that has fed through into local prices as global demand soaks up more Australian produced food.

We benefit because we get more cash. We, and especially the lower income among us, lose because we have to pay more.

We will have to pay still more in the future. For that reason, I have argued that we have to focus on expanding primary production.

There is a paradox here. The growing need for more food, the best terms of trade for agricultural products in decades if not ever, are associated with rural decline. In fact, much of the policy debate and the associated regulation actually works against expanded primary production.

Take, as a simple example, my complaints about Sydney water restrictions. There is not and has not been a real reason for the rigid restriction on the use of water for gardening. All this has done is to stop me growing my own food, instead importing water in food from the Murray-Darling basin.

There is very considerable scope for expanding Australian food production at all sorts of levels. This will happen in any event. We can begin now, or we can wait. If we begin now, then we can start turning rural depopulation around.

We will face conflicts. Water harvesting is an example.

In the old farming model, the farmer waited for rain. Planting was linked to seasons, dependent on annual rainfall. In the new model, farms can be designed to capture rain when it does fall with the aim of harvesting enough water to carry production through dry cycles that might last for years. This allows for irrigation farming in areas once considered far too dry for this.

The upside is much higher production. The downside can be reduced water flows down stream. This raises issues that need to be worked through.

The changing distribution of global population and wealth

The world's population may still be growing, but its distribution is changing as a consequence of aging in a number of countries.

There has been discussion on these issues in Australia. However, those discussion have generally had a domestic focus. How do we manage the aging of our own population? In fact, global demographic changes have profound implications for Australia, ones that bear directly on some of the issues raised by the SMH.

Let me give you a few macro numbers just to set the scene.

The population of China in 2007 was 1.32 billion out of a global population of 6.5 billion.. Then there are the Chinese living outside China - I have not attempted to calculate numbers here. Perhaps not surprisingly then, the Chinese are now Australia's fifth largest ethnic group - 669,980 at the last census, of whom 594,962 had both parents born outside Australia.

In 2007, the population of India was 1.13 billion. Indians are now Australia's ninth largest ethnic group - 234,722 at the last census of whom 212,029 had both parents born outside Australia.

Now track forward. China's population has begun to age. By 2050, its population is projected to rise by just 100 million to 1.42 billion. By contrast, India's population is projected to grow from 1.13 billion to 1.81 billion. On these figures, by 2050 just over one person in five globally will be living in India.

Compare this to Europe. With the exception of France and the UK, all European countries are projected to experience population declines. Just to take a few examples:

  • Russia141 million down to 109 million
  • Germany 82 million down to 74 million
  • Italy 58 million down to 50 million
  • Ukraine 46 million down to 34 million.

These are big changes whose effects are already being felt across Europe. In simplest terms, all the population decline countries are in competition for the people they need to fill economic gaps.

Now factor in economic change.

Australia's papers are full of the rise of China. This rise has helped underpin our current growth. In turn, the growing economic linkages with China have facilitated the movement of people, especially business people or those with skills.

The growth of China is just one facet of an increasingly complex global economic scene as countries rise and fall. As a small open economy, Australia has to ride with these changes as best it can.

Turn now to our immediate region.

By 2050 Indonesia's population will have grown to 313 million, Papua New Guinea to something over 10 million, East Timor to around 2 million.

I have selected these countries as our most immediate neighbours in distance terms, countries where direct interaction is likely to be greater. Here we can add in New Zealand and the Pacific Islands.

We already have open population movement with New Zealand. This is a country where the process of demographic change is in advance of Australia's: the European proportion of Auckland's population is down to 54% - the rest is a melting pot of 8 per cent Maori, 13 per cent Pacific people and 24 per cent Asian. More than than half of school-aged children in Auckland are now non-European.

I think it highly likely this open access policy will extend, if with some limits. As it does, our population and position will change.


The analysis in this post has been rough and broad brush. Further, these macro issues must seem a long way from the general theme of these posts.

The reality is quite different. The changes the SMH talks about and our potential responses to them are directly linked to this global picture.

In my next post I will narrow the focus to domestic Australia, drawing out the linkages.

Introductory post. Previous post. Next post


The population data in this post is necessarily rough. The US Census Bureau's International Data Base provides an invaluable source of data on global populations in aggregate and at country level. demography.matters remains the best source I know of discussion on global population change.

A stocktake on my own writings on demographic change can be found at Belshaw posts on demography - entry page.

For discussion on drought, the environment and food prices see:

For information on New Zealand demographic change see Pacific Perspective - Pasifika and New Zealand's Future.

For an introductory picture of changing global Gross Domestic Product and its implications for Australia see GDP - Australia in its Region.

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