MENA’s Truncated Epidemiological Transition

Spring, most MENA countries had atypically high fertility rates for their levels of development as of 2009, or experienced unusual increases in fertility rates between 2009 and 2019—thus yielding truncated demographic transitions.

Why MENA’s fertility rates have remained elevated is an issue beyond the scope of this report. Nevertheless, taking the high fertility rates as a given, the effect was that the young-age dependency ratios were higher on the eve of the pandemic, with important health, fiscal and economic consequences.

First, an elevated high young-age dependency ratio could hurt women’s health or hamper public and private investment per capita in children’s education and health, especially in low-income countries.

Second, the incomplete demographic transitions in MENA could have damaged the region’s macroeconomic balances and growth. The elevated young-age and old-age dependency results in higher fiscal burdens for MENA countries and a fiscally unsustainable public sector, as government tax revenues become insufficient to meet the population’s health and education expenditure needs even as the public sector continues to play an outsized role in MENA economies. Yet, the development model in which the public sector is the employer of first resort, as in MENA, is not sustainable in the long run as evidenced by chronic low growth and fiscal vulnerabilities. Moreover, the higher dependency ratios also depress private savings because more household resources are allocated to the needs of children and the elderly, which diverts resources that otherwise could have been available to fund investments needed to underpin economic growth. As a result, low government and private savings contributed to chronic current account deficits. Indeed, higher young-age and old-age dependency ratios are associated with a negative and significant impact on the current account balance (Arezki and others 2020). The high dependency ratios also lower output per capita (as the young and the elderly largely do not work).10

MENA’s Truncated Epidemiological Transition

Epidemiological dynamics—the evolution of the causes of mortality in a country’s population—operate in tandem with demographic dynamics as a country progresses from lower- to higher-income levels. Specifically, as countries become richer, better access to health and medical care results in fewer deaths from infectious (communicable) diseases. During this process, the share of deaths due to non-communicable diseases (NCDs) tends to rise (Omran 2005).11 Because the old-age dependency ratio in MENA is elevated during this truncated epidemiological transition, NCDs—such as cancers, cardiovascular diseases, diabetes, and chronic respiratory infirmities—become a bigger cause of mortality. For example, diabetes is a major biological risk factor for NCDs, and the prevalence of diabetes has increased by 99 percent over the past decade in Saudi Arabia, from 1.4 million cases in 2009 to 2.7 in 2019. It has become both a health burden and a large economic drag because of its effect on human capital (World Bank forthcoming). The prevalence of obesity and diabetes in MENA is among the highest in the world (see Figure 4.3).

A symptom of an incomplete epidemiological transition is a high burden of disease from both communicable and non-communicable diseases. In MENA, instead of transitioning from communicable diseases to NCDs as the main

10 To put the negative effects into perspective, in 2019, the fertility rate for MENA is on average 1.14 percentage points higher than for other countries with similar development levels. In 2019, the simple average share of the working age population in MENA was 51.8 percent, hence the 1.14 additional percentage point higher fertility rate implies a 2.2 percent higher young-age dependency over the course of the next 14 years (i.e., until the children get to 15 years old). Feeding this input into the estimated coefficient obtain in Arezki and others (2020), we find that the accumulated effect is a current account deterioration of 0.8 percent of 2019 GDP (assuming real GDP is growing at 1 percent a year). 11 Appendix Table B3 in the Appendix contains basic health indicators in MENA and the rest of the world by income groups.