Changes in Demographic Characteristics of Indonesia

by aadharshd (student)

By: Aadharsh. D

Economics

10B

Indonesia is currently the fourth most populous country in the world with a population of 245, 613, 043 million[1] people. It is also the largest archipelago in the world with 5 main islands. The Indonesia economy is the 18th largest in the world by nominal GDP and 15th largest by purchasing power parity.2 It is considered to be one of the fastest growing developing countries in the world especially since it is richly endowed with natural resources but they are exploited and poverty still remains as a major widespread problem in the country.

Population growth rate is defined as the annual change in population for a country. In 2011 (July 2011 est.), Indonesia has a growth rate of 1.069% which is the 111th highest in the world.3 For the past 10 years, Indonesia’s population rate has been decreasing and there is no increase at all.

4[2]

As you can see from the graph, the population is still growing, but just at a slower rate. A decrease in the growth rate could have been caused by factors such as increased knowledge and awareness about contraceptive methods. If married couples started to do family-planning and were aware about birth control, the growth rate will drop. This is a positive change as developed countries usually have low growth rates. It is better that the population grows slowly since there is already so much unemployment (7.1%, 2010 est.)5 and poverty in the country and so we do not need more people being unemployed in the future. If the economy does grow as an effect of the growing population, this will create more jobs for those who are unemployed right now.

Life expectancy is a value that estimates how long a person from a specific country will live. Of course this varies from person to person but the figure is estimated from an average. The current life expectancy for an Indonesian from birth is 71.33 years (2011 est.). [3]6

[4]7

From the graph above, you can see the rate at which the average life expectancy is increasing in a steady rate as the line is almost straight. The average life expectancy could be increasing due to such factors such as improved medical facilities and also increased awareness on habits that could harm your health such as smoking or excessive drinking. Improved medical facilities could mean that the economy is also improving as doctors and nurses are provided better education and hospitals are maintained better. This could also help the economy through medical tourism where the doctors of Indonesia offer quality service but at a cheaper rate.

Increased life expectancy could also mean that the people can work for longer years since they are healthier and this results in an increased labor force which could drive the economy forward and developing industries which in turn creates job opportunities of those who are unemployed and also those who live in poverty.

Another good indicator of how a country’s services are is the infant mortality rate. It is defined as the number of infant deaths (one year or younger) per 1000 live births. The current number of deaths is 27.95 deaths (2011 est.)[5]8

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[6]9

The infant mortality rate has been declining every year and this means that the number of infants dying before they reach at least one year old is decreasing. This could be because of the same reasons as for why the life expectancy is increasing. The medical facilities are improving in Indonesia and the doctors are getting better. Due to better education, there are also skilled nurses to help during delivery and making sure there are no complications. If more people are aware of life threatening diseases such as pneumonia which is the number one cause of infant mortality, it decreases the chance of infants dying.

Since fewer infants are dying, it means that once they grow up, there will more people and could help the economy as could add to the labor force which might cause more job opportunities by developing countries and decreasing unemployment. On the other hand, they could also be a burden to the country as an increased population could result in more unemployment and poverty in this country.

Sex ratio is the ratio of males to females (usually per 100 females) in a population. A ratio above 1 means there are more males than females, while a ratio below 1 means there are more females than males. A ratio of 1 means there are equal numbers of females and males.[7]10

The above table shows the ratios in two forms. The 2nd row shows the simplified ratio when the 3rd row shows in terms of 100. At first, the women outnumbered the men but at the start of the 21st century, men started to outnumber women but only a bit.

Usually in a society, it is the men who go to work and provide all the things for their family. Men usually contribute more to the economy compared to women and so having more men than women can be an advantage to the country as it develops the economy and raises the GDP in the process. This could also be a disadvantage because as more men are available to work, there also has to be enough jobs for them and if not, there will be more unemployment in the country.

In economics, the dependency ratio is an age-population ratio of those not in the labor force (dependent part) and those who are in the labor force (productive part). The ratio is usually written as a percentage. The dependency ratio is usually measured by this formula: [8]11

[9]13

The current age dependency for the young and the old is 40% and 9% respectively. When you add these up, you get the 49% which is the total dependency ratio of the whole country. The age dependency ratio has been decreasing since 1970 and this is a positive change since it means that more people are now working. This could be due to more job opportunities created by the development of various industries and fields. Urbanization can also play a part in this because as people move from rural areas to an urban place where there are a lot of job opportunities, it would be easier for them to find a job. This would decrease unemployment and also a larger labor force would contribute more to the GDP of the country.

The graph above shows that the urban population is growing and this supports my statement that age dependency ratio is decreasing due to more people moving to an urban location in search of employment.

Age distribution can be defined as the percentage of the population at each age group or level.

14 years and under [10]14

The graph above shows the percentage of population that falls under 14 and under. After 1970, the percentage of people in that age group started to decrease. The table also shows that the percentage was decreasing in the past decade except for 2009-2011 where it started to increase. Having less people in this percentage is an advantage as it also reduces the dependency ratio.

15 to 64 years [11]15

The graph above shows that the number of people in this age group is increasing and this means that there are more people available to work. This is good as the dependency ratio will decrease if more people are working. If more people are working, this increases the labor force and contributes to the GDP unless there are not enough jobs and this will cause more unemployment. If there are more people, there will be more production and this is better.

65 years and above [12]16

The number of people who are considered seniors and cannot work has been increasing this last decade and this is in contrast to the decreasing number of people who are 14 years and under. The increasing number of seniors adds to the dependency ratio as there are more people who are dependent on the working age but this is balanced by the decreasing number of those who are under 14 years old. The increase could also be due to factors such as increased life expectancy and better medical facilities.

As the number of dependent seniors increase, people who are able to work are motivated to go out and search for jobs to support the seniors in their family. This is good for the economy as people are now motivated to work harder and earn more money.

GDP (Gross Domestic Product) refers to the market value of all final goods and services produced in a country in a given period. It is often considered as the main indicator to the country’s standard of living. Measured by the official exchange rate, Indonesia’s GDP is currently at $706.5 billion and by purchasing power parity, it is currently at $1.03 trillion which is the 16th highest in the world. [13]17

Growth Rate GDP (%)

As you can see from the graph, the GDP has been growing since the late 1990s probably due to the fall of the Indonesian dictator at that time. The GDP has been growing ever since except in 2000-2001 where it went down only by a bit. The growth can be due to many reasons. When the population growth rate decreases and the population become more stable, the GDP will increase. This is because the resources that the country has are distributed to a more stable population.

When analyzing the sex ratio, we saw that the number of men to females increased. Since males make up the majority of the labor force, they contribute to the GDP’s growth more and also help to sustain it. When compared to the age dependency ratio, the number of dependent people decreased and the number of people working increased and this leads to more production which also helps the GDP to grow.

As the life expectancy of a person increases, the person can work for longer years and remain healthy at the same time and this increases production as more people are working at the same time. When the GDP increases, it would also decrease the infant mortality rate as better medical services can be afforded by the Indonesia people.

Another indicator at how the country is doing is the unemployment rate. Unemployment rate is measured by dividing the unemployed by the total labor force and expressing it as a percentage.

The graph for the unemployment rate is not very consistent and is fluctuating all the time. Even though the population growth rate is decreasing, there are still many people unemployed. This could be due to the movement of people from rural areas to urban areas in search of jobs. When they do this, they aren’t always guaranteed to find a job as there has to a job opportunity for them to be employed.

Another indicator that points to whether a country is progressing or not is the percentage of population that is below the poverty line.

As you can see in the graph, we have had 2 decreases and 2 increases in the percentage in the last decade itself. It decreased from 2000-2004 and then increased from 2004-2006 and then started decreasing again until 2010. In terms of population growth rate, when the growth rate decreases and the population is stabilized and under control, the poverty decreases too. This is because there will be less people unemployed and more people will have an income source which will bring them above the poverty line.

In terms of age dependency ratio, as the ratio decreases, there are more people available to work and earn a living so that they don’t have to live in poverty. In terms of the sex ratio, there more job opportunities for men than women and so as the ratio gets higher, lesser people will live in poverty. When the standard of living of a country increases, the life expectancy increases and the infant mortality rate decreases and this shows that the poverty has decreased in that country.

Due to some reasons, Indonesia is considered a second-world county and a developing country. If Indonesia is able to efficiently use their large amount of natural resources, it will help in growing the GDP and the country could make a good progress.

Additional Bibliography:

"CIA - The World Factbook." Welcome to the CIA Web Site — Central Intelligence Agency. Web. 23 July 2011. <https://www.cia.gov/library/publications/the-world-factbook/geos/id.html>.

Moynihan, Dan, and Brian Titley. "The Structure of Population." Economics: A Complete Course for IGCSE and O Level. Oxford UP, 2007. 379-83. Print.

"Asia: Softstates." Time Magazine. Web. 20 July 2011.

Wirawan, Erwin. “Population: Opportunity and Change.” Jakarta Post, 25 Feb 2011

[1]-3 and 5 “CIA - The World Factbook." Welcome to the CIA Web Site — Central Intelligence Agency. Web. 7 Aug. 2011. <https://www.cia.gov/library/publications/the-world-factbook/geos/id.html>.

[2]4 "Population Growth (annual %) | Data | Graph." Data | The World Bank. Web. 7 Aug. 2011. <http://data.worldbank.org/indicator/SP.POP.GROW/countries/ID?display=graph>.

[3]6 "CIA - The World Factbook." Welcome to the CIA Web Site — Central Intelligence Agency. Web. 7 Aug. 2011. <https://www.cia.gov/library/publications/the-world-factbook/geos/id.html>.

[4]

7 "Life Expectancy at Birth, Total (years) | Data | Graph." Data | The World Bank. Web. 7 Aug. 2011. <http://data.worldbank.org/indicator/SP.DYN.LE00.IN/countries/ID?display=graph>.

[5]8 "CIA - The World Factbook." Welcome to the CIA Web Site — Central Intelligence Agency. Web. 7 Aug. 2011. <https://www.cia.gov/library/publications/the-world-factbook/geos/id.html>.

[6]

9 "Mortality Rate, Infant (per 1,000 Live Births) | Data | Graph." Data | The World Bank. Web. 7 Aug. 2011. <http://data.worldbank.org/indicator/SP.DYN.IMRT.IN/countries/ID?display=graph>.

[7]10 "List of Countries by Sex Ratio." Wikipedia, the Free Encyclopedia. Web. 7 Aug. 2011. <http://en.wikipedia.org/wiki/List_of_countries_by_sex_ratio>.

[8]

11 and 12 "Dependency Ratio." Wikipedia, the Free Encyclopedia

[9]13 "Age Dependency Ratio (% of Working-age Population) | Data | Graph." Data | The World Bank. Web. 7 Aug. 2011. <http://data.worldbank.org/indicator/SP.POP.DPND/countries/ID?display=graph>.

[10]14 "Population Ages 0-14 (% of Total) | Data | Graph." Data | The World Bank. Web. 7 Aug. 2011. <http://data.worldbank.org/indicator/SP.POP.0014.TO.ZS/countries/ID?display=graph>.

[11]15 "Population Ages 0-14 (% of Total) | Data | Graph." Data | The World Bank. Web. 7 Aug. 2011. <http://data.worldbank.org/indicator/SP.POP.0014.TO.ZS/countries/ID?display=graph>.

[12]16 "Population Ages 15-64 (% of Total) | Data | Graph." Data | The World Bank. Web. 7 Aug. 2011. <http://data.worldbank.org/indicator/SP.POP.1564.TO.ZS/countries/ID?display=graph>.

[13]17 "GDP (current US$) | Data | Graph." Data | The World Bank. Web. 7 Aug. 2011. <http://data.worldba