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World Bank Support to Aging Countries

Chapter 5 | The Way Forward

This section outlines the main messages arising from the evaluation and puts forward two suggestions for the World Bank to consider to develop the aging agenda further. As this is a formative evaluation on a relatively new topic for the institution, no recommendations are presented.

The World Bank has made great progress in moving toward a more comprehensive approach for aging. The regional and country reports and the GMR have articulated an integrated approach to analyzing population aging as a cross-sectoral issue. This framework highlights that a complex issue like population aging has wide-ranging socioeconomic implications and calls for cross-sectoral solutions. The use of demographic analysis, tools like the NTA methodology, and data from multiple sources to explore alternative medium- and long-term scenarios have been powerful in identifying policy options. The number of regional and country reports is still very limited, but they provide a useful reference framework for additional World Bank analytical work on aging.

The body of aging-relevant analytical work in late- and postdividend countries has grown substantially over the past 10 years and has become more diverse. An increasing number of reports discuss how the labor market and productivity may be affected by population aging, the challenges of providing long-term care, and the potential consequences of population aging for growth and well-being.

The World Bank diagnostic work, however, is not well aligned to country needs and priorities and often does not explore the distributional implications of population aging. A country’s stage of demographic transition is weakly correlated with the volume of diagnostic work on aging-related issues. The evaluation found that the oldest countries did not have the largest amount of analytical work on the consequences of population aging. Moreover, a country’s need for diagnostic work on specific, very pressing issues (for example, especially low female participation rates or substantial outmigration) is also uncorrelated with the volume of this work and its quality. This seems to reflect data limitations, although analytical work can often be quite opportunistic and reflect factors such as staff availability in the Region to work on a certain topic for a certain country. Another limitation is that many reports do not discuss how different groups of the population are or may be differently affected by population aging. This was seen all too frequently, even in cases where the report would have benefited from deeper analysis of the spatial, socioeconomic, or gender aspects of aging. In some cases, this is quite puzzling; for example, the explicit inclusion in the gender strategy of aging as a second-generation issue does not yet appear to be reflected in more attention to gender gaps in analytical work.

A key issue with the World Bank analytical work is that it is not systematically used to inform the engagement with aging countries. There are some notable examples of how analytical work has informed the World Bank response to country demand for aging-related issues. The evaluation found several examples of influential aging reports and support for data generation and technical assistance that informed the policy discussion about aging in client countries. Most of these cases, though, are isolated. What is missing is the systematic, deliberate, and regular use of analytical work as an input to the SCD and the CPF. The probability that the SCD will integrate analysis from existing diagnostic reports depends on the topic; analytical work on pensions and, to a lesser extent, on the labor market and health is more likely to also feature in the SCD, but this is not the case for other topics.

The insufficient attention to aging in the SCDs and CPFs for aging countries suggests that the speed of demographic change and the potential of population aging to disrupt growth and prosperity are not widely recognized as urgent priorities. There are relatively few SCDs that provide an in-depth analysis of the drivers and impacts of aging on growth and prosperity through impacts on the labor force and productivity; changes in consumption patterns, saving or dissaving, and investments; and pressures on social protection, pension, health, and care systems. Population aging is not treated as a systemic issue in SCDs and CPFs but rather as mere context. There is no widespread perception that aging can be an appropriate lens through which to assess the implications for growth, inequalities, and well-being in countries that are aging (and often well advanced in the process). The evaluation findings point to two explanations: (i) the lack of an institutional endorsement of the issue; and (ii) the client’s difficulty in reaching a full awareness of the issue and expressing a clear demand to the World Bank.

Population aging is recognized as a critical issue affecting client countries by groups of World Bank staff, but it is not highlighted by the institution as a whole. Most interviewees lamented the lack of a unified vision and guidance. Interviewees expressed the hope that the World Bank could articulate a clearer and more coordinated position on how to firmly include population aging in the policy agenda of client countries and provide more systematic support. The insufficient integration of an aging perspective in the Human Capital Project, the future of work agenda, the gender strategy, and the inclusion agenda suggest that opportunities exist but have not been used.

Client countries often understand the inevitability and irreversibility of the aging challenge but have little incentive to adopt the medium- and long-term horizon that adequate policy solutions require. The electoral cycle is not conducive to pursuing the long-term policies that addressing (or even anticipating) the challenges arising from population aging demand. At the same time, the World Bank is also called to help the client plan for the medium- and long-term horizon, requiring a strong focus on systemic solutions, even with short-term fiscal concerns. This relates to two further challenges for internal World Bank attention identified by the evaluation: the need to focus on preparedness and the need to think cross-sectorally.

The World Bank has not paid enough attention to preparedness. Supporting a healthier and more productive population calls for investing in a healthy and productive population. The World Bank has here a mixed record: it has worked with countries to better respond to NCDs but has not invested in promoting healthy habits to reduce risk factors for them. Similarly, it has not worked toward promoting more productive lives and permanence in employment in old age through encouraging lifelong learning, fighting age discrimination, and removing barriers to low female labor force participation. Attention to long-term care has been the most important development in World Bank work over the past decade, although the number of activities is limited to a couple of operations in China and technical assistance in Chile, Estonia, Latvia, Romania, and the Seychelles. Other topics have yet to be properly articulated and linked to aging. There is clear interest within the World Bank in expanding topics such as lifelong learning and age-friendly cities, but there is virtually no evidence of a discussion of financial inclusion in relation to aging and the silver economy.

The World Bank needs to improve thinking cross-sectorally. Although the analytical framework proposed by country and regional reports is a systemic, multisector framework, quite often activities have been developed without carefully assessing the links across sectors and themes. This may lead to overlooking not only potential unintended impacts but also potential synergies across issues and policy solutions. The evaluation shows several examples, including missing connections between long-term care provision and female labor force participation (including gender gaps in wages and working conditions and risks of reinforcing gender norms); weak or absent links between the discussion or proposal of pension reforms and the realities of the labor market and retirement behavior; and insufficient consideration on how to integrate fiscal sustainability of pensions with concerns for coverage and adequacy. These disconnects happen frequently not only at the operational level but also in analytical work.

To address some of these issues, the evaluation has two suggestions.


Suggestion 1: Better formulate the World Bank position with respect to population aging. This should facilitate dialogue with clients and potential partners and improve the World Bank’s capacity to provide support to aging countries. Population aging is not a visible issue at the institutional level. This means that the framework that several aging reports have powerfully outlined has not generated a common understanding of how the institution thinks about population aging. Since population aging is a cross-sectoral issue, the skills and viewpoints to develop a richer and more mature perspective need to come from across the institution. A better articulation of the World Bank’s position on population aging can therefore support a more powerful use of internal expertise, more regular coordination across teams, and more systematic use of knowledge. Moreover, a more cohesive position on aging could help better frame the issue with ministries of finance in client countries and help them better articulate their policy priorities and demand for World Bank support. Concrete steps that the World Bank can consider to achieve this goal are the following:

  • Identify a champion who can coordinate the efforts related to this agenda. Currently, the bulk of the work is in Human Development, but other groups working on aging are found in other Global Practices (Macroeconomics, Trade, and Investment; Social Development; Poverty; and the gender Global Theme). Moreover, education, financial, and private sector groups could expand into aging. A recognized champion can facilitate cooperation across teams and promote the inclusion of aging in relevant institutional agendas: the Human Capital Project, future of work, gender strategy, and inclusion.
  • Produce a high-level report or position paper on population aging, outlining the World Bank framework and priorities for engagement. The 2015/2016 GMR has been very influential in inspiring World Bank analytical work, but its focus was on demographic challenges at large, including high fertility, not just aging (World Bank and IMF 2016). Several other institutions (OECD, IADB, WHO, and the EU) have issued high-level reports signaling their perspective on aging to countries and potential partners. A World Development Report on population aging, for instance, could provide a framework for the World Bank.

Suggestion 2: Improve the systematic production and use of diagnostic work to provide more regular analysis of the drivers and consequences of population aging to inform engagement with aging countries. The SCD and CPF products and process are an excellent vehicle through which to focus on aging issues, align them with the country aging context, and identify policy solutions. The World Bank diagnostic work, however, does not systematically assess the distributional implications of population aging or explore relevant policy areas in all aging countries. Moreover, when available, relevant World Bank diagnostic work is not adequately reflected in the SCD and is therefore less effective in informing engagement priorities. Concrete steps that can be considered to achieve this goal are the following:

  • Make the existing wealth of analytical work more easily accessible. In particular, improving access to relevant analysis developed for RAS should be prioritized. The evaluation has shown that this knowledge is highly valued and appreciated by clients but frequently unknown beyond the responsible team.
  • Invest in generating high-quality analytical work and in the production of and access to aging-relevant data. The World Bank can build on its comparative advantage in generating knowledge and help client countries evaluate policies and programs to respond to population aging. The evaluation has stressed the need to identify and fill key data gaps to better understand distributional issues, explore overlooked topics, and more systematically inform diagnostics, planning, and policy discussions.