National transfer accounts 2020 : demographic transition and the Maldives’ economy : trends, challenges, and future prospects

Abstract

This study explores the extent of intergenerational resource allocation in Maldives, using the United Nations’ National Transfer Accounts (NTA) methodology. The NTA methodology enables us to measure some important features of intergenerational resource allocation at the aggregate level, in a manner consistent with National Income and Product Accounts. The NTA estimates economic flows from one age group or generation to another and year to year, thereby giving policymakers valuable information with which to design national frameworks for public policies. The results of this study can shed light on several issues: the implications of population aging; changes in public and private financing of education, health, and pensions; women’s full contributions to the economy; and human capital needs.

The study is organized as follows. In the next section, we briefly describe the population structure, economy, and social sectors of Maldives. We then present basic NTA estimates for Maldives in 2019 and estimate the first demographic and second demographic dividends, respectively. In Section 3, we compare the results with the 2016 results. Section 4 provides evidence on the disparities. In Section 5, we use the NTA to generate insights on the fiscal sustainability of Maldives and simulate the future of the social welfare budget. Section 6 provides some insights on the effect of COVID-19 on the generational economy in Maldives. In the last section, we summarize and conclude the paper with some implications for policy.