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Sunday, November 04, 2007

"Your manuscript is both good and original, but the part that is good is not original and the part that is original is not good." - Samuel Johnson, (attributed)


Bloomberg: Sexual Frustration Will Hurt Asia's Economies: William Pesek

''The Geopolitics of Sexual Frustration.'' That's how Martin Walker, a senior fellow at the New School University of New York, refers to an underappreciated risk to Asia's economic outlook.

French demographer Christophe Guilmoto calls it ''masculinization.'' Others put it more bluntly: ''The Penis Preference.''

No matter what one calls it, the desire for sons in China, India and other Asian economies is causing a dangerous gender gap. In China, for example, 120 boys were born for every 100 girls in 2005, according to a new United Nations report. This growing testosterone glut is something investors making long-term bets on Asia should be monitoring, and closely.

''Sex ratio imbalances only lead to far-reaching imbalances in society,'' Thoraya Ahmed Obaid, head of the UN Population Fund, said in Hyderabad, India, on Oct. 29. ''We must carry forward the message that every human being is born equal in dignity, worth and human rights.''

Tell that to the ever-growing numbers of families from Beijing to New Delhi and from Hanoi to Kathmandu actively avoiding the birth of daughters. It's a cultural phenomenon governments have yet to address sufficiently and one that could have unexpected economic side effects.

The preference for boys often boils down to economics. Sons tend to support parents in their old age, while daughters are often seen as a liability. Families sometimes need to pay a dowry when daughters marry. In some cultures, sons perform last rites when parents die and continue the family name.

Reverse Darwinism

It's a bit of Darwinism in reverse. Families are conducting a kind of unnatural selection process to get ahead economically. Yet hundreds of millions of households engaging in such an experiment may backfire on entire economies. Guilmoto, who wrote the UN report, says men will outnumber women by 23 million in India and by 26 million in China by 2030. Some estimates are even higher.

In the 1990s, economist Amartya Sen drew attention to the phenomenon of ''missing women.'' Improved census data now allow us to see how much the trend is growing and could undermine Asian growth, productivity and lead to bigger budget deficits. It might even lead to an increase in violence.

This latter risk was detailed in the 2004 book ''Bare Branches: Security Implications of Asia's Surplus Male Population.'' In it, Valerie Hudson and Andrea den Boer warned that Asia's shortage of women is giving rise to an entire generation of young men with no prospects of finding a mate. They argue that biology, sociology and history suggest the imbalance will lead to crime and social disorder.

Gender Gap

Farfetched, perhaps, yet the UN warns that the focus on sons in countries such as China, India, Nepal and Vietnam may fuel sexual violence and trafficking in women. The UN notes that if Asia's overall sex ratio were the same as the rest of the globe, in 2005 the region would have had 163 million more females.

Here, China and India should be the largest concern for investors. Multinational companies are relying on increased consumer demand in the two most-populous nations. So are investors, who are betting on strong economic growth, rising productivity and an ample supply of increasingly skilled labor.

''To address the socio-economic basis for the preference for boys, both societies need to reduce the dependence of parents on their male children, while improving the economic standing of daughters,'' says Jing Ulrich, chairman of China equities at JPMorgan Chase & Co. in Hong Kong. ''This will require improvements in social security and policies to improve education and female participation in the workforce.''


One consequence of Chinese becoming richer may be more sex selection, not less. Improving ultrasound and amniocentesis technology is making it easier for parents to abort girls, and reports of female infanticide are becoming routine. The same is true of India; the wealthier the region, the wider the gender divide is likely to be.

What also concerns the UN is what all those single men will do with their desire for female companionship. Sadly, the real winner could be the human-trafficking business amid increased demand for prostitution and the outright purchase of mates.

China's government is beginning to address the issue. Earlier this year, the Communist Party vowed to take ''tough measures'' to control the imbalance. Yet China needs to become more aggressive in tackling a problem that's partly at the root of President Hu Jintao's push for a ''scientific outlook on development.''

Sexual Frustration

Hu wants to spread the benefits of China's 11.5 percent growth. At the moment, the lack of safety nets -- public help with education, health care and pensions -- means that sons are the safety net. Having a boy is your retirement plan and until that changes, Chinese may welcome fewer and fewer daughters.

Among the biggest obstacles is the not-in-my-backyard dynamic that demographers confront in Asia. It's recognition by parents that it's important to have more girls -- just as long as someone else has them. Breaking this NIMBY mindset will require tremendous political will and spending in the years ahead.

In Asia's case, worsening sexual frustration may frustrate economic growth.

To contact the writer of this column: William Pesek in Tokyo at"
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