Posted by: kenwbudd | July 16, 2010

India: Preparing for a Demographic Dividend

Demographics are destiny. Countries with a large and expanding workforce and relatively few people of dependent age (under 15 or over 64) can reap what Harvard School of Public Health demographer David Bloom has called a “demographic dividend.” Young, unencumbered workers spur entrepreneurship and innovation, enabling significant gains in productivity, savings, and capital inflows.

As fresh ideas flourish, governments can focus on improving infrastructure and helping to fund such critical technologies as intelligent transportation systems, smart utility grids, and renewable energy. The World Health Organization (WHO) estimates that the demographic dividend can increase a country’s GDP growth by as much as a third.

No country is better poised to take advantage of the demographic dividend than India. In 2020, the average age in India will be only 29 years, compared with 37 in China and the United States, 45 in western Europe, and 48 in Japan.

Moreover, 70 percent of Indians will be of working age in 2025, up from 61 percent now. Also by 2025, the proportion of children younger than 15 will fall to 23 percent of India’s total population, from 34 percent today, while the share of people older than 65 will remain around just 5 percent.

China’s demographics are not as rosy as India’s, because the government’s policies to limit population growth will have created an abnormally large cohort of people over age 60 by 2040.

Other emerging nations, such as Pakistan, Indonesia, and certain countries in Latin America and Africa, will produce much larger workforces in the coming years. But their demographic dividends may be inhibited by political and social instability that impedes efforts to put this young population to productive use; a country with massive numbers of unemployed young people and no constructive economic outlet for their dynamism is headed for trouble.

To read the full article follow the link: Preparing for a Demographic Dividend

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