Demographic Dividend: The Secret to Success?

This is a topic that nobody usually talks about. So today we have decided to explore it, and understand its significance.
First, let's understand what is demographic dividend.
Demographic dividend is a kind of economic growth which occurs due to favorable changes in the age structure of a country's population. It is a concept in economics that refers to the boost in working-age population that takes place when a country experiences low birth rates in conjunction with low death rates. Countries with a demographic dividend can experience rapid economic growth, as the number of people entering into the labor market is greater than those who are leaving it. As fewer births are registered, the number of young dependents grows smaller relative to the working population. With fewer people to support and more people in the labor force, an economy’s resources are freed up and invested in other areas to accelerate a country's economic development and the productivity of the country increases.
To receive a demographic dividend, a country must go through a demographic transition where it switches from a largely rural agricultural economy with high fertility and mortality rates to an urban industrial society characterized by low fertility and mortality rates. To unlock the true potential, the country needs to invest in these areas, women empowerment, health, education and employment generation. You see, women empowerment is an important factor because it ideally represents 50% of the population. And they should have rights to define their own life and when to have children. It has been observed that when women have chosen to have smaller families they and their children get the advantage of better health education and economic opportunities. For this woman needs to have access of contraceptive information which helps the woman to decide when to have children. Health and education also plays an important role in this. Healthy and skilled young workforce could increase a country's productivity which ultimately helps the economy. And lastly, employment generation in this government needs to be actively involved to bring and create job opportunities across the country in order to fully utilize the workforce. So ultimately when this large workforce is healthy, well educated and productively employed then the country unlock the demographic dividend.
But the demographic dividend does not last forever. The first dividend period generally lasts for a long time, typically five decades or more. Eventually, the reduced birth rate leads to reduced labor force growth. Meanwhile, improvements in medicine and better health practices lead to an expanding elderly population, which ends the demographic dividend. At this stage, per capita income grows at a decelerated rate and the first demographic dividend becomes negative. But on the other hand an older working population facing an extended retirement period has a powerful incentive to accumulate assets to support themselves. These assets are usually invested in both domestic and international markets, adding to a country's national income. The increase in national income is referred to as the second dividend which continues to be earned indefinitely. This trend of demographic dividend has been seen in some countries like japan. Japan's economy has stagnated after reaching some growth over the period of time. One of the reasons behind it is they have fewer child birth rates and a big older generation to support it. Which makes social welfare spending higher than investing in other sectors of the economy. Japan is a good example of demographic dividend negatively affecting the economy.
So at the end we can say that the benefits gotten from a demographic transition is neither automatic nor guaranteed. Any demographic dividend depends on whether the government implements the right policies in areas such as education, health, governance, and woman empowerment. If governments get success in it then that country gets benefits of it. Demographic dividend is one of the ways that can help the country remarkably in economic growth especially for developing and underdeveloped countries.



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