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Ageing society
OpinionComment
Sylvia Sheng
Sylvia Sheng

Macroscope | Demographic blessing or disaster? How Asia can reap its youth dividend

  • Good governance, education, infrastructure and more are needed to integrate a growing working-age population productively into the economy
  • In an age of deglobalisation, emerging Asia must also capitalise on its close integration in regional supply chains and free-trade agreements

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Students at the Nguyen Tat Thanh High School in Hanoi, Vietnam on May 26, 2020. Vietnam, India and Malaysia are among those most likely to benefit from the demographic dividend. Photo: AFP
Sylvia Sheng
The world’s population has tripled since 1950, from 2.6 billion to 8 billion people. By the end of this century, it may reach 10.4 billion, according to the UN. The sheer size of the population can have profound implications for economic growth.
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An economy with a rising proportion of young and working-age people (15-64 years old) can deliver higher economic growth and gross domestic product per capita – usually referred to as a demographic dividend – compared to an economy where more older adults may need social services. A young population can also serve as a large labour pool and a long-term generator of tax receipts to fund older cohorts.

Yet population growth poses important risks. An economy that fails to make the proper investments to incorporate a growing working-age population productively into the labour force, to build out sufficient infrastructure in time and to ensure the sustainable use of its finite natural resources, could see disastrous economic consequences.

Strong institutions and governance frameworks, including rule of law, anti-corruption practices, economic openness and quality public education, are also crucial preconditions.

History also suggests caution in translating population growth alone, or youthful emerging market demographics, into future economic growth.

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In 2000, many major emerging market economies were projected to have the fastest population growth over the next 20 years, but only a few, including China and India, ended up having faster annualised GDP growth than the global average. The rest have yet to put their demographic advantage to work.

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