Who Earns the Next Demographic Dividend?
The demographic dividend is a posited driver of rapid economic growth in certain circumstances. In a nutshell, when the ratio of workers to dependents in a country goes up, the aggregate output of that country’s economy will also go up, and when the ratio goes down, the output will also go down. What makes the ratio go up and down? Well, in the early phases of a demographic transition (when death rates fall rapidly due to improvements in public health and nutrition), the ratio “worsens” (more children survive so the percentage of dependent children goes up); in the middle phase, the ratio “improves” (the birth rate drops, and a bulge makes it way up the population pyramid, eventually reaching prime working age); and in the last phase, the ratio “worsens” again (as the bulge reaches retirement age and the large elderly population needs to be supported by a smaller working-age population). So the demographic “dividend” occurs when a country reaches that second phase, with a large population of 25-45 year-old working people and relatively smaller sub-18 and over-65 cohorts.
Precisely because it is a temporary demographic situation, countries really need to take advantage when they are “in the zone.” South Korea and Ireland were able to do that very effectively, each following a different national economic strategy – Korea following the Japanese path of export-led development via large manufacturing conglomerates and Ireland becoming an outsourcing center for a variety of different kinds of services – but in each case successful in substantial part because of a high degree of integration with the global economy. Cuba, by contrast, because of its isolation, has been much less able to take advantage, and now faces a real economic challenge as its population ages.
So: who’s next?
Well, I can think of a couple of good candidates out there.
But one in particular stands out. The next ten years are going to be a critical period, in which they either take advantage of an opportunity to integrate into the global economy, and reap a substantial dividend from the demographic transition – or they don’t, and they don’t.
How about Mexico? There’s a growing body of analysts there who argue that the country didn’t take advantage of its demographics over the last half of the twentieth century, when the country went from a birthrate of something like six per mother to just over two per mother. Plus, they are running out of the oil whose reveue has been used since the late 70s to put off reform, which will only compound the demographic crunch.
— Patrick · Apr 21, 07:18 PM · #
I wish I could source it (my guess is The Atlantic) but maybe a 10-15 years ago I saw an article on world demographics trends. What stuck in my head was the age curve for the Middle East.
I have no expertise, so maybe this is utterly worthless musing, with that graph of the Middle East stuck in my head, more than once I’ve wondered if all this Jihad stuff isn’t just the Middle East’s version of the Sixties, but with added fun of loose nukes, anthrax, and sarin gas.
— Tony Comstock · Apr 21, 09:59 PM · #
Tony: What you are describing is a hypothesis put forward by Samuel Huntington in “Clash of Civilizations” (the book), so you’re in good company.
— Magnus · Apr 22, 03:51 AM · #
Having a productive economy isn’t just a matter of having enough warm bodies between 18 and 65.
For example, here are the 2007 Trends in International Mathematics and Science Study (TIMSS) results for eighth grade math.
Chinese Taipei 598
Korea, Rep. of 597
Singapore 593
Hong Kong 572
Japan 570
Hungary 517
England 513
Russian Federation 512
United States 508
Lithuania 506
Czech Republic 504
Slovenia 501
Armenia 499
Australia 496
Sweden 491
Malta 488
Scotland 487
Serbia 486
Italy 480
Malaysia 474
Norway 469
Cyprus 465
Bulgaria 464
Israel 463
Ukraine 462
Romania 461
Bosnia and Herzegovina 456
Lebanon 449
Thailand 441
Turkey 432
Jordan 427
Tunisia 420
Georgia 410
Iran, Islamic Rep. of 403
Bahrain 398
Indonesia 397
Syrian Arab Republic 395
Egypt 391
Algeria 387
Colombia 380
Oman 372
Palestinian Nat’l Auth. 367
Botswana 364
Kuwait 354
El Salvador 340
Saudi Arabia 329
Ghana 309
Qatar 307
Notice any general patterns?
— Steve Sailer · Apr 22, 04:36 AM · #
“ What you are describing is a hypothesis put forward by Samuel Huntington in “Clash of Civilizations” (the book), so you’re in good company.”
I only know “Clash of Civilizatins” by reputation, but my impression is that I’m suggesting something considerably more mundane that Mr. Huntington’s theory.
— Tony Comstock · Apr 22, 11:04 AM · #
Tony, I’m not referring to Huntingtons main Clash of Civilization-theory, but to his explanation of the Islamic Resurgence and general instability in the Muslim world. In essence, it’s: Lot’s of men between 15 and 30 -> social instability and change. Like you, he makes the comparison with the West in the 60s.
— Magnus · Apr 22, 05:26 PM · #