SHAPING THE FUTURE HOW CHANGING DEMOGRAPHICS CAN POWER HUMAN DEVELOPMENT

40
In developed Asia-
Pacific, the dividend
has contributed to
42 percent of
economic growth
low fertility and older populations. As China,
Japan and Thailand passed through demographic
transition, their human development indicators
improved significantly.
Looking at some of the other components
of human development, such as life expectancy,
globally, countries with more than 30 percent of
their population in the 0 to 15 age group have
a life expectancy below 70 years on average.
As countries move away from a predominantly
young population, life expectancy improves
(Figure 1.15).
Among countries in the early stage of demographic
transition, some have lowered fertility
rates but still have large numbers of youth. At
this stage, the average number of years spent in
school tends to be low, with limited public resources
for education spread over larger numbers
of students. As the share of youth falls, people
tend to attain higher levels of education.
Countries in the early stages of demographic
change with a large share of children also tend
to be in lower income groups. Countries with
30 percent to 50 percent of the population aged
0 to 15 are generally in the low- or middle-income
categories, while countries with less than
30 percent in this age group and at a more
advanced stage of transition are in the higher
income category.
Countries in the most advanced stage of
demographic transition are those experiencing
ageing. Those with a greater proportion of people
over age 60 tend to have higher HDI ranks, such
as the European countries. Nations with high
HDI values that are not yet ageing include some
from the Middle East, such as Kuwait, Saudi
Arabia and the United Arab Emirates. Many
have large shares of younger migrants.
HOW MUCH IS THE
DEMOGRAPHIC DIVIDEND?
To measure the impacts of changes in population
age composition on economic growth, a
simple growth model is used, as discussed in
Box 1.4. 55 Estimating demographic dividends
using this model confirms that economic growth
has been supported by favourable demographic
tailwinds over the last four decades (see Table
1.6 and 1.7). For the world as a whole, the first
and second demographic dividends combined
added six-tenths of a percentage point to economic
growth, compared with actual GDP
growth of 1.4 percent per year—in other words,
equal to about 40 percent of overall per capita
economic growth. 56 The dividend contributed
one-half percentage point to world economic
growth in 1970 to 1990, when it was in general
higher among developed countries, and a full
percentage point in 1990 to 2010, as transition
began in earnest in many developing countries.
Developed Asia-Pacific countries experienced
their largest first dividends (0.64 percentage
points) from 1970 to 1990, led by Australia,
Brunei Darussalam, Japan, New Zealand, Republic
of Korea and Singapore—countries further
advanced in demographic transition (Table
1.6). Their first dividends, however, began to fall
from 1990 to 2010, as working-age populations
began to shrink. The combined effect of the
first and second dividends from 1970 to 2010
contributed to 42 percent of economic growth.
Developing Asia-Pacific experienced a
smaller first dividend in the earlier period, but
a larger first dividend from 1990 to 2010, given
that it is further behind in its demographic
transition than developed Asia-Pacific. Within
developing Asia, East and South-east Asia enjoyed
modest first dividends from 1970 to 1990,
of 0.38 percent and 0.31 percent, respectively. In
South Asia, in contrast, the first dividend was
still negative at the time, indicating that the
working-age population was still small.
From 1990 to 2010, the first dividends
picked up in all of Asia-Pacific’s developing
regions, particularly in East Asia, led by China.
It acquired almost 0.78 percentage points
of additional growth. In South-east Asia and
South Asia as well the first dividend began to