The United Nations Population Fund's report on "The State of World Population, 1998" makes an interesting point about demographic transition. As high mortality and fertility rates fall, there is a temporary bulge in the proportion of the population of working age. This would mean that while fewer children are being born currently, the effect of earlier high birth rates will result in the number of working people increasing. The net effect is what the UNFPA characterises as a "demographic opportunity" --a one-time increase in the working population before the proportion of older people rises. A part of the rapid growth in East Asia can be attributed to this demographic bulge.For instance, during 1960-1995, GDP per capita in East Asia grew annually by an average of 6.1 per cent, and demographic trends are estimated to have contributed between 0.9 and 1.5 percentage points to that growth. However, the East Asian as well as SE Asian region have already put the bulge behind them, as a result of which, during1990-2025, demographic trends will reduce growth in Hong Kong, Korea and Singapore by 1.3 to 1.9 percentage points. Similarly, for SE Asia the reduction in growth could be 0.2 to 0.6 percentage points due to a slimming of the bulge. The good news is that south Asia is only now going to experience the beneficial effects of the demographic bonus, as a result of which growth rates could increase, upto 2025, by around 0.55 to 1.20 percentage points.
There is, however, a flip side to the demographic bonus. The influx of so many people into the workforce could, if not handled right, merely translate into increased unemployment. All the more reason, therefore, for policies to be put into place to ensure growth in the economy, without which the demographic shift could soon become a major cause of social tension.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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