Remember the title. You are going to hear this term a lot in the future. Especially when people are talking about India and its economic growth.
Demographic dividend is the rise in the rate of economic growth of a country because of rising number of working people. That is,the economic growth that occurs when there are more people in the working age ( 20 to 60) than non-working (i.e dependants).
I came across this term in Nandan Nilekani’s Imagining India. I recommend this book even though it does not fit into business books category.You would be amazed at his level of knowledge about India and wonder how he managed to run infosys as well as do research for this book.
Every country has a limited window of time in which the possibility of reaping demographic dividend occurs. US and other developed countries of Europe had this opportunity right after world-war II. Many couples had put-off starting the family because of the war. As soon as the war ended lots of families were started at the same time. When these babies grew up and started working the countries grew at phenomenal rates to become “developed” countries. This generation was called “Baby Boomer” generation.
The main ingredient is that the large number of people in working age should actually get some work. If unemployment rises during this critical time, the country will fail to reap the dividend and remain a “developing” nation.
In earlier times, a country with a large population was considered to be destined to be poor. This was because there were not many knowledge industries and over population was thought to be a burden on the natural resources of a country.However, this view has changed considerably in recent years with development of lot of knowledge based industries and population is now considered an asset.
China started “One Child” policy when people still considered population as a burden. This policy artificially accentuated the demographic dividend. i.e suddenly all the working people had less number of dependants. Hence their growth rates are in double digits. But when this single child reaches the working age, suddenly they have more dependants( 2 parents and one child). This is becoming serious problem for China and are actively thinking of abolishing the rule. One side-effect of the rule is that the kids there are very very pampered. The people there are facing something called 4-2-1 problem. i.e 4 grandparents, 2 parents and one child. Can you imagine? Forget brother or sisters, the kids in China do not have cousins, uncles or aunts. They are the sole focus of attention of 4 grandparents!! But I still think growing up would be less fun without cousins, aunts and uncles.Anyway, I digress… Because of this policy China will stop having the dividend in about 5 to 10 years time.
However, in India, we don’t have any such problems thanks mainly to Sanjay Gandhi. Nandan says because he tried to control population through forced sterilization and faced the wrath of people no politician in his right mind wanted to do anything for population control. The result? we expect to have demographic dividend well past 2050 🙂
India is also unique in the sense that we are not behaving like one country. He says, different parts of the country are earning demographic dividend at different years. When green revolution happened, farmers in North India suddenly became rich, started having fewer kids and reaped the dividends. Then IT revolution brought money into the hands of educated people of South India the fertility rates have dropped dramatically.
However, some North Indian states like Bihar and UP continue to have high population growth which would help India grow for another 40 years.
I like the term “dividend”. Its like when I invest in stock market, I don’t look for dividend. I invest thinking the stock price will go up. Any dividend I get is like a bonus. Similarly, people don’t look for getting any economic benefit of having kids, but the fact that country as a whole gets benefits makes it a “demographic dividend”
I have a plan to extend this benefit infinitely.I am sure most people plan to have less number of kids than their parents had. Right? That is what is giving us the high economic growth. Now, to sustain this, we all need to ask our kids to have lot of kids. That is it!! We just need to increase our population every alternate generation!! Nothing could be simpler 🙂
NOTE: – Anyone who follows the plan described above is doing it at his/her own risk. I should not be held responsible for the consequences.
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