Demographic dividend is termed as the period of exponential population growth in
a country resulting in youth bulge during 15-20 year period. In other words demographic
dividend could be considered as a corollary to demographic transition. Because of the shift
in demographics with respect to mean age over a period of time more people fall under the
age bracket of 15-64 than below 15 and above 64. Simply put younger the population
higher the chances of economic activity because of the abundance of human resource.
David Bloom and Jeffery J Williamson, two development economists, coined the
term. The term gained currency after Bloom and Williamson studied the East Asian
growth model and analyzed the success of South East Asian countries (aka Asian Tigers:
Malaysia, Indonesia, Singapore, Taiwan, Thailand, South Korea and Vietnam)
and attributed it to these countries’ carefully managed population policies to yield
demographic dividend. They identified the changing age-structure for accounting
two-fifth of East Asia’s economic miracle.
The phenomenon of demographic dividend does not take place suddenly. Rather it
is transited first from high birth and death rates to low birth and death rates as a country
evolves from agrarian to industrial. In certain cases the demographic dividend is the
outcome of the demographic transition which then allows a country to grow rapidly because
of the high working age population. This also increases per capita income and
savings (Can Pakistan, 2012). States, in order to reap its benefits tend to plan in advance
and at the time of its occurrence utilize the available human resources for generating
economic development and progress.
According to the United Nations Population Fund: “The demographic dividend is
the economic growth potential that can result from shifts in population’s age structure,
mainly when the share of the working-age population (15-64) is larger than the
non-working-age share of the population (15 and younger and 65 and older)” (Demographic
Dividend, 2008).
Simply put, demographic dividend is the result of high birth rate for a certain period
of time. It shifts the demographics of a country resulting in more young people in that
society than the older ones i.e. it lessens the number of dependents and allowing the society
to reap the benefits of a younger, healthier, and educated generation which could
fasten the economic growth rate of the state.