Population dividend: how to yield benefits?

By Ali Hassan Bangwar

INTRODUCTION

Sustainable economic development is a prerequisite for realizing the dream of inclusive prosperity and a
welfare state today. To this end, vibrant socioeconomic policies, consistent political agendas, and efficient
resource management promise considerable positive outcomes. However, the capitalization of enormous
human potential has emerged as a potent source of economic development in contemporary times. The potent population of the countries attends unparalleled governmental attention to promising economic outcomes. Earlier, the population quantity and quality defined economic productivity and national development. However, modern times have experienced a shift in categorizing human resources’ potential based on age structure. The relationship of population dynamics-particularity, its age structure with the cumulative economic outcomes has received much theoretical and applied traction. This is because of the relatively better participation in the economic development of a country as is envisioned in the concept of demographic dividend.

MEANING OF DEMOGRAPHIC DIVIDEND

The term demographic dividend, also called population dividend, has earned much policy attention in political units in the modern times across the globe. This is due to the fact that countries that are conscious of the transitional demographic potential effectively cash on their demographic dividend and yield enormous economic outcomes unrivalled in the classical notions of population-economics equations

The term Demographic Divided has been defined by United Nations Population Fund (UNFPA) as the
economic growth potential resulting from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the non-working-age or dependent share of the population (14 and younger, and 65 and older). This age structure typically results from declining fertility and mortality rates of a country’s population.

The demographic dividend, if harnessed, results in considerable boosts economic growth of a country caused by a decline in birth and death rates. Because of fewer births a year, a young dependent population share decreases compared to the working age population count. With a higher working-age population and fewer souls to support, a country houses a potential demography that can make wonders in economic growth. A country experiencing a low birth rate in concurrence with low mortality rates secures an economic benefit or dividend in the name of improved productivity that increased working population yields. The increased labor force and decreased dependents’ population freed up resources for what we term economic gifts. This creates avenues for accelerating economic growth and family well-being. At the micro-level, the transition increases income level per capita and improves the living standard of families. At the macro level, the same adds to the economic development of countries.

ROAD TO ATTAIN DEMOGRAPHIC TRANSITION

However, the realization of a demographic dividend warrants a country’s population to undergo a structural shift termed as the demographic transition. This needs a population transition from high fertility and mortality rates to low fertility and mortality population rates. A decline in mortality rates results from improved medical, health and sanitation services. Though a democratic dividend is an obvious possibility in many developing countries today, the earlier inception of it warrants voluntary interventions aimed at reducing fertility and child mortality rates. This can be achieved through carefully designed mass family planning, prioritizing the reproductive health of the population and improving educational quality and access, particularly for girls.

The existence of a demographic dividend would not in itself translate into benefits for a country without policy interventions. It would remain untapped or a liability unless pragmatic governmental, economic and social policies are put in place and sufficient investment in human resources is made. The sustainable realization of demographic dividend, therefore, depends on the formulation and implementation of pragmatic policies. In this regard, the higher investments in human capital, improving the mobility of the labor market, facilitating female participation in the workforce, enhancing mechanisms for savings, building a practical framework for education, facilitating entrepreneurship and creating employment opportunities would help serve the purpose.

ADVANTAGES THAT DEMOGRAPHIC DIVIDEND OFFER

The capitalization of population dividends exponentially contributes to a country’s economic and social
development in many interrelated ways. The foremost benefit of it is labor supply. Because of the large and
exceedingly high human resources and labor force, the economy of a country can employ a sufficient
workforce. This would not only help divest only economic activities, but would also boost economic productivity and growth. Moreover, a skilled labor supply to developed and increasingly aged populations would contribute to the home country through remittances. The second advantage of demographic dividend is an increase the average personal savings. Personal savings, during the demographic period, exponentially grow and serve as an impetus to the economy. Third, qualitative growth in human capital is another dividend of demography. With fewer births and dependents, parents are in the position of spending relatively more resources on each child, leading to improved educational, health social standards. Finally, a declining dependency ratio leads to a sizable GDP growth per capita.

SOUTH KOREA- A SUCCESS STORY

It is generally believed that the developed countries of the world have been making the best possible use of their demographic dividend since the half of the twentieth century now. South Korea presents a glaring
example of leveraging its demographic dividend. South Korea, along with other South Eastern nations, the
Asian Tigers have effectively unlocked and cashed on their population dividend. They have so done with
sustainable investment in education, health and social security services and increasing women’s participation in the labor force.

PAKISTAN’S UNTAPPED DEMOGRAPHIC POTENTIAL

Pakistan is on the cusp of a demographic transition and holds some of the highest demographic potentials for socio-economic development in the world. Duree Nayab, a joint director at the Pakistan Institute of Development Economics holds that “Pakistan is going through a phase of demographic transition, experiencing a once-in-a-lifetime opportunity of reaping the demographic dividend as the working-age population bulges and the dependency ratio declines,” She further opined that an increasing number of the population making it to the working age, could prove counterproductive unless it’s used through effective policies in savings, labor supply and human capital.

With a potential youthful population and large workforce, the country could do wonders, if harnessed with
conducive policy and far-sighted planning. Nevertheless, on account of being short of required governmental will and policies, the country has so far failed to cash in on the demographic dividend. Far from being an asset, he population is increasingly becoming a liability. A lack of successive government interest, increasing unemployment, a dearth of state-of-the-art skills and the reluctant flight of human capital to other countries manifests this. Therefore, the country needs a radical policy shift towards human capital. An urgent investment in the country’s healthcare, education and skills would help to capitalize on the potent demographic divided in the longer run

WAYS TO YIELD BENEFITS OF DEMOGRAPHIC DIVIDEND

A demographic dividend holds invaluable potential for socio-economic miracles for the countries. Nevertheless, its capitalization warrants pragmatism in policy and practical national approaches. Prioritizing human capital and putting in place the requisite socio-economic agenda would open windows for inclusively sustainable societal and economic development for the countries. The following suggestions would help yield the benefits a demographic dividend promises.

1. ENTREPRENEURSHIP

Modern times, particularly in the aftermath of the COVID-19 pandemic, have underscored increasing the need for entrepreneurship skills. The economic halt of the pandemic has resulted in emphasizing the need to focus on entrepreneurship as an engine for growth and economic recovery. This would, in its best possible form, would help realize the human potential that the demographic dividend of a country carries. Moreover, introduction of pragmatic policies and practices aimed at generating employment opportunities would be a right step in this direction

2. EDUCATIONAL ACCESS AND QUALITY

Education is the key element for unlocking the human potential to be used for the greater good of people and society. Educational access to all and sundry and its quality matching the market needs would be a great impetus to human and economic productivity. Result-oriented efforts aimed at improving the quality and quantity of education would unleash promising economic and developmental outcomes.

3. SKILL DEVELOPMENT PROGRAMMES

A result-oriented and demanding skill development program in line with dynamics of the contemporary times would play a considerable role in yielding a country’s potential demographic benefits. This includes promoting the hard and technical skills of the population and bridging the gap between academia and the job market demands.

4. PRIORITIZING PUBLIC WELFARE

An owned and socially stable population is likely to increase participation in economic activities and national development. In this regard, encouraging the participation of youth in national policymaking and programs as social stakeholders would boost their morale and make them contribute to the best of their capacity. The population free from exploitation, deprivation and violence can contribute more productively than their systematically subjugated counterparts

References

https://carnegieendowment.org/2021/06/29/demographics-and-future-of-south-korea-pub-84817
https://arabstates.unfpa.org/en/topics/demographic-dividend-6

https://www.imf.org/external/pubs/ft/fandd/2006/09/basics.htm
https://www.rand.org/pubs/research_briefs/RB5065.html
https://www.unicef.org/kosovoprogramme/press-releases/demographic-dividend
https://www.rand.org/pubs/research_briefs/RB5065.html
https://www.sciencedirect.com/science/article/abs/pii/S0264999316304473?via%3Dihub
https://www.prb.org/resources/fact-sheet-attaining-the-demographic-dividend/
https://tribune.com.pk/story/2310022/pakistan-fails-to-reap-demographic-dividend
https://www.thenews.com.pk/print/905430-the-demographic-dividend
https://www.dawn.com/news/1671262
https://www.iasexpress.net/demographic-dividend-india/

*Brief Bio: A columnist and independent researcher
Email: alihassanb.34@gmail.com

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