Demographic Dividends, Dependencies and Economic Growth in China and India

There is a growing body of evidence to suggest that the potential “dividend”, “gift” or “bonus” associated with a country’s demographic transition towards a population dominated by people of working age can be quite substantial. Population structure plays a critical role in determining the relative magnitudes of labour force growth to total population growth and the consequent change in dependency ratios, which in turn impact significantly on per capita income growth. In particular, the decline in fertility rates since the 1950s has reduced total population growth and dependencies in both China and India, precipitating higher per capita income growth, or demographic dividends, in both cases. Given their very different population age structures, it comes as no surprise that the timing and magnitude of China’s and India’s demographic dividends have also differed: China’s largely lies in the past while India’s lies in the present.