The Demographic Dividend: Components and Policies

Monica Das Gupta, University of Maryland

Recent discussion of the demographic dividend often emphasizes that the dividend is “not automatic”, and will be “squandered” without sweeping policy and institutional reforms conducive to rapid economic growth. This paper makes two obvious points. First, fertility decline in low-income settings yields a substantial automatic dividend in reducing poverty, regardless of whether growth-friendly policies are in place. Second, reaping a larger dividend does not require countries to have optimal policies and institutions in place from the outset. Very few countries have in fact been so organized, but most have gained substantially from both the automatic as well as the policy-related demographic dividends, even if they have been slow to improve their policy settings. Many have become middle-income countries. It is not helpful to suggest that countries will fail to reap a demographic dividend unless they meet a daunting list of pre-requisites in terms of policy and institutional settings.