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Puppet master Economy: theory of demographic dividend

  • Published at 05:38 pm November 24th, 2016
  • Last updated at 05:43 pm November 24th, 2016
Puppet master Economy: theory of demographic dividend
Is population a blessings or a curse? Over the last two centuries economists like Malthus, Boserap, Simon Fred, Harrod Domar, Lewis and others economists introduced number of theories regarding this. Many argue that population is not a problem, but unskilled overpopulation is a matter of concern. The term demographic dividend has been getting popularity during the last few years. Demographic dividend refers to a period – usually 20 to 30 years - when economic growth may result from a decline in a country's mortality and fertility and the subsequent change in the age structure of the population. As women and families realise that fewer children will die during infancy or childhood, they begin to have fewer children to reach their desired number of offsprings, further reducing the proportion of non-productive dependents. This fall is often accompanied by an extension in average life expectancy that increases the portion of the population that is in the working age group. According to UNFPA, a country with both increasing numbers of young people and declining fertility has the potential to reap a demographic dividend. During the last four decades Bangladesh has experienced a dramatic decline in fertility and mortality. In the year 1971 the fertility rate was 6.95%, which is now 2.21%. Statistics reveal that the total fertility rate has declined almost 64% during these past decades. During 1970-2016 mortality has also declined significantly. Infant mortality rate and under-five mortality has declined by at least 74% to 38%, while maternal mortality ratio declined by 63%. During the same period life expectancy at birth has increased from 33.6% to 70.2%. This has produced a huge shift in age structure in the population, with more population in the working age group than in dependent age group. Dependents per 100 working population declined from over 100 in 1961 to 60 in 2016. This has created a window of economic opportunity that can be expressed as demographic dividend of Bangladesh. As in many countries, declining infant and child mortality helped to spark lower fertility, effectively resulting in a temporary baby boom. As this group moves into working ages, Bangladesh will potentially find itself with a higher share of workers than dependents. If working-age people can be productively employed, Bangladesh’s economic growth will accelerate. The massive surge in young working population can generate massive amounts of economic activities. It is important to note that demographic dividends cannot be an automatic process. To realise the dividends some other issues need to be taken care of, for example accumulating these extra work force. Skilled workforce and availability of adequate investment on health and education will be necessary. Bangladesh is also going through a demographic transition, and experiencing a once-in-a-lifetime demographic dividend as the working-age population bulges and the dependency ratio declines. This outcome can be generalised in a variety of ways. One important possibility is by increasing investment in human capital. Increase in investment in physical capital should also be emphasised. For economic benefits to materialise, there is a need for policies dealing with education, public health. We will also need policies that promote labour market flexibility and provide incentives for investment and savings. In Bangladesh 1.7 million people are entering into the labour market annually. If we divide it into three groups, namely, unemployment, youth unemployment and under employment, then the percentages are 4.3%, 9.2% and 20.3% respectively. Youth employments are almost doubled. Bangladesh Government along with number of national and international organisations, donors and microfinance institutions have created exemplary platforms, such as: Youth Employment through Skills (UNDP-YES 2016), Skill and Training Enhancement Project (STEP 2016 and World Bank 2014), B-SkillFUL, Grassroots Organisations (GRO and Swiss-Contact 2016), Skills for Unemployed and Underemployed Labour (SkillFUL-Dhaka Ahsania Mission 2016), Skills for Employment Investment Program (SEIP-Asian Development Bank, Swiss Agency for Development and Cooperation, Government of Bangladesh and PKSF). It has been projected that by the year 2050 the population of Bangladesh would reach 230 million. If that happens then Bangladesh is going to lose about 15 percent of its cultivable land every year. At present the cultivable land is not sufficient and there are extreme pressures on the land. So, how Bangladesh is going to accommodate and feed its extra population? The simple answer is that we need massive investment in education, building skilled labour force, health, nutrition, infrastructure. It is also important to creating favourable investment environment for the foreign donors, improve productivity and planned urbanisation, and most importantly connect Bangladesh with the global economic markets. For this there is no alternative other than adopting an expansionary economic policy so that with the help of higher investment Bangladesh can set an example in the above mentioned sectors. If we cannot manage demographic dividend in an efficient manner then the potential prosperity might turn into a demographic disaster as well as economic stagnation. Authors: Sifat E Azam, Tania Salahuddin, Pardita Haroon, Abdullah Al Nyem and Priangka Das Mphil and MDS students of Department of Development Studies, University of Dhaka
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