A country's economic demeanor can often be influenced by the population it has. If conditioned the right way, a country's population can be a huge strength for its economy. Conversely, it can result in several problems which can ultimately pull its economy downwards.
According to Bangladesh Bureau of Statistics (BBS), the country's population is approximately 153 million with a growth rate of 1.37 percent per year. For a country of Bangladesh's size, this already seems like a massive problem on its own. However, what many may not be aware of is there has been a big change in the dynamics of the population structure in Bangladesh over the years.
Population and productivity are two factors which are required for the success of any economy. If a country has a large population but is devoid of productive workers, then it will put a strain on its growth. On the other hand, if workers have high productivity but few people in the workforce, the country would not be able to reap its full potential.
According to Bangladesh Demographic and Health Survey, the total fertility rate (TFR) was 6.3 in 1975 and has declined to 2.3 in 2011. In simple terms, this means that in 1975, a woman had an average of 6.3 children in her lifetime whereas now a woman only has an average of only 2.3. A high TFR generally results from high death rates among children. However, as a country develops, fewer children die, fertility rate drops and so does population growth rate. This results in a 'bulge' in the population structure: a rise in the proportion of people in the working age population accompanied by a decline in dependent age population (individuals below 15 and above 65 years of age). A rise in the working age population can imply a higher gross domestic product (GDP) and higher income per head for the country. This change in population structure creates what is known as 'demographic dividend'.
Just as the name suggests, a demographic dividend provides a boost for the economy; not only can it generate more income but it can also lead to higher tax revenue for the government as more people are in the workforce. Labor force can rise in two ways: the number of people in the working-age population gets bigger and more women join the labor market as fertility rates fall. However, a lack of appropriate policies can diminish the advantages that a demographic dividend can bring. If the workers are not properly educated, untrained or lack good health, then a high proportion of people in the workforce will only pull the economy downwards. Similarly, if there are not enough work opportunities for the growing number of working-age individuals, then this will lead to a high degree of unemployment and the nation's economic strength will start to wane.
Demographic dividend was a major contributor to East Asia's growth from 1960s onward and to China's growth after the introduction of its one-child policy. However it should be remembered that the advantages from the demographic dividend can usually be reaped only once. This is because as population growth slows, it ages and each worker must support a growing number of retirees.
Some economists say that a second demographic dividend can arise because some of the gains in per capita income from the first dividend can be diverted into raising productivity and thereby raising standard of living for future generations. However, demographic dividend is mostly associated with the notion that it delivers a one-time kick to economic growth. A study on demographic dividend of Bangladesh suggests that the dividend will last till 2040. It is important to accompany it with appropriate policies such as provision of education, training, health and jobs in order to take full advantage of it .
The writer is the head of research of The Daily Star and can be reached at email@example.com