Briefing Paper

A demographic dividend for the developing countries? Consequences of the global aging process

Loewe, Markus
Briefing Paper (6/2007)

Bonn: German Development Institute / Deutsches Institut für Entwicklungspolitik (DIE)

Even in the countries of the South life expectancy is rising and birth rates are falling. As a result, not only is population growth on the decline, but the proportion of minors in the population, too. Conversely, the proportion of inhabitants aged between 15 and 65 years who are gainfully employed and able to save is growing. During this period a rise in the savings ratio is likely, bringing higher growth rates, provided that the additional savings are invested productively in the country itself. The high rate of economic growth in East and South-East Asia since the late 1980s is probably due in part to this “demographic dividend”.The demographic dividend has, however, evaded most Latin American countries so far, their investment conditions being too unattractive in the years that mattered. Africa, Central Asia, the Middle East and India can still benefit from the demographic dividend. This is also important because the propensity to save is likely to diminish in the industrialized countries over the next twenty years – again for demographic reasons – and they may even become net capital importers by 2030.For the developing countries it will therefore be even more essential than in the past to ensure profitable and safe investment conditions for domestic and foreign investors.