The demographic dividend

Demographics have an important impact on economic growth. A higher working age population can lead to faster economic growth, while an ageing population can be a drag on productivity, While Western economies enjoyed a demographic dividend in the post-war period, those ‘babyboomers’ are now retiring, creating a headwind for growth.  

In contrast, the UN expects countries such as Nigeria, Pakistan, Egypt, Philippines and India to have some of the strongest population growth rates over the next 15 years or so. Of the seven continents, Africa is expected to have the highest population growth rate at 2.2% per year until 2040. This is an important advantage.

However, demographics aren’t destiny. There will be other factors at work in whether a country grows quickly and innovates – its infrastructure, for example, or the strength of its rule of law, but it can be an important guide to opportunities and growth.