Reaping the Demographic Dividend Lessons from the East Asian Miracle

Abstract

This research empirically tests the impact of population dynamics on the economic growth of Pakistan, for the period of 1960 to 2013. The results reveal that the working age population is definitely growing at a faster rate than the total population, resulting in a potential dividend. However, Pakistan has been unsuccessful in reaping it, given the lack of correct policy environment. The dependent segments of the economy, i.e. ‘child dependency ratio’ and ‘old dependency ratio’, negatively impact the GDP growth rate, leading to the conclusion that age structures do indeed impact economic growth. Furthermore, human capital is also found to positively contribute to Pakistan’s economic growth, as do savings and labour. Finally, given the prominence of the East Asian region in the demographic transition theory, we further proceed to recommend policies by taking the example of those programs that made the East Asian miracle a reality. It was found that policies regarding human capital were among the major contributors to their phenomenal economic growth.