The Demographic Transition And Economic Growth Oppotunities In China And India

The whole world stands on the brink of a stunning demographic transformation brought about by declining fertility and rising life expectancy. The mortality rates, especially those for infants and children, declining steeply at the outset of the demographic transition, but fertility rates fall only after a lag, countries initially experience large and destabilizing youth bulges. In the last stage, the demographic transition tends to lean against growth as the elderly share of the population increases rapidly and the old-dependency burden rises. Midway through the demographic transition, however, countries enjoy a long period of favorable demographics-often called the demographic dividend or opportunity window-in which society’s total dependency burden falls and the share of the population in the working years rises. Although demography may not be destiny, the broader environment such as their level of market and human capital development will play a critical role in determining how effective China and India are in leveraging their demographic dividends and boosting living-standard growth while they are still young-or adjusting to higher old-age dependency burdens when they grow old.China and India are emerging economies with impressive economic growth rates in the recent past, and both of them are in the top two world ranking of countries based on population size. The two countries are passing through the process of demographic transition, but at different pace and over a different time period. Therefore, it is pertinent to explore the impact of demographic transition of their economic performance both in the past and in the future.In the first place the article presents a detailed comparative analysisi of the process of demographic transition in China and India. China is passing through the transition process much faster than India; its demographic opportunity window opened from1990s and will remain the same till2030s. India’s fertility rate decreased more gently and its demographic opportunity window just started. Second we reviewed the economic development process during the last several decades and find that China achieved much more rapidly economic growth than India. Then we describe the augmented Solow-Swan model extended to include demographic variables that is used for testing the empirical relationship between the demographic transition process and economic growth. The empirical findings are based on data from sixty-four countries over the period1960-2008; reveal that GDP per capita growth is positively related to the growth differential between the working-age population and the total dependency ratios. Based on these results we find that population dynamics explain46percent of economic growth in per capita GDP in China over the period1960-2008,39percent in India.Then the article gives out the population prospects of China and India. Based on the data of age-sex specific population in China’s Sixth National Population Census, we assume that China will adjust the family planning policy in2015,2030and2050to simulate the population’s prospects under the adjustment of the policy in the near future, in the medium and long future, and we use India’s population data from the United Nations, sets low, medium and high varients to stimulate India’s population prospect. We also summarized the United Nation’s World Population Prospects. It convinced our main findings which indicates China will aging dramatically in the next three decades, in the2050s, the elderly population will account for more than thirty percent of the total population, and fluctuate around thirsty-six percent in the last fourty years of this century. The proportion of the population of China that is of working-age was already peaked in2011and decreased thereafter. The proportion of the working-age population of India is projected to increase through2030s, China’s demographic window of opportunity is rapidly closing, while India’s will remain open until at least2030.When compared with India, in the short term China has more of the preconditions to take advantage of its demographic window of opportunity and to deal with demographics when they become a potencial drag. These preconditions include more flexible labor markets; less illiteracy and more highly educated people in general, and especially for women, and more open attitudes about women working; higher rates of female labor force participation; a healthier population; better infrastructure; more internal migration and a higher degree of urbanization; and more openness to foreign trade.In the long term, as the demographic transition continues, China’s prospects may be hindered by its aging population, while India will have more favorable demographics than China. At last we map the future prospects of the demographic transition process on economic growth in China and India over the period2008-2050. China have to consider the adjustment of the family planning policy and keep a healthy population age structure, whether India is able to reap a demographic dividend will depend on its ability to meet the challenges of improving its educational system and closing gender gaps in education, improving its health care system, enhancing its infrastructure, and incorporating more women into the workforce.