Friday, August 27, 2010

Is Demography Destiny?

In its lead story about the "Contest of the Century" (between China and India) in its August 21st 2010 issue, the Economist begins with the following observations:
These two Asian giants, which until 1800 used to make up half the world economy, are not, like Japan and Germany, mere nation states. In terms of size and population, each is a continent—and for all the glittering growth rates, a poor one.This is uncharted territory that should be seen in terms of decades, not years. Demography is not destiny [emphasis added]. Nor for that matter are long-range economic forecasts from investment banks.
A quick search of the Economist's archives shows that they have used the term "demography is destiny" 14 times in the past 13 years, although usually with the appropriate caveat that demography shapes the future, but does not determine it. However, in discussing the demographic futures of China and India, the Economist gets only part of the story right:
While China is about to see its working-age population shrink (see article), India is enjoying the sort of bulge in manpower which brought sustained booms elsewhere in Asia.
This is, unfortunately, the same mistake that I previously mentioned regarding the New York Times story about paying women in India not to have children. Fertility has not yet declined rapidly enough in India to replicate the kind of age dividend that has been experienced by nearly all of East Asia. A youth bulge is not the same thing as having an increasing proportion of your population in the productive ages, rather than in the young and old dependent ages. India's youth bulge may lead to an increase in overall productivity in an absolute sense, but that will not necessarily lead to higher incomes per person.

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