Dependency ratio: Explaining the Economic Miracles of Ireland, China and India

Last updated on: August 21, 2006 at 4:49 pm by Desh Kapoor

Dependency ratio: Explaining the Economic Miracles of Ireland, China and India 2006-08-21T16:49:02-05:00 Desh Kapoor

LOGO Patheos Explore the world's faith through different perspectives on religion and spirituality! Patheos has the views of the prevalent religions and spiritualities of the world.

This is an interesting article about how not the total population itself.. but the structure of population as captured by the Dependency Ratio is the best indicator of a country’s potential!! I was intrigued by a line in the article that I have emphasized below in bold. In a way that line brings out the fragile nature of China’s economic miracle!

This relation between the number of people who aren’t of working age and the number of people who are is captured in the dependency ratio. In Ireland during the sixties, when contraception was illegal, there were ten people who were too old or too young to work for every fourteen people in a position to earn a paycheck. That meant that the country was spending a large percentage of its resources on caring for the young and the old. Last year, Ireland’s dependency ratio hit an all-time low: for every ten dependents, it had twenty-two people of working age. That change coincides precisely with the country’s extraordinary economic surge.

Demographers estimate that declines in dependency ratios are responsible for about a third of the East Asian economic miracle of the postwar era; this is a part of the world that, in the course of twenty-five years, saw its dependency ratio decline thirty-five per cent. Dependency ratios may also help answer the much-debated question of whether India or China has a brighter economic future. Right now, China is in the midst of what Joseph Chamie, the former director of the United Nations’ population division, calls the “sweet spot.” In the nineteen-sixties, China brought down its birth rate dramatically; those children are now grown up and in the workforce, and there is no similarly sized class of dependents behind them. India, on the other hand, reduced its birth rate much more slowly and has yet to hit the sweet spot. Its best years are ahead.

The logic of dependency ratios, of course, works equally powerfully in reverse. If your economy benefits by having a big bulge of working-age people, then your economy will have a harder time of it when that bulge generation retires, and there are relatively few workers to take their place. For China, the next few decades will be more difficult. “China will peak with a 1-to-2.6 dependency ratio between 2010 and 2015,” Bloom says. “But then it’s back to a little over 1-to-1.5 by 2050. That’s a pretty dramatic change. Thirty per cent of the Chinese population will be over sixty by 2050. That’s four hundred and thirty-two million people.” Demographers sometimes say that China is in a race to get rich before it gets old.

Economists have long paid attention to population growth, making the argument that the number of people in a country is either a good thing (spurring innovation) or a bad thing (depleting scarce resources). But an analysis of dependency ratios tells us that what’s critical is not just the growth of a population but its structure. “The introduction of demographics has reduced the need for the argument that there was something exceptional about East Asia or idiosyncratic to Africa,” Bloom and Canning write, in their study of the Irish economic miracle. “Once age-structure dynamics are introduced into an economic growth model, these regions are much closer to obeying common principles of economic growth.”

Technorati : China, Dependency ratio, Economics
Del.icio.us : China, Dependency ratio, Economics
Ice Rocket : China, Dependency ratio, Economics
43 Things : China, Dependency ratio, Economics

Previous Post

August 21, 2006

"Ladies cannot teach Men says Bible!"

Next Post

August 21, 2006 Imam Bukhari at his anarchist best

Browse Our Archives

Select a Category Aarti Achievement and Leadership AfPak Africa Annual and Year-end Asia Audio Australia Behavioural Sciences Bhagwad Gita Bhagwad Gita Blogging Blogs Business Business Intelligence Business Strategy Cannes Careers Chanakya China Conservation Corruption Creative Daily Links Desh Poems Development & Welfare Devotional Audio Devotional Songs Drama Earth Economics Education Entertainment Environment Europe Everyday Quotes Featured Articles Featured Songs Finance Flickr Pictures Food Geo-Political Global Warming Globalization Health & Medicine Hinduism Historic History Humour India Indian Culture Indian music Indian Weddings Israel Issues Legal Link Love Minorities Misc Motivation and Personal Development Movie Lists Movie Reviews Movies Mumbai terror attacks Natural Disasters Nature News Outsourcing Pakistan Parenting Personal Philosophy Poetry Politics Poverty Quotes Recipe Regular Blog Post Relationships Religion Religious/Spiritual Audio Sciences Showcase Slideshow South Asia Special Stories Spiritual Quotes Spirituality Sports Stories Strategy Technology Technology Terrorism Travel Uncategorized US Video Women Women_s Rights Worship Yoga

Select a Month December 2015 November 2015 October 2015 September 2015 August 2015 June 2015 April 2015 March 2015 February 2015 September 2014 August 2014 January 2014 November 2013 October 2013 September 2013 August 2013 July 2013 June 2013 April 2013 March 2013 February 2013 January 2013 December 2012 November 2012 October 2012 September 2012 August 2012 July 2012 June 2012 May 2012 April 2012 March 2012 February 2012 January 2012 December 2011 November 2011 October 2011 September 2011 August 2011 July 2011 June 2011 May 2011 April 2011 March 2011 February 2011 January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 September 2009 August 2009 July 2009 June 2009 May 2009 April 2009 March 2009 February 2009 January 2009 December 2008 November 2008 October 2008 September 2008 August 2008 July 2008 June 2008 May 2008 April 2008 March 2008 February 2008 January 2008 December 2007 November 2007 October 2007 September 2007 August 2007 July 2007 June 2007 May 2007 April 2007 March 2007 February 2007 January 2007 December 2006 November 2006 October 2006 September 2006 August 2006 July 2006 June 2006 May 2006 April 2006 March 2006 February 2006 January 2006 December 2005 November 2005 October 2005 September 2005 August 2005

TAKE THE

Religious Wisdom Quiz

What does the Greek word 'Christos' mean?

Select your answer to see how you score.

Anointed One Redeemer Savior Lord