Preparing for a Demographic Dividend

At the World Economic Forum’s fall meeting in New Delhi, five experts discussed the challenges and opportunities India faces as its population becomes increasingly youthful. These include improving the education system, providing better housing, luring capital to support innovation, and implementing policies that will engender confidence in the economy.

The five experts are Sudhakar Balakrishnan, CEO of Adecco India, a staffing and human resources services firm based in Bangalore; Thomas Crampton, Asia/Pacific social media strategy director for Ogilvy Public Relations Worldwide, part of WPP PLC; Shobana Kamineni, executive director of new initiatives for the Apollo Hospitals Group, which operates 46 hospitals in India and overseas; Naresh Malhan, managing director of Indian operations for the employment services firm Manpower Services India Private Ltd; and C.K. Prahalad, considered by many to be the world’s number one mangement guru, who unfortunately passed away on April 16, 2010.

The discussion, moderated by Booz & Company Chief Marketing and Knowledge Officer Thomas A. Stewart, took place on November 9, 2009, at the World Economic Forum’s India Economic Summit in New Delhi. Booz and Company is an international management consulting firm.

The Summer 2010 issue of STRATEGY+BUSINESS, the management magazine published by Booz & Company, carries a full account of the illuminating discussion. It’s reproduced below.
Ram Narayanan
US-India Friendship

with Sudhakar Balakrishnan, Thomas Crampton, Shobana Kamineni, Naresh Malhan, and C.K. Prahalad; moderated by Thomas A. Stewart (click here)

Demographics are destiny. Countries with a large and expanding workforce and relatively few people of dependent age (under 15 or over 64) can reap what Harvard School of Public Health demographer David Bloom has called a “demographic dividend.” Young, unencumbered workers spur entrepreneurship and innovation, enabling significant gains in productivity, savings, and capital inflows. As fresh ideas flourish, governments can focus on improving infrastructure and helping to fund such critical technologies as intelligent transportation systems, smart utility grids, and renewable energy. The World Health Organization (WHO) estimates that the demographic dividend can increase a country’s GDP growth by as much as a third.

No country is better poised to take advantage of the demographic dividend than India. In 2020, the average age in India will be only 29 years, compared with 37 in China and the United States, 45 in western Europe, and 48 in Japan. Moreover, 70 percent of Indians will be of working age in 2025, up from 61 percent now. Also by 2025, the proportion of children younger than 15 will fall to 23 percent of India’s total population, from 34 percent today, while the share of people older than 65 will remain around just 5 percent. China’s demographics are not as rosy as India’s, because the government’s policies to limit population growth will have created an abnormally large cohort of people over age 60 by 2040. Other emerging nations, such as Pakistan, Indonesia, and certain countries in Latin America and Africa, will produce much larger workforces in the coming years. But their demographic dividends may be inhibited by political and social instability that impedes efforts to put this young population to productive use; a country with massive numbers of unemployed young people and no constructive economic outlet for their dynamism is headed for trouble.
Preparing for a Demographic Dividend