Roughly one quarter of the world’s population is between 10 and 24 years old. The aspirations and achievements of these young people will shape the future. At the same time, fertility rates in many parts of the world are falling. A country with both increasing numbers of young people and declining fertility has the potential to reap a ‘demographic dividend’ – a boost in economic productivity that occurs when there are growing numbers of people in the workforce relative to the number of dependents.
UNFPA works with partners, including civil society, communities and governments, to encourage policies that can help realize this dividend. Such policies include improving access to quality education and jobs, as well as investing in the health, particularly the sexual and reproductive health, of young people.
More young people than ever
The total number of young people today is higher than it has ever been – there are about 1.8 billion people between ages 10 and 24 – and it is expected to increase until about 2070, according to moderate population projections.
Although many developed countries actually have shrinking populations of young people, the least developed countries have large and rapidly growing youth populations. Today, about 60 per cent of the population in the least developed countries is under age 24, and their ranks will increase by another 60 per cent by the middle of this century. These rising numbers of young people, accompanied by falling fertility rates, offer a critical window of economic opportunity.
The demographic dividend is the economic growth potential that can result from shifts in a population’s age structure, mainly when the share of the working-age population (15 to 64) is larger than the non-working-age share of the population (14 and younger, and 65 and older).
The potential for economic gains can be enormous, provided the right policies are in place and investments in human capital, particularly among young people, are substantial and strategic.
To realize a demographic dividend, a country must undergo a demographic transition – a shift from high fertility and mortality to low fertility and mortality. Mortality generally falls as child survival rates improve, mainly because of improved health and sanitation standards. Declines in fertility often follow, and as families have fewer children, household resources are freed up to make investments in their long-term well-being.
Over time, the children born during the early stage of this transition enter the labour force. When the labour force grows more rapidly than the population dependent on it, resources become available for investment in economic development. This offers an opportunity for rapid economic growth – if the right social and economic policies and investments are in place.
In the 1950s and 1960s, several East Asian countries invested heavily in their youth and expanded access to voluntary family planning, enabling people to start families later and have fewer children. As fertility rates fell, there were fewer dependents and more resources available to create or expand businesses, build infrastructure and make productive investments. The result was unprecedented economic growth: The Republic of Korea, for example, saw its per-capita gross domestic product grow about 2,200 per cent between 1950 and 2008. Thailand’s GDP grew 970 per cent. Today, demographic shifts are taking place in about 60 countries, creating the conditions for a demographic dividend, according to the 2014 The State of World Population
. If sub-Saharan African countries are able to repeat the East Asian experience, the region could realize a demographic dividend amounting to as much as $500 billion a year for 30 years.
Taking the right actions
To make the most of a demographic dividend, countries with falling fertility rates must undertake specific actions to empower young people to fulfil their potential. This includes encouraging decent employment, investing in education, and ensuring access to adequate nutrition and health – including unrestricted and universal access to sexual and reproductive health care.
Sexual and reproductive health care plays an important role in taking full advantage of the demographic dividend. When women are empowered to plan the number and spacing of their children, fertility levels tend to fall. Sexual and reproductive health care also reduces disease and injuries, ensuring people are better able to contribute to the economy. And women with access to these services are better able to continue working, strengthening the financial well-being of their families and communities.
Prospects for realizing the dividend
With their surging populations of young people, the least developed countries have the greatest opportunity to realize a demographic dividend. But they also confront the greatest challenges to doing so.
By the middle of this century, the population of the least developed countries will have doubled in size, adding 14 million young people to the working-age population each year. Creating conditions for decent livelihoods will be an enormous task, especially given that, currently, about 80 per cent of the people who work in these countries are unemployed, underemployed or irregularly employed. Additionally, the shortage of financial resources will make it difficult to maintain, let alone increase, spending on health, education and nutrition.
And there is a large gap between the demands that countries place on young people and the opportunities provided to them. In reality, large numbers of young people are not able to complete school or find productive, remunerative employment. Countries must recognize and cultivate the potential of young people – the most important resource any country has.
What is UNFPA doing?
In the Sahel region, the World Bank and UNFPA are collaborating to support countries in realizing the demographic dividend. UNFPA also works with policymakers, encouraging increased investment in young people.
UNFPA also works to eliminate the barriers to economic and social empowerment facing young people – especially adolescent girls, who too often suffer discrimination and inequality at all levels. Preventing child marriage, keeping girls in school, and ensuring they have access to sexual and reproductive health care can go a long way towards improving their own lives and the lives of their families and communities.
Last updated on 8 April 2015.