Demographic transition in sub-Saharan Africa: How big will the economic dividend be?

Abstract

In mid-demographic-transition, many Asian countries enjoyed a large demographic ‘dividend’: extra economic growth owing to falling dependant/workforce ratios, or slower natural increase, or both. We estimate the dividend, 1985–2025, in sub-Saharan Africa and its populous countries. Dependency and natural increase peaked around 1985, 20 years after Asia. The UN projects an acceleration of the subsequent slow falls but disregards slowish declines in young-age mortality and thus, we argue, overestimates future fertility decline. Even if one accepts their projection, arithmetical and econometric evidence suggests an annual, if not total, dividend well below Asia's. The dividend arises more from falling dependency than reduced natural increase, and could be increased by accelerating the fertility decline (e.g., by reducing young-age mortality) or by employing a larger workforce productively. Any dividend from transition apart, low saving in much of Africa (unlike Asia) means that, given likely natural increase, current consumption per person is unsustainable because it depletes capital per person.

Keywords:

• sub-Saharan Africa
• demographic dividend
• demographic transition
• dependency burden
• economic development
• fertility decline
• labour force
• natural increase
• population projection
• sustainable development

Notes

1. Robert Eastwood and Michael Lipton are Senior Lecturer and Research Professor in the Department of Economics at the University of Sussex. Eastwood is corresponding author: email [email protected]

2. The authors thank three reviewers, Guenther Fink, and Bruno Schoumaker for helpful comments on an earlier draft and Kenneth Hill for sending us the IDEC Life Tables.