Demographic change and economic growth in Asia

The paper begins by presenting a simple descriptive analysis of the growth of income per capita in Asia and its subregions. The analysis shows that Asia"s record of economic growth is associated with changes in three key factors: (1) the share of population in the prime working ages; (2) the productivity of labor in all sectors of the economy; and (3) the allocation of labor to the low-productivity agriculture sector and the high-productivity industry and service sectors. It is argued that all three factors have potentially strong linkages to various aspects of demographic change, especially changes in the age structure and rural-to- urban migration. Next, the paper examines the effect of demographic variables on the pace of economic growth, taking into account other influences on growth that are standard in the economics literature; this is done using statistical tools that allow the correlation between demographic change and income growth to be decomposed into two parts, one that reflects the causal impact of demographic change on income growth and another that reflects the reverse effect of income growth on demographic change. The examination is based on data for 70 countries from all regions of the world and covers the period 1965-90. Results indicate that sizable portions of both East Asia"s economic success and South Asia"s economic failure are attributable to the influence of demographics, namely, differences in health status, dependency burdens, and the spatial distribution and concentration of people. The paper also finds strong evidence of a negative effect of income on fertility rates, together with a sharp downward trend in fertility between 1965 and 1990. Finally, it is shown that life expectancy increased substantially during this time, apparently independent of changes in average country income, notwithstanding the fact that rich countries have higher life expectancies than poor countries. Implications of study findings for population policy and for the prospects for economic growth and development elsewhere in Asia and the world are discussed in conclusion. (Author abstract, modified)