India's Growth; China at 140m by 2100!?

As India steps further towards the centre of the world’s
economic stage, the Economist has published a lengthy feature story about the need
for further economic reform to consolidate the country’s remarkable economic
rise over the last two decades. The article as a whole is well worth a read as
it is very informative, but I want to draw your attention to the parts of the
article concerning demography. 

In June a deputy governor of the central bank predicted that
the country’s economy would grow at a double-digit rate during the next 20-30
years. [(!)] India has the potential for such a feat, with its vast and growing labour force and now
famous entrepreneurial spirit…(emphasis added)

The fact is that India’s growing population has helped its rapid
rise economically. This will continue to be an advantage for India over its
competitors over the next few years:

“…demography, at least, is in India’s favour, with the ratio
of workers to dependants forecast to rise until 2030 or so, in marked contrast
to China. Over the past decade demography has added about 1.7 percentage points
to the growth rate of GDP per person, reckon Shekhar Aiyar and Ashoka Mody, of
the IMF. This boost will not get much bigger but it will last for a couple of
decades. Better still, because workers save more than non-workers, India’s
saving rate is rising towards East Asian levels and should provide more
domestic funds for investment. Taken together, more workers and more capital
explain about half of the recent growth rates of about 8%, estimates Chetan
Ahya, of Morgan Stanley. A recent OECD study put the proportion at

However, a growing population is not all that is required:

“…the demography cuts both ways. India will need to create
10m-13m jobs a year in the next two decades as people enter the workforce, many
of them from its poorest regions and unskilled. That will probably require more
manufacturing or large service companies; and that in turn demands a state that
is better at organising such things as education and transport.”

Fascinatingly, according to the article, India has 15 times
more phone subscribers than taxpayers! I find that a staggering figure.  The article also predicts that:

“…in the coming years most Indians are likelier to be
connected to a national, biometric, electronic identity-system than to a sewer.”

Wow, what an unbelievably fascinating country! It will be
interesting to see if India can continue its growth in the coming years. Since
1990, India’s GDP per person has more than doubled, it will be hard to replicate
that figure with a continuing growing population, but as the Economist says, a
growing population is an economic opportunity, not an economic burden.

Oh and finally, another piece of interesting information regarding
China’s one-child policy. 

According to the Chinese Government, the one-child policy
has meant that the Chinese population is around 400 million people fewer than
it would have been otherwise.  However,
this number would have been even more if the policy had been applied uniformly
and without exception. Although it is easy to conceptualise the one-child policy
as being applied monolithically across the entire country, in reality the
policy is enforced more strictly in some areas (especially cities) than others
and amongst some groups than others.  Ethnic
minorities and some rural families are exempt from the policy entirely.  According to an interesting hypothetical in The

“If each woman had been allowed only one child since 1980,
China’s population would have been 340m smaller than it was in 2010. If a
strict one-child limit were in force for the rest of this century China’s
population would shrink to less than 145m by 2100, 800m fewer than the UN
projects in its central scenario. By then China would have 1.2 pensioners per
worker, although it would also have relatively few children to look after: just
one for every 9.2 workers.”

Although this shows an interesting example of the relatively
porous nature of the one-child policy (even in a totalitarian state) it also
shows what a major impact that low birth rates have on a population. At a birth
rate of one child per woman, the Chinese population would shrink to 10% of its
current size by 2100. A sobering thought for certain countries in Western
Europe and East Asia?


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