Jul 1 2013, 11:56 | Abhinav Chouhan
"An ageing world needs workers; A young country has workers"
Nandan Nilekani, chairman of the Unique Identification Authority of India, through the above quote, tried to bring out an opportunistic competitive advantage that India possesses as a result of its demographics. This competitive advantage, better known as the demographic dividend, is the rise in the rate of economic growth due to a rising share of working age people in a population. And Mr. Nilekani is not the only person who has been vocal about this fact. In India, it is almost fashionable to include the demographic dividend in a discussion and feel good about the future. But, in my opinion, the demographic advantage alone can't be India's ticket to the elite "Superpower Club." Let us analyze this further.
Long-term growth depends ultimately on two factors - the number of workers in the economy and their level of productivity. The aggregate production function puts this fact in a simple mathematical function:
Aggregate Production Function = f(total workable population, labor productivity)
Workable Population
Clearly, India has an advantage in this aspect. Charting the total workable population (defined here as the population between 15-60 years) suggests that India's working population will surpass China's working population by 2040.
(click to enlarge)
