Demographic dividend and economic growth in emerging economies: fresh evidence from the SAARC countries

Abstract

PurposeThe study attempts to establish the relationship between demographic dividend and GDP growth rate by utilising panel data from 1990 to 2017 in Bangladesh, India, Pakistan, Nepal and Sri Lanka.Design/methodology/approachThis study employs the pooled OLS model, using data from the World Bank's database for the period 1990–2017 for five selected South Asia Association for Regional Cooperation (SAARC) countries.FindingsThe results reveal that demographic dividend affects economic growth in Bangladesh, India, Nepal, Sri Lanka and Pakistan, thereby supporting the demographic dividend hypothesis. For the country-specific analysis, it was also observed that demographic dividend impacts the economic growth of the five SAARC countries. In addition, growth of gross capital formation is highly significant for both aggregated and country-specific analyses. However, economic growth is unaffected by trade openness and unemployment rates. Moreover, the rate of labour force participation is negatively related to the GDP growth rate in the aggregated model.Originality/valueThis paper bestows insight into the fact that the impact of demographic dividend on the economic growth of the SAARC regions cannot be fully actualised if the workforce are underutilised. This region needs to adopt appropriate policies to strengthen the considerable benefits of demographic dividend on the economic growth.