DIFFERENCE IN IMPLICATIONS
SHRINKING WORKFORCE VS GROWING WORKFORCE
Shrinking Workforce (China)
The implications of the effectiveness of the one-child policy in China has already started surfacing. China is starting to face the problem of a shrinking workforce, decreasing by 3.45m in 2012 for the first time in 5 decades (China Digital Times, 2013). International strategist Sanjeev Sanyal foresee that China's labour force will continue shrinking gradually from 853.7 million in 2015 to 848.9 million by 2020, but then decrease rapidly to 781.8 million by 2030, 743 million by 2040 and 650.9 million in 2050 (Harjani, 2014).
Shrinking Workforce (China)
The implications of the effectiveness of the one-child policy in China has already started surfacing. China is starting to face the problem of a shrinking workforce, decreasing by 3.45m in 2012 for the first time in 5 decades (China Digital Times, 2013). International strategist Sanjeev Sanyal foresee that China's labour force will continue shrinking gradually from 853.7 million in 2015 to 848.9 million by 2020, but then decrease rapidly to 781.8 million by 2030, 743 million by 2040 and 650.9 million in 2050 (Harjani, 2014).
Implications of shrinking workforce (China)
The past three decades of rapid economic growth has been due to China's large workforce, which lowers labour costs, thus attracting foreign investors who are looking for cheap labour but huge volumes of manufacture. (South China Morning Post, 2015) With a shrinking workforce, labour costs will start to rise and this results in China losing its competitive edge (low manpower costs for manufacturing). In fact, Louis Kuijs, the China economist for the Royal Bank of Scotland Group predicts that "in the coming 10 years, labour will contribute less to growth than it has done in the last two decades." (South China Morning Post, 2015) Unless China switches swiftly from a "manufacturing factory" to a "investing country", China will face a drop in gross domestic product due to the decreasing investments placed on China. However, China's gross domestic product per capita may not be as affected as GDP per capita is calculated by dividing the income of the country by the population. Since there is a drop in population and a gradual decrease in the gross domestic product, the GDP per capita may stay the same or even increase (Collins, 2013). |
Growing Workforce (India)
Due to the more relaxed population policies of India, there is a growing population, especially that of the working adults. It is estimated that the proportion of working adults in India will increase from approximately 58% of the population in 2001 to around 64% by 2021. (The Economic Times, 2014)
Implications of growing workforce (India)
With a larger workforce, the cost of labour will decrease, making it more attractive to foreign investors as they are able to invest a smaller sum of money to produce the same amount of products. With China becoming less and less of a "manufacturing factory", India will be able to take over China's role and gain more economic growth. In addition, India is still a largely agrarian country, with agriculture contributing to 50% of the economy (Biswas, 2014) Hence, with the growing workforce, agricultural productivity will also increase, bringing about even more economic growth. In fact, India’s GDP increased by 7.5% in 2014, even more rapidly than that of China’s (The Economist, 2015)This upwards trend also shows that India's economy in terms of GDP will continue to increase.
AGING POPULATION VS YOUTH BULGE
Aging Population (China)
The large number of people born before the implementation of the one-child policy has now joined the demographic group of >65 years old. As a result, there is a growing population of elderly. 30 years ago, only 5 percent of the population was over 65. Now, 9 percent of the population are over 65. An official report predicts that China will soon have the greatest aging population in the world by 2030 and that the older population will most probably increase to 330 million, 25 percent of the population by 2050 (Huang, 2013). Meanwhile, the population of people younger than 65 years old are relatively small due to the restrictions of the one-child policy, thus increasing the dependency ratio of China.
Implications of Aging Population (China)
Due to the growing population of elderly, the Chinese government will have to fork out more money to support the elderly, who require infrastructure and facilities as well as healthcare assistance. For each individual elderly, the government has set up a healthcare insurance, which provides them with a sum of money to spend on health-related issues. When the aging population increase, the government finances will be stretched (Collins, 2013) as they have to use more capital on these people. As such, there is also less capital available for investments and this means that less interest as well as profits will be earned too, leading to a decrease in both GDP and GDP per capita.
Youth Bulge (India)
The birth rate of India remains high at 2.58 births per women (geoba, 2015). As a result, the population of young adults have been on a continuous increase, rising from 353 million in 2001 to 430 million in 2011. It is also foreseen that this trend will increase, to 464 million by 2021(Shivakumar, 2013) By 2020, India will become the world's youngest country and 64% of its population are working.
Implications of youth bulge (India)
In the future, when most of the economic giants such as Europe and China experience aging, the youth bulge in India will offer India a competitive edge over the others. The young are generally more adept to technology and are able to easily manipulate technology to their advantage. By making full use of technology, the work which they do become much more efficient and productive. Hence, economists foresee that the trend in youth bulge will possibly increase the GDP growth rate by 2% (Shivakumar, 2013)
Due to the more relaxed population policies of India, there is a growing population, especially that of the working adults. It is estimated that the proportion of working adults in India will increase from approximately 58% of the population in 2001 to around 64% by 2021. (The Economic Times, 2014)
Implications of growing workforce (India)
With a larger workforce, the cost of labour will decrease, making it more attractive to foreign investors as they are able to invest a smaller sum of money to produce the same amount of products. With China becoming less and less of a "manufacturing factory", India will be able to take over China's role and gain more economic growth. In addition, India is still a largely agrarian country, with agriculture contributing to 50% of the economy (Biswas, 2014) Hence, with the growing workforce, agricultural productivity will also increase, bringing about even more economic growth. In fact, India’s GDP increased by 7.5% in 2014, even more rapidly than that of China’s (The Economist, 2015)This upwards trend also shows that India's economy in terms of GDP will continue to increase.
AGING POPULATION VS YOUTH BULGE
Aging Population (China)
The large number of people born before the implementation of the one-child policy has now joined the demographic group of >65 years old. As a result, there is a growing population of elderly. 30 years ago, only 5 percent of the population was over 65. Now, 9 percent of the population are over 65. An official report predicts that China will soon have the greatest aging population in the world by 2030 and that the older population will most probably increase to 330 million, 25 percent of the population by 2050 (Huang, 2013). Meanwhile, the population of people younger than 65 years old are relatively small due to the restrictions of the one-child policy, thus increasing the dependency ratio of China.
Implications of Aging Population (China)
Due to the growing population of elderly, the Chinese government will have to fork out more money to support the elderly, who require infrastructure and facilities as well as healthcare assistance. For each individual elderly, the government has set up a healthcare insurance, which provides them with a sum of money to spend on health-related issues. When the aging population increase, the government finances will be stretched (Collins, 2013) as they have to use more capital on these people. As such, there is also less capital available for investments and this means that less interest as well as profits will be earned too, leading to a decrease in both GDP and GDP per capita.
Youth Bulge (India)
The birth rate of India remains high at 2.58 births per women (geoba, 2015). As a result, the population of young adults have been on a continuous increase, rising from 353 million in 2001 to 430 million in 2011. It is also foreseen that this trend will increase, to 464 million by 2021(Shivakumar, 2013) By 2020, India will become the world's youngest country and 64% of its population are working.
Implications of youth bulge (India)
In the future, when most of the economic giants such as Europe and China experience aging, the youth bulge in India will offer India a competitive edge over the others. The young are generally more adept to technology and are able to easily manipulate technology to their advantage. By making full use of technology, the work which they do become much more efficient and productive. Hence, economists foresee that the trend in youth bulge will possibly increase the GDP growth rate by 2% (Shivakumar, 2013)