Realizing the Prospects of the Demographic Dividend in Selected Arab Countries

Abstract

Background: For most Arab countries, the coming ten years will reveal a real challenge with their changing age structure. Currently, a demographic window of opportunity is unlocked in many of those countries with the increase in the fraction of population in the working-age. Hence, the study investigates the relation between population growth and dependency ratio as demographic indicators and the per capita growth domestic product (GDP).

Methods: A  time-series analysis  model  was developed for  Egypt and Morocco versus the Republic of Korea as an economically empowered country that had the same initial conditions in the early sixties. Data exploited are drawn from the World Bank and OECD databases. We adopt an income per capita growth model to analyze the role of demographic factors, mainly working-age share.

Results There is a significant relationship between GDP per capita and the proportion of working age population. A significant long-run association between dependency ratio and per capita GDP is confirmed. The reduction of dependency load contributes to GDP per capita growth throughout the study duration by an annual rate of about 9 and 2 percent in Egypt and Morocco, respectively.

Conclusion: The decline in the dependency ratio, or alternatively, the raise in the working age population has a favorable impact on economic growth. The paper presents supporting evidence to scale up the effect of age structure alteration and to realize the demographic dividend in the studied countries.