Realising the prospects of the demographic dividend in selected Arab Countries

Abstract

Background: For most Arab countries, the coming ten years will present a real challenge in terms of their changing age structure. At present, a demographic window of opportunity has been unlocked in many of these countries, with the increase in the proportion of the population of working age. Hence, this study investigates the relationship between population growth and the dependency ratio in terms of demographic indicators and the per capita gross domestic product (GDP). Methods: A time series analysis model is developed for Egypt and Morocco versus the Republic of Korea, as an economically empowered country that had the same initial conditions in the early 1960s. Data exploited are drawn from the World Bank and OECD databases. We adopt an income per capita growth model to analyse 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% in Egypt and Morocco, respectively. Conclusion: The decline in the dependency ratio, or alternatively, the rise in the working-age population, has a favourable impact on economic growth. The paper presents the interconnections between demographic changes and economic growth, and highlights the need for strategic public policies to scale up the effect of age structure alteration and to realise the demographic dividend in the studied countries.