Demographic Transitions and Economic Miracles in Emerging Asia

Abstract

The demographic transition—a change from high to low rates of mortality and fertility—has been more dramatic in East Asia during the twentieth century than in any other region or historical period. By introducing demographic variables into an empirical model of economic growth, this article shows that this transition has contributed substantially to East Asia's so-called economic miracle. The miracle occurred in part because East Asia's demographic transition resulted in its working-age population growing at a much faster rate than its dependent population during 1965–90, thereby expanding the per capita productive capacity of East Asian economies. This effect was not inevitable; rather, it occurred because East Asian countries had social, economic, and political institutions and policies that allowed them to realize the growth potential created by the transition. The empirical analyses indicate that population growth has a purely transitional effect on economic growth; this effect operates only when the dependent and working-age populations are growing at different rates. These results imply that future demographic change will tend to depress growth rates in East Asia, while it will promote more rapid economic growth in Southeast and South Asia.