The decrease of births and increase of deaths during the Great Chinese famine caused a large amount of people to be born in 1963 as “replacement births” occurred (Naughton 166). This was followed by an echo baby boom 20 years later (Yang). The baby boom, its echo and the one child policy resulted in there currently being a proportionally large population of working age individuals, and so a low dependency ratio. A low age dependency ratio leads “to more rapid growth of per capita GDP” due to demographic dividends (Naughton 174).
Demographic dividends come as a result of people having fewer children and so investing more into their education, which leads to the creation of more productive individuals. It allows for higher standards of living, as there are less people dependent on a single person- therefore less costs to them - and so the opportunity for individuals to be more productive. It also means that people can invest more into capital and infrastructure, since they have more income to spare, which makes the county more appealing to FDI investment because of its business friendly infrastructure which allows for more “flexibility, speed and reliability in the delivery of goods” (Mbekeani). Finally, it also means that there is a large young workforce that is available. Young people are quicker to adapt to changes that are innate in a market economy and so are more eff...
... middle of paper ...
...aughton, Barry. The Chinese Economy, Transitions and Growth. England: MIT P, 2007. Print.
Ross, John. “Understanding the Demographic Dividend.” Policy Project. POLICY Project, Sept. 2004. Web. 29 Oct. 2011.
Yang, Dennis Tao, Vivian Chen, and Ryan Monarch. “Rising Wages: Has China Lost Its Global Labor Advantage?” Institute for the Study of Labor. IZA Impressum, June 2010. Web. 12 Dec. 2011.
Yang, Yao. “China’s Growth Model and Its Implications.” University of Wisconsin-Madison. Address.
Yokota, Kazuhiko, and Nazrul Islam. “Lewis Growth Model and China’s Industrialization.” The Japan Society of International Economics. The Japan Society of International Economics, 2005. Web. 12 Dec. 2011.
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