First Demographic Dividend, Digitalization, and Economic Growth: Bangladesh’s Experience

First Demographic Dividend, Digitalization, and Economic Growth: Bangladesh’s Experience

Bangladesh is one of the most densely populated countries in the world with a total population of 165 million and about 1,265 people living per square kilometer (World Development Indicators 2020). Despite the population pressure, Bangladesh’s economy has been rapidly growing in recent years and its gross domestic product (GDP) is expected to grow by 6.8% in 2021 (ADB 2020). While Bangladesh is experiencing rapid demographic changes accompanied by age structural transitions, this also creates a window of opportunity for potential demographic dividends over the next 3 to 4 decades (Navaneetham and Dharmalingam 2012, CRI 2017). Currently, about 45% of its population is aged below 24 years and 70% is aged below 40 (UN DESA 2019). The economic and social implications of such a demographic transition have been widely analyzed in the literature both theoretically and empirically. The earlier literature refers to the grander process of economic and social transformation, and the modernization that resulted from the demographic dividends enjoyed by Europe and the West throughout the middle of the twentieth century (Willekens 2016, Van de Kaa 2010). Theories imply that such a change in age structure eventually induces higher living standards and educational levels while the society becomes increasingly urban, with the industrial and services sectors of the economy used to surpass agriculture both in production and in social relevance (Reher 2011). Consequently, a larger consumer society begins to emerge, and the women start to enter into the labor market in greater numbers. Cutler et al. (1990) explain that a lower dependency ratio owing to demographic transition would enable the countries to invest more resources, which would lead towards economic growth. Many scholars recognize human capital development as the core factor to reap the benefits of demographic transition (Striessnig 2019; Ahmad and Khan 2019; Mason, Lee, and Jiang 2016). Bloom, Canning, and Fink (2007) emphasize the institutional and infrastructural improvement in forms of health care, schooling, roads and transport to facilitate the human development process that could employ a productive young labor force to maintain higher economic growth. Olaniyan, Soyibo, and Lawanson (2012) argue that the education system in the country must emphasize the right relevance of entrepreneurship and private sector employment.

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