The impact of changing demographics

At this point in time, it is inconceivable that underdeveloped African economies projected to have high population growths would be able to raise their economic growth to sufficiently high levels by exploiting their comparative advantages in exporting a few natural resources. Unless equipped with good infrastructure and modern industries, they can hardly expect to achieve sustainable high growth.

But developing infrastructure and modern industries requires large investments. So high-fertility resource-rich African countries like Nigeria and Ethiopia would look forward to other countries for these investments. Much of these are expected to flow from large developing countries, in which resource-intensive industries aim to be connected to natural resource supplies in Africa through forward and backward linkages. China, India and Brazil are the obvious sources of such investments. They are already investing heavily in Africa and are expected to invest more in the future.

For a populous country like India, investing in Africa means creating new jobs for its own people. New industrial projects in African countries, which have limited technical expertise, can enable skilled Indian technical professionals to move to skilled professions in these projects. At the same time, these projects will also create low-skill local jobs making them "win-win" outcomes for both sides.

The favorable outcomes apply to investments from other large developing countries like China, Brazil, Indonesia and Mexico as well. All these countries would benefit from the demographic dynamics by investing in Africa, because their investments would generate income and employment for both sides.

Countries like India and Indonesia need to take particular note of investment opportunities in Africa, because despite having a lower fertility rate, they will still have positive population growth for a long time and will thus have young workers. China and Brazil, in contrast, are already experiencing falling fertility rates, aging populations and older workforces. India and Indonesia - more than China and Brazil - will need to create adequate jobs for the increasing number of entrants to their job markets, for which they have to invest in other economies and markets. African countries seem to be the best choice for them, because in that case the changing global demographics can also produce more active South-South cooperation.

The author is head of partnership & programme and senior research fellow in the Institute of South Asian Studies in the National University of Singapore.

(China Daily 07/10/2013 page9)