IDEAS home Printed from https://ideas.repec.org/p/acb/cbeeco/2006-477.html
   My bibliography  Save this paper

Projected Economic Growth in China and India: The Role of Demographic Change

Author

Listed:
  • Rod Tyers
  • Jane Golley
  • Ian Bain

Abstract

Within the next decade, China’s labour force will begin to contract, while that of India will expand faster than its population. Relative labour abundance will bring higher capital returns and an increasing share of global FDI to India. Yet China may relax its One Child Policy further and India’s fertility could follow the pattern elsewhere in Asia and decline faster than expected. These linkages are explored using a global demographic sub-model that is integrated with an adaptation of the GTAP-Dynamic global economic model in which regional households are disaggregated by age and gender. Even with a two-child-policy, China’s growth is projected to slow in future with India becoming the fastest growing economy in the world on the strength of its continued population expansion. While GDP depends positively on fertility and per capita income negatively in both countries, the price of more GDP growth in terms of lost per capita income is lower in China than in India, a result that depends critically on India’s initially higher fertility, its higher youth dependency and the age-gender pattern of its participation rates. India therefore has considerably more to gain, at least in per capita terms, from further reducing its fertility

Suggested Citation

  • Rod Tyers & Jane Golley & Ian Bain, 2007. "Projected Economic Growth in China and India: The Role of Demographic Change," ANU Working Papers in Economics and Econometrics 2006-477, Australian National University, College of Business and Economics, School of Economics.
    • Handle: RePEc:acb:cbeeco:2006-477
    as

    Download full text from publisher

    File URL: https://www.cbe.anu.edu.au/researchpapers/econ/wp477.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Sir H. W. Singer, 1998. "Beyond Terms of Trade: Convergence/Divergence and Creative/Uncreative Destruction," Zagreb International Review of Economics and Business, Faculty of Economics and Business, University of Zagreb, vol. 1(1), pages 13-25, May.
    2. Wilfred Beckerman & Joanna Pasek, 2003. "The Morality of Market Mechanisms to Control Pollution," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 4(3), pages 191-207, July.
    3. Bloom, David E & Williamson, Jeffrey G, 1998. "Demographic Transitions and Economic Miracles in Emerging Asia," The World Bank Economic Review, World Bank, vol. 12(3), pages 419-455, September.
    4. Attanasio, Orazio P, et al, 1999. "Humps and Bumps in Lifetime Consumption," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(1), pages 22-35, January.
    5. David E. Bloom & David Canning, 2003. "How Demographic Change can Bolster Economic Performance in Developing Countries," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 4(4), pages 1-14, October.
    6. T. W. Swan, 1956. "ECONOMIC GROWTH and CAPITAL ACCUMULATION," The Economic Record, The Economic Society of Australia, vol. 32(2), pages 334-361, November.
    7. John Gibson & Grant Scobie, 2001. "A cohort analysis of household income, consumption and saving," New Zealand Economic Papers, Taylor & Francis Journals, vol. 35(2), pages 196-216.
    8. Jörg Mayer, 2002. "The Fallacy of Composition: A Review of the Literature," The World Economy, Wiley Blackwell, vol. 25(6), pages 875-894, June.
    9. Grilli, Enzo R & Yang, Maw Cheng, 1988. "Primary Commodity Prices, Manufactured Goods Prices, and the Terms of Trade of Developing Countries: What the Long Run Shows," The World Bank Economic Review, World Bank, vol. 2(1), pages 1-47, January.
    10. Liu, Jing & Nico van Leeuwen & Tri Thanh Vo & Rod Tyers & Thomas W. Hertel, 1998. "Disaggregating Labor Payments by Skill Level in GTAP," GTAP Technical Papers 314, Center for Global Trade Analysis, Department of Agricultural Economics, Purdue University.
    11. Kitamura, Yukinobu & 北村, 行伸 & キタムラ, ユキノブ & Takayama, Noriyuki & 高山, 憲之 & タカヤマ, ノリユキ & Arita, Fumiko & 有田, 富美子, 2001. "Household Savings and Wealth Distribution in Japan," Discussion Paper 38, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    12. Rod Tyers & Ian Bain & Jahnvi Vedi, 2006. "The global implications of freer skilled migration," ANU Working Papers in Economics and Econometrics 2006-468, Australian National University, College of Business and Economics, School of Economics.
    13. David E. Bloom & David Canning, 2004. "Global demographic change : dimensions and economic significance," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, issue Aug, pages 9-56.
    14. repec:bla:ecorec:v:78:y:2002:i:243:p:375-80 is not listed on IDEAS
    15. Cai Fang & Wang Dewen, 2005. "Demographic transition: implications for growth," Labor and Demography 0512001, University Library of Munich, Germany.
    16. Higgins, Matthew, 1998. "Demography, National Savings, and International Capital Flows," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 343-369, May.
    17. Robert M. Solow, 1956. "A Contribution to the Theory of Economic Growth," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 70(1), pages 65-94.
    18. Will Martin, 1993. "The Fallacy of Composition and Developing Country Exports of Manufactures," The World Economy, Wiley Blackwell, vol. 16(2), pages 159-172, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rod Tyers & Jane Golley, 2006. "China's Growth to 2030: The Roles of Demographic Change and Investment Premia," PGDA Working Papers 1206, Program on the Global Demography of Aging.
    2. Rod Tyers & Jane Golley, 2006. "China's Growth to 2030: Demographic Change and the Labour Supply Constraint," PGDA Working Papers 1106, Program on the Global Demography of Aging.
    3. Jane Golley & Rod Tyers, 2006. "Demographic Change and the Labour Supply Constraint," ANU Working Papers in Economics and Econometrics 2006-467, Australian National University, College of Business and Economics, School of Economics.
    4. Rod Tyers & Jane Golley, 2006. "China's Growth to 2030: The Roles of Demographic Change and Investment Risk," ANU Working Papers in Economics and Econometrics 2006-461, Australian National University, College of Business and Economics, School of Economics.
    5. repec:bla:rdevec:v:14:y:2010:i:s1:p:592-610 is not listed on IDEAS
    6. Jane Golley & Rod Tyers, 2011. "Contrasting Giants: Demographic Change And Economic Performance In China And India," CAMA Working Papers 2011-10, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    7. Jane Golley & Rod Tyers, 2012. "Demographic Dividends, Dependencies, and Economic Growth in China and India," Asian Economic Papers, MIT Press, vol. 11(3), pages 1-26, Fall.
    8. Husain, Muhammad Jami, 2010. "Contribution of health to economic development: A survey and overview," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 4, pages 1-52.
    9. GOLLEY, Jane & WEI, Zheng, 2015. "Population dynamics and economic growth in China," China Economic Review, Elsevier, vol. 35(C), pages 15-32.
    10. Chan, Ming Ming & Shi, Qun & Tyers, Rodney, 2005. "Global Demographic Change and Economic Performance: Implications for Agricultural Markets," 2005 Conference (49th), February 9-11, 2005, Coff's Harbour, Australia 137808, Australian Agricultural and Resource Economics Society.
    11. Hajamini, Mehdi, 2015. "The non-linear effect of population growth and linear effect of age structure on per capita income: A threshold dynamic panel structural model," Economic Analysis and Policy, Elsevier, vol. 46(C), pages 43-58.
    12. Husain, Muhammad Jami, 2009. "Contribution of health to economic development: a survey and overview," Economics Discussion Papers 2009-40, Kiel Institute for the World Economy (IfW Kiel).
    13. Rod Tyers & Qun Shi, 2006. "Global Demographic Change, Labour Force Growth and Economic Performance," ANU Working Papers in Economics and Econometrics 2006-462, Australian National University, College of Business and Economics, School of Economics.
    14. Rod Tyers & Jane Golley & Bu Yongxiang & Iain Bain, 2008. "China's economic growth and its real exchange rate," China Economic Journal, Taylor & Francis Journals, vol. 1(2), pages 123-145.
    15. Wei, Zheng & Hao, Rui, 2010. "Demographic structure and economic growth: Evidence from China," Journal of Comparative Economics, Elsevier, vol. 38(4), pages 472-491, December.
    16. Rod Tyers & Qun Shi, 2007. "Demographic Change and Policy Responses: Implications for the Global Economy," The World Economy, Wiley Blackwell, vol. 30(4), pages 537-566, April.
    17. Rod Tyers & Iain Bain & Jahnvi Vedi, 2007. "The Global Economic Implications of Freer Skilled Migration," DEGIT Conference Papers c012_028, DEGIT, Dynamics, Economic Growth, and International Trade.
    18. Mapa, Dennis S & Bersales, Lisa Grace S, 2008. "Population Dynamics and Household Saving: Evidence from the Philippines," MPRA Paper 21245, University Library of Munich, Germany.
    19. Rod Tyers & Ying Zhang, 2011. "Appreciating the Renminbi," The World Economy, Wiley Blackwell, vol. 34(2), pages 265-297, February.
    20. Aiyar, Shekhar & Duval, Romain & Puy, Damien & Wu, Yiqun & Zhang, Longmei, 2018. "Growth slowdowns and the middle-income trap," Japan and the World Economy, Elsevier, vol. 48(C), pages 22-37.
    21. Durr-e-Nayab, 2008. "Demographic Dividend or Demographic Threat in Pakistan?," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 47(1), pages 1-26.

    More about this item

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • E27 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Forecasting and Simulation: Models and Applications
    • F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:acb:cbeeco:2006-477. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/feanuau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.