(October 2015) A demographic dividend in Ethiopia would contribute to the long term economic and social development of the country. But a demographic dividend hinges on job growth: Ethiopia's economy must be able to absorb the large number of people reaching working age over the next several decades.
A new report and accompanying policy brief from the Ethiopian Economics Association and the Population Reference Bureau explore the potential for a demographic dividend in Ethiopia. As mortality and fertility levels decline, Ethiopia's working age population may grow in relation to the number of young dependents. Therefore, the country may enter a demographic window of opportunity, enabling Ethiopia to capture a demographic dividend. The demographic dividend is the accelerated economic growth that may result from the demographic transformations and the shift in the age structure of the population.
To maximize the potential benefits of a demographic dividend, Ethiopia must continue to implement policy frameworks that prioritize health, education, and economic growth. Appropriate economic policies that promote growth will contribute significantly towards a job market that can absorb a large workforce and give them productive employment. Policies that provide incentive to invest and save, that encourage trade and a flexible strategy for producing a well-trained workforce, will yield a stronger economy with greater employment and earning opportunities. Investments in basic infrastructure such as roads, transportation, and communication systems will create a supportive environment for Ethiopia to capitalize fully on its demographic changes.
The report presents the national economic plans of Ethiopia. The authors take stock of the progress that has been accomplished in demography, and especially fertility transition, economic growth and economic policies, as well as social sector outcomes and policies. The report explores new pathways needed to consolidate and expand ongoing development efforts. Findings include a focus on policies and funding that can enable the country to capture a demographic dividend.
Assefa Admassie is a principal researcher at the Ethiopian Economics Association (EEA) and Seid Nuru is a senior research fellow at EEA. John F. May is a visiting scholar at the Population Reference Bureau (PRB). Shelley Megquier is a policy analyst at PRB, and Scott Moreland is a senior fellow at Palladium.