The article utilises a commentary in the German “Business Daily” to challenge the automatic equation of India’s demographic dividend with advantage, mentioning the offsetting role of AI in particular while elaborating on the familiar caveats to the assumed automatic pluses of favourable demographics in India.
Full translation :
A recent commentary published in the German “Business Daily” avers that India’s current population advantage might mean disasters in future if there were not enough employment opportunities. This actually points to another facet that might result from India’s rising potential.
After the Cold War, India has been under the aura of (its) “rise”. On the whole, there is indeed an “Indian miracle.” Horizontally, India’s economic aggregate ranking rose from the 16th in the world when economic reform was commenced in 1991 to the 7th in 2017. As a result, many people are definite in their belief that India will create a new human development miracle. The talk in these circles is that India is the youngest country in the world, and will continue to enjoy the advantage of youthful population for more than ten years.
The advantages from India’s demographic composition are obvious but, from the standpoint of dialectics, they are even more a necessity. To be effective, India’s population advantage must be combined with economic development. That is the reason why Modi’s government has tried to promote “Make in India” since assumption of office in May 2014, and tried to address the unemployment problem by developing labor-intensive industries. However, after several years of hard work, it has not achieved much success. Two points need to be recognised here. First, India missed the best time to embrace globalization. China’s reform and opening up in the 1980s utilised its comparative advantage of a (huge) labor force by introducing labor-intensive manufacturing. At that time, the Rajiv Gandhi government directed the development of India to electronics.
Service industries such as software have made India the current “world office”. That difference in the initial path of economic reform/development has determined the path of subsequent development. It is not easy for the Modi government to re-adjust now.
Second, India still needs to make great efforts to improve its soft environment for promotion of “Make in India”. Although the Modi government’s achievements in governance have begun to show, reflected in the World Bank’s “2018 Global Business Environment Report” published in 2017 in which India’s ranking shot up by 30, to 100th. However, compared with China’s 78th, India still has a long way to go. This is why while the Japanese government is trying to shift its industry to India, the Japanese business community is not buying the idea. Take Japan’s Shinkansen construction in India as an example. After several years of intense activity, land acquisition and resettlement of people has been less than 1 hectare.
The demographic advantage does not necessarily represent quality of the population. According to the Human Development Report released by the United Nations Development Programme in 2016, China ranks 90th in the Population Development Index, Brazil 79th, Russia 49th, South Africa 119th and India 131st. This actually points to the grave deficiencies in the overall Indian basic education and medical care systems. With the labour force lacking in basic education and labor skills training, it is impossible to achieve full employment. Therefore, vocational skills training has been made an adjunct of “Make in India”.
Finally, and perhaps even more challenging, is the fact that the development of artificial intelligence may actually offset India’s population advantage. Artificial intelligence has come up partly in response to the “low fertility trap” in developed economies. Countries that have entered the aging stage have come up with their own specific strategies for development of artificial intelligence. India is also trying to keep up with the development of artificial intelligence. However, (it is a moot point) how the development of artificial intelligence and automated manufacturing can bring economic benefits and social security to a wider population in India ?
To sum up, it would appear that it is not enough to talk about the rise of India simply in terms of the demographic dividend. In the future, the population factor might not be a necessary or a sufficient condition for development. (The context of ) time, place, and people may be important for demography to play its role.
(The author is a researcher at the Institute of International Studies at Fudan University)