At most a demographic dividend offers only a potential for increased
economic growth. There is no guarantee more people entering the labour force
will generate more employment and more output. First, the population must be
able to leave the household and be available to work. In India cultural norms
prevent women from leaving the household to do paid work. In 2004/05 female
labour force participation rates in urban areas were only 15 per cent and
showed almost no increase from the previous decade (Chandrasekhar et al.,
2006:5059). Second, work must be available where people are. Chapter 11
discusses how industry is most likely to be located close to raw materials or
urban markets, or in coastal areas. Historically people have tended to populate
the most fertile farmland. Some of the highest population density in Africa is in
the Great Lakes area (Rwanda, Uganda and Burundi). Migrating from there
and crossing borders to work in the richer coastal areas of Kenya and South
Africa is very unlikely for the vast majority of the population. In China, by
contrast, perhaps one hundred million people have migrated from the poor inte-
rior areas to the rapidly growing coastal regions. China is a single unified
nation so people don’t have to cross international borders. China also has good
infrastructure and a high degr ee of cultural uniformity such that people can
more easily communicate and blend in once they have migrated for work.
Third, those entering the potential labour force must be sufficiently educated.
Subsistence agriculture requires little education, but most other forms of
employment do. Literacy is generally required even in a dingy backstreet
factory. A survey of young women working in casual, informal exploitative
conditions in small-scale textile production (in Tiruppur, India) found that 99.7
per cent of them were literate (Neetha, 2002). Chapter 6 shows just how poor
the education system is in many developing countries. Fourth, the relationship
between available cheap labour and long-term economic growth is more
complicated in practice. An increasing supply of young labour could make
labour markets more competitive, reducing wages and encouraging domestic
and foreign firms to set up production facilities, thus increasing employment.
The Chinese export boom after 1980 was based on employing reasonably well-
educated people at low wages, and using labour-intensive methods to produce
cheap manufactured goods for export. A completely different dynamic could
also be possible. More people and lower wages may reduce the incentives for
firms to use more modern technology. Why, for example, utilize modern and
expensive machinery in a knitwear factory if there is a queue of people willing
to stitch by hand? More people could lead to an economy being stuck in low-
technology, labour-intensive, low-skill production methods and being unable
to shift to a more dynamic growth path based on high-technology, capital-
intensive and high-skill production methods. Some historians have argued that
the abundance of slaves available in ancient Greece in the fourth and fifth
centuries BCE to work on farms, mines and in households gave the poets, histo-
rians and philosophers the freedom to wander the streets of Athens pondering
life. At the same time this ready availability of slaves also meant there was
never any real incentive to introduce new labour-saving or output-boosting
84 Sources of Growth in the Modern World Economy since 1950