WP-04: Dynamic demographics and economic growth in Vietnam

This paper is an empirical study of the effect of age-structure of population on economic growth in Vietnam. The statistics show that in recent years, Vietnam’s demographics have been changing remarkably with an increase in the labor force as well as a decrease in the dependency ratio. This change offers a great opportunity for the economy to enhance its economic growth in the short and medium terms at least. Our estimated results form regression models also indicate that Vietnam has utilized this opportunity: the change in demographics has contributed up to 15 percent of economic growth during the last five years. Another finding is that while being categorized as dependent, the aged seem do not have negative impact on economic growth but young children do.

Vietnam’s population will probably shift from a demographic dividend to demographic debt in about ten years. Therefore, it is very important for Vietnamese government to take advantage of this dividend period in order to improve human capital and technology and prepare a coming period of demographic debt. In addition, building up sound pension and health care system in the medium term is also a must.

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