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A country's working-age population is increasing, but the savings rate is not rising. Which channel of the demographic dividend appears weak?

Answer and explanation

Correct answer: The savings and capital-formation channel

A demographic dividend is not produced simply by having many working-age people. It also depends on whether the economy can convert their potential into productivity, saving, investment, and better living standards. Savings can provide funds for investment and capital formation.

Here the working-age population is increasing, but the savings rate is not. This suggests that the saving-and-capital-formation channel is not becoming stronger, or is failing to operate as expected. The other options are not recognised channels for explaining this economic outcome: infant mortality, geographical area, and weather change do not directly identify the missing dividend mechanism. Thus, option A is correct.

Related tags

Demographic DividendSavingsCapital FormationWorking Age PopulationAge StructurePopulation CompositionGeographyClass 12 Mcq

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