A Longitudinal Demographic Window of Nepal (1952-2021)

Abstract

Nepal is experiencing a historic demographic structural change, creating a time-based window of opportunity for macroeconomic acceleration. This paper uses multi-criterion triangulation of five international models, including the growth-rate differentials of Bloom and Williamson, the dependency levels of the UN, and the standards of the National Planning Commission (NPC), to examine the initiation and length of the Nepalese demographic dividend using seven decades of data (1952/54 2021) of decennial census data. Findings show that Nepal formally entered its demographic window in 2017, and by 2021, the share of the working-age population reached a record high of 65.2%. Nonetheless, the paper finds a paradox in the transnational labour migration process with the physical absence of the most productive age groups (1845) externalizing the dividend and resulting in a hollowing-out of local productivity. Moreover, under the federal framework, sub-national analysis shows that there is a high level of demographic polarization, whereby some provinces, such as Madhesh, are trapped in the high dependence trap. As the geriatric population (65 +) increases at an annual rate of 3.54% (almost 4 times the national population growth rate), Nepal is at risk of becoming an aged society by 2051 without achieving middle-income status. This paper presents a case for urgent policy change and the use of foreign labour to build human capital within the nation and prevent a demographic disaster.