For much of East Asia, the years since the 1997 financial crash have been demoralizing. There was one short-lived recovery, fueled by the U.S. technology bubble, and several false stock market rallies. Economies couldn't find traction. The reason: Leaders never finished the reforms needed to return their economies to solid footing, particularly in the case of Southeast Asia.
Little wonder, then, that many have doubts that the current recovery signals a revival of robust growth. But Asian policymakers should realize they are blessed with a remarkable, one-time opportunity: a so-called demographic dividend, or a period in which there are large concentrations of healthy, working-age people. The phenomenon stems from a rapid shift in the age structure brought about by unprecedented drops in fertility and mortality rates. New research shows that up to one-third of the remarkable growth of South Korea, Singapore, and Taiwan from 1960 to 1990 was due to a rise in working-age populations hitting the labor market just as governments established pro-growth policies.
Most of Southeast Asia is still in the middle of these dividend years. But regional leaders must hurry, since the demographic dividend lasts only two or three decades before the population begins to age quickly. If the region's economies can't get their act together now, they will blow this chance for growth and will lack the resources to care for large elderly populations a few decades hence: Think Japan, but much worse. Asia still has time to return to healthy growth, but policymakers must use the decade wisely.