Journal of Economic, Finance Research and Review (JEFRR)

Unlocking the Demographic Dividend: The Essential Role of Capital Accumulation in Latin America (1980–2023)

Öztopcu, Aslı

5 June 2026 · Vol. 2, Issue 6, pp. 305-316

DOI: 10.65150/EP-jefrr/V2E6/2026-01

Abstract

This study examines the nexus between demographic transition and economic performance across seven Latin American economies over the period 1980–2023. Employing a Two-Way Fixed Effects panel data framework that simultaneously controls for country-specific heterogeneities and common time-varying shocks, the study isolates the within-country growth dynamics of key demographic and macroeconomic variables. Empirical results identify physical capital accumulation as the dominant and most statistically robust determinant of regional growth, with a semi-elasticity of 8.044 (p < 0.01) that remains stable across all model specifications. Life expectancy emerges as a second significant factor, yielding large negative coefficients (–40.278, p < 0.01) consistently across baseline and robustness checks, suggesting that rapid longevity gains generate short-run fiscal pressures that temporarily constrain growth. In contrast, demographic variables — including the fertility rate, age dependency ratio, and population size — do not attain statistical significance in the short-to-medium term, indicating that their influence on annual growth fluctuations is secondary to investment-driven factors. These findings suggest that a declining dependency ratio does not spontaneously trigger economic growth; its potential is unlocked only when synchronized with high-intensity capital formation. The study concludes that for Latin American nations to capture the demographic dividend before the strategic window closes, policy priorities must center on stimulating productive investment and enhancing financial deepening to translate demographic transition into sustained economic expansion.

Keywords: Sustainable Development, Economic Growth, Physical Capital Accumulation, Demographic Dividend, Latin America, Fertility Rate, Panel Data Analysis

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Öztopcu, & Aslı (2026). Unlocking the Demographic Dividend: The Essential Role of Capital Accumulation in Latin America (1980–2023). Journal of Economic, Finance Research and Review, 2(6), 305-316. https://doi.org/10.65150/EP-jefrr/V2E6/2026-01

@article{ztopcu2026,
  title   = {Unlocking the Demographic Dividend: The Essential Role of Capital Accumulation in Latin America (1980–2023)},
  author  = {Öztopcu and Aslı},
  journal = {Journal of Economic, Finance Research and Review},
  year    = {2026},
  volume  = {2},
  number  = {6},
  pages   = {305-316},
  doi     = {10.65150/EP-jefrr/V2E6/2026-01},
  url     = {https://doi.org/10.65150/EP-jefrr/V2E6/2026-01}
}

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