This paper is an empirical study of the effect of demographics on economic growth in Vietnam. Empirical results 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. The results show that this opportunity has contributed approximated 15 percent of economic growth during the last five year.

Vietnam’s population will probably shift from a demographic dividend to demographic debt in about ten years. Hence 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 time of demographic debt. In addition, building up sound pension and health care systems in the medium term is also suggested.