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Why is the dependency ratio important?

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The dependency ratio, the ratio of dependent-age individuals (below 15 years old and above 64) to economically active individuals (15 to 64 years old), is important because it influences how a country will allocate national income. For example, if a country has a high youth dependency, it will need to allocate a significant portion of funds to food, housing, and education and divert funds away from economic development.

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