Impact Of Population Growth On Economic Development – This is “Population Growth and Economic Development”, section 19.2 of the book Principles of Macroeconomics (v. 2.0). For more information (including licensing), click here.

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Impact Of Population Growth On Economic Development

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China’s Demographic Shift: Impact Of Population Decline

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Projections Of Population Growth

It is easy to see why some people have become alarmists when it comes to population growth rates in developing countries. If we look at the world’s low-income countries, they see a population of over 2 billion growing at a rate that suggests it is doubling every 31 years. How will we cope with so many more people? The following statement captures the essence of the widely expressed concerns:

“At the end of each day, the world now has more than two hundred thousand more mouths to feed than the day before; at the end of each week, a million and a half more; at the end of each year, an additional eighty million. … Humanity, which now doubles its numbers every thirty-five years, has fallen into an ambush of its own making; economists call it the “Malthusian trap,” after the man who most forcefully stated our biological predicament: population growth tends to outstrip food supply. “Phillip Appleman, ed., Thomas Robert Malthus: An Essay on the Principle of Population—Text. , Sources and Background, Critique (New York: Norton, 1976), xi.

But what are we to make of such a statement? Certainly, if the world’s population continues to increase at the rate it has grown in the last 50 years, it is less likely that economic growth will translate into an improvement in the average standard of living. But the population growth rate is not a constant; it is affected by other economic forces. This section begins with a discussion of the relationship between population growth and income growth, then moves on to an explanation of the sources of population growth in low-income countries, and closes with a discussion of the caveat Malthusianism suggested in the previous quote.

At a simplistic level, the relationship between population growth and per capita income growth is clear. After all, per capita income equals total income divided by population. The growth rate of per capita income is roughly equal to the difference between the growth rate of income and the growth rate of population. Kenya’s annual real GDP growth rate from 1975 to 2005, for example, was 3.3%. Its population growth rate during this period was 3.2%, leaving it with a per capita GDP growth rate of only 0.1%. A slower rate of population growth, coupled with the same rate of increase in GDP, would have left Kenya with more impressive gains in per capita income. The implication is that if developing countries are to increase their per capita GDP growth rate relative to developed nations, they must limit their population growth.

Solution: Impact Of Population Growth On National Development

Figure 19.2 “Population and Income Growth, 1975–2005” plots population growth rates versus per capita GDP growth rates from 1975 to 2005 for more than 100 developing countries. We don’t see a simple relationship. Many countries experienced rapid population growth and negative changes in real GDP per capita. But still others had relatively rapid population growth but had rapid increases in GDP per capita. Clearly, there is more to achieving gains in per capita income than simply slowing population growth. But the challenge posed at the beginning of this section remains: Can the world continue to feed a population that grows exponentially, that is, doubling at fixed intervals?

A scatterplot of population growth rates versus per capita GNP growth rates for several developing countries over the period 1975–2005 suggests that there is no systematic relationship between population and population growth rates. income

. It turned out to be one of the most enduring works of the time. Malthus’s fundamental argument was that population growth will inevitably collide with diminishing returns.

Diminishing returns imply that adding more labor to a fixed amount of land increases output, but by smaller and smaller amounts. Finally, Malthus concluded, increases in food production would be too small to sustain the increase in the number of human beings consuming that production. As the population continued to grow unchecked, the number of people would eventually exceed the ability of the land to generate enough food. There would be an inevitable Malthusian trap in which the world is no longer able to meet the food needs of the population and hunger becomes the main brake on population growth. , a point at which the world is no longer able to meet the food needs of the population, and hunger becomes the main brake on population growth.

Population Gains Experienced By Half Of U.s. Counties

A Malthusian trap is illustrated in Figure 19.3 “The Malthusian Trap.” We can determine the total amount of food needed by multiplying the population in any period by the amount of food needed to keep one person alive. As the population grows exponentially, food needs increase at an increasing rate, as shown by the curve labeled “Food Needs.” Food produced, according to Malthus, increases by a constant amount each period; its increase is shown by an upward-sloping straight line labeled “Food Produced.” The food needed eventually exceeds the food produced and the Malthusian trap is reached in time

If the population grows at a fixed exponential rate, the amount of food needed will increase exponentially. But Malthus argued that food production could only increase by a constant amount each period. Given these two different growth processes, food requirements will eventually catch up with food production. The population reaches the subsistence level of food production in the Malthusian trap, shown here at point T.

What happens in the Malthusian trap? Clearly, there is not enough food to support the population growth implied by the “Food Needed” curve. Instead, people starve and the population begins to increase arithmetically, controlled by the “Food Produced” curve. Hunger becomes the limiting force of the population; the population lives beyond subsistence. For Malthus, the long-term fate of human beings was a standard of living barely sufficient to keep them alive. As he said, “the view has a melancholy tone.”

Fortunately, Malthus’s predictions did not match the experience of Western societies in the 19th and 20th centuries. One of the weaknesses of his argument is that he did not take into account the gains in production that could be achieved through increased use of physical capital and new technologies in agriculture. Increases in the amount of capital per worker in the form of machinery, improved seeds, irrigation, and fertilization have made possible a huge increase in agricultural production at the same time as the labor supply has increased. Agricultural productivity rose rapidly in the United States over the past two centuries, just the opposite of the fall in productivity expected by Malthus. Productivity has continued to grow.

File:african Population Growth V09 Daft.png

Malthus was also wrong about the relationship between population growth and income. He believed that any increase in income would increase population growth. But the law of demand tells us that the opposite can be true: higher incomes tend to reduce population growth. The main cost of having children is the opportunity cost of parents’ time to raise them: higher incomes increase this opportunity cost. Higher incomes increase the cost of having children and tend to reduce the number of children desired and thus slow population growth.

Panel (a) of Figure 19.4 “Income Levels and Population Growth” shows birth rates for low-, middle-, and high-income countries over the period 2000–2005. We see that the higher the income level, the lower the birth rate. Fewer births result in slower population growth. In panel (b), we see that high-income nations had much slower population growth rates than middle- and low-income nations over the past 30 years.

Panel (a) shows that low-income nations had much higher total fertility rates (births per woman) during 2000-2005 than high-income nations. In panel (b), we see that low-income nations had a much higher

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