Negative Effects Of Population Growth On Economic Development – In our previous post, we described the changing views of economists and demographers on the relationship between population growth and economic development. In short, rapid population growth in developing countries was seen as a problem in the 1950s and 1960s, irrelevant (or even positive) in the 1970s and 1980s, and again an obstacle to strong economic growth from the mid-1990s to the present. . Moreover, these changing views were largely consistent with the evidence available for each period. How can we explain it?

There is currently no consensus on this issue. But we argue that this is a case where historical context really matters for models of economic development and the interpretation of empirical data.

Negative Effects Of Population Growth On Economic Development

Since the end of World War II, there have been two quite distinct sub-periods of world economic growth, which have been well documented by economic historians ([i], [ii]). The first was the post-war economic boom, which ended around 1973. As Table 1 shows, the global economy grew very rapidly between 1950 and 1973. Indeed, wealth was created faster in this period than any other before or since.

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It was an era of extraordinary political and economic change characterized by decolonization, the rapid diffusion of knowledge and technology around the world, booming international trade, and high levels of public and private investment in a growing number of sovereign nations. It was also a period of historically unprecedented population growth, fueled in large part by rapidly declining death rates, primarily in poorer countries.

All that changed in the early 1970s. The collapse of the Bretton Woods system and rising inflation exposed the world economy to the risk of recession—a risk realized by the first Arab oil embargo in 1973. A further oil price shock in 1977, a series of debt crises in developing economies in the 1980s, and the collapse of the USSR around 1990 led to a sustained period of economic weakness, with the notable exception of rapid growth in some East Asian countries.

Specifically, between 1973 and 1990, global GDP per capita growth slowed significantly. Despite a slight recovery between 1990 and 2008, GDP per capita never regained the momentum of the post-war “golden age”. Since 2008, global growth has been downright miserable.

In considering these trends, two key observations must be made. First, the rapid population growth of the postwar boom years was largely stimulated by the spread of medical knowledge, technologies, and public health initiatives that dramatically reduced death rates from infectious and parasitic diseases ([iii]

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). This coincided with a period of rapid economic growth. More importantly, however, the continued improvement in mortality was not dependent on sustained economic growth. Among other things, this is also evident from the fact that in Table 1 there is no obvious correspondence between population growth rates and GDP growth rates at the global level.

Second, in the growing world economy (ie between 1950 and 1973) poorer countries benefited from a positive investment environment and growing employment opportunities. Both at the household level and at the overall macroeconomic level, this buoyant economic environment likely helped alleviate the economic pressures associated with the larger family sizes and rapid population growth that characterized this period.

After 1973, mortality continued to decline in most countries despite the stagnation of production. This meant that, in aggregate, there was less product (eg income) produced per person. Slow global growth has also meant that the pie of investment and employment opportunities has shrunk, making larger families a greater economic liability at both the household and macroeconomic levels.

With fewer earning opportunities but the same number of children, households must cut back on spending—in some cases they may even have to pull children out of school and put them to work. Overall, this translates into less savings, less investment, and a workforce that may ultimately be less productive (if less educated or unhealthy).

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In short, the negative impacts of rapid population growth were masked in the earlier period by a buoyant global economy and a decline in mortality that

To follow rapid economic growth, but was not ultimately dependent on that growth. When this unique episode in global economic history came to an end in 1973, a fundamental negative correlation between population growth rates and economic growth rates was discovered.

The negative impacts of rapid population growth were masked in the earlier period by a buoyant global economy and the decline in mortality that accompanied rapid economic growth

We can see this in Table 2, which presents a very simple regression model periodized according to our interpretation of the role of history in shaping the statistical relationship between population growth and economic growth. We observe changes in the ratio over the entire time period, and within each of the two discrete economic periods outlined in the previous historical analysis.

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In column 1, we find a clear negative and statistically significant correlation between these variables when looking at the long run (ie between 1950 and 2008) and controlling for initial GDP per capita. In column 2, which covers the economic boom period from 1950 to 1973, we find no statistically significant relationship between these variables. The negative and highly statistically significant relationship returns, however, when we consider the period of economic slowdown after 1973, as we expected.

This model is clearly highly stylized: the performance of economic growth depends on a wide range of factors beyond population dynamics, such as investment, trade, education, and the quality of political and economic institutions. Our key point is that properly periodizing the simple cross-sectional models that have been at the center of so much debate (and policy) provides important insight into the issue.

If our interpretation of the data is correct—that is. if global economic conditions do mediate the relationship between demographic change and economic performance – then the post-2008 regime of weak global growth does not bode well for poor countries with high birth rates.

Although there has been a modest resurgence of interest in family planning initiatives among international development organizations in recent years, much more could be done to ensure that all adults (and especially women) have a choice about how many children they have. Indeed, the UN estimates that there are about 225 million women today who do not want to become pregnant but do not use safe and effective means of family planning.

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If global economic conditions do mediate the relationship between demographic change and economic performance – then the post-2008 regime of weak global growth does not bode well for poor countries with high birth rates.

The challenge is particularly pressing for many countries in Africa and the Middle East – where the potential micro and macroeconomic benefits of reducing very high fertility are likely to be substantial.

All data up to 2008 used in these posts are derived from Angus Maddison’s World Population, GDP and GDP per Capita Statistics, 1-2008 AD; data for 2008-2014 are from the World Bank’s World Development Indicators. Our sample for Figure 1 and Table 2 consists of all countries with a population of 5 million or more in 2008 for which data were available. 102 countries meet these criteria and together represent 94% of the world’s population. It’s easy to see why some people have become alarmist when it comes to population growth rates in developing countries. Looking at the world’s low-income countries, they see a population of more than 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 a widely expressed concern:

“At the end of each day, the world now has over two hundred thousand more mouths to feed than it had the day before; at the end of each week another million and a half; at the end of each year an additional eighty million. … Mankind, now doubling 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 spoke most starkly about our biological predicament: population growth tends to outstrip food supply” (Appleman, 1976).

Population Growth And Economic Development

But what are we to say about such a statement? Of course, if the world’s population continues to grow at the rate it has for the past 50 years, it is less likely that economic growth will translate into an improvement in the average standard of living. But the rate of population growth is not constant; it is influenced by other economic forces. This section begins with a discussion of the relationship between population growth and income growth, then moves on to explain the sources of population growth in low-income countries, and concludes with a discussion of the Malthusian caveat suggested in the quote above.

At a simplified 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 approximately 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%. The population growth rate in that period was 3.2%.

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