9 Population

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POPULATION AND ECONOMIC DEVELOPMENT

Development Economicsth

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Solano Da Silva


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Objective >

To understand the issue of population growth andeconomic development in the context of developingeconomies.1) Population growth trends

1.1) General1.2) Developing economies

2) Approaches to population analysis

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2.1) Malthusian approach2.2) Theory of demographic transition

3) Relationship between population and economic

development

4) Population policies for developing economies4.1) Economic4.2) Social

4.3) Family planning programmes


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1. Population growth trends> 1.1. General >>

Before 1650 it took 36,000 years for global population to double. Today it doubles in less than 53 years.

Onset of industrial revolution

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1. Population growth trends> 1.1. General >>

Projected stabilisation

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1. Population growth trends> 1.2. Developing economies >>

1) Rapid population growthDue to falling mortality rates and relatively high fertility rates.

2) High dependency ratiosPercentage of persons younger than 15 and older than 64

dependent on the working age population.

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OECD 50.3%

LDC 83.8%

Arab region 73%

South Asia 66.9%


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2) High dependency ratios

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3) High youth dependency ratiosi.e. Children (below 15 years) depend on economically active adults

(15-64 years).

Economic category Youth proportion of

population

Overall developed 20%

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econom es

Overall developing

economies

40%


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3) High youth dependency ratios

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4) Population momentum Refers to longer period for population growth to level off or

stabilise.

o [Reason] Even if young couples have lower fertility rates, sayreplacement level of fertility, the total number of youngcouples are much higher which results in a longer time

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requ re or t e popu at on growt to eve ng o .


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4) Population momentum

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2. Approaches to population analysis> 2.1. Malthusian approach >>

Based on Thomas Malthus (1798)Essay on Populationwhere heargued that while population doubles itself in geometric proportions

food production increases in arithmetic proportions. As a result a food scarcity is likely to emerge.

If population growth is unchecked vice and misery would result.

[Criticism] Gloomy prediction did not seem to hold true for most

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estern econom es as oo pro uct on was a e not on y to eep upbut also exceed the growth of population due to technological

innovations.

[Relevance for developing economies] Some argue that hisprediction did hold some credibility in the case of many developingeconomies where food production was not able to keep up withincreases in population and this also resulted in holding back

economic growth.


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2. Approaches to population analysis> 2.2. Theory of Demographic

transition >>

According to the theory every country passes through three stages of

demographic change:

1. First stage: high birth and death rates

High birth rates: As a result of certain customs and beliefsalongside economic compulsions (agricultural societies tend to

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have large families) High death rates: because of low standards of living.

As a result the two normally balance each other and thepopulation is largely stable.


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transition >>


demographic change:

2. Second stage: rapid population growth

As the process of development begins there are improvements inthe std. of living and the death rate falls.

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As population remains largely agrarian the fertility rate remainshigh.

Fertility rate is approx. 2.5% per annum.


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transition >>


demographic change:

3. Third stage: birth and fertility rates converge

As process of industrialisation, urbanisation and educationprogress people revise their attitudes regarding family size.

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Many feel inclined to have small families.oWomens education and employment also play a crucial

role in determining smaller family size.


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transition >>

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3. Relationship between population and economic development>

3.1. Population as obstacle to economic growth >>

Argues that population growth can arrest economic growth by

lowering land-man and capital-labour ratios:

1) Adverse impact on agricultural productivity

i. Decline in cultivated land/capitaii. Fragmentation of land holdings; low productivity >

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disincentive to produce.

2) Employment pressures

i. Problem of disguised unemployment

ii. Need for job creation to absorb increase in labour force.


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3.1. Population as obstacle to economic growth >>

3) Adverse impact on p.c.i. and std. of living

i. By eroding capital savings.

4) Adverse impact on capital formation

i. Reducing savings (and investments)ii. Diversion of resources from productive investments to

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social overheads (residences, schools, hospitals, roads, etc.)

5) Shortage and import of food grains

i. Increased demand for food.

ii. If the same in not met from domestic production thanfood has to be imported leading to BoP problems


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3.2. Population not an obstacle to economic growth >>

1. Underdevelopment not a problem of population but a

result of other issues.

2. High population growth a result of under-development.

i. Children as labour and social security.

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3. Looking at consumption levels; people in developedeconomies consume approx. 16 times more than those in

developing economies.

4. In some countries e.g. Canada, Latin America, etc. populationgrowth can actually help economic growth through fullerutilisation of available resources and creation of larger markets.


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3.3. Consensus view >>

1. Most argue that world would be better off without large

population pressure.

2. Population is not the primary cause of low std. of living but

problem in inequalities and certain structural economicproblems.

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3. Issue not just population growth but consumption levels in

which case developing economies have low levels.

4. Rapid population growth intensifies the problem of economicdevelopment and therefore it is best to undertake some effortsof population control.


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4. Population policies for developing economies>

Applied only to those developing economies which have populationpressures.

Comprises broadly of three kinds of measures:1. Economic measures

2. Social measures3. Family planning programmes

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4. Population policies > 4.1. Economic measures >>

1. Expansion of the industrial sector

2. Employment opportunities in urban areas

3. Equitable distribution of income and eradication of

poverty

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4. Population policies > 4.2. Social measures >>

1. Education

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1. Education

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2. Improving the condition of women

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3. Raising the minimum age of marriage of women

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4. Population policies > 4.3. Family Planning Programme >>

1. Public information programme2. Incentives and disincentives

3. Coercion

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REFERENCES

Misra, S. K. and Puri, V. K. (2010), Population and Human Capital Formation inEconomic Development, in Development and Planning: Theory and Practices, 13th ed.Himalaya Publishing House Pvt. Ltd. Mumbai, pp. 312-327.

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9 Population

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