POPULATION AND ECONOMIC DEVELOPMENT

Development Economics 4th October 2012 Solano Da Silva

Objective > To understand the issue of population growth and economic development in the context of developing economies. 1) Population growth trends 1.1) General 1.2) Developing economies 2) Approaches to population analysis 2.1) Malthusian approach 2.2) Theory of demographic transition 3) Relationship between population and economic development 4) Population policies for developing economies 4.1) Economic 4.2) 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

1. Population growth trends> 1.1. General >> Projected stabilisation

1. Population growth trends> 1.2. Developing economies >> 1) Rapid population growth Due to falling mortality rates and relatively high fertility rates. 2) High dependency ratios Percentage of persons younger than 15 and older than 64 dependent on the working age population.
Economic group/region OECD LDC Arab region South Asia Dependent ratios 50.3% 83.8% 73% 66.9%

1. Population growth trends> 1.2. Developing economies >> 2) High dependency ratios

1. Population growth trends> 1.2. Developing economies >> 3) High youth dependency ratios i.e. Children (below 15 years) depend on economically active adults (15-64 years).
Economic category Overall developed economies Overall developing economies Youth proportion of population 20% 40%

1. Population growth trends> 1.2. Developing economies >> 3) High youth dependency ratios

1. Population growth trends> 1.2. Developing economies >> 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, say replacement level of fertility, the total number of young couples are much higher which results in a longer time required for the population growth to levelling off.

1. Population growth trends> 1.2. Developing economies >> 4) Population momentum

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2. Approaches to population analysis> 2.1. Malthusian approach >> Based on Thomas Malthus (1798) Essay on Population where he argued 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 Western economies as food production was able not only to keep up but also exceed the growth of population due to technological innovations. [Relevance for developing economies] Some argue that his prediction did hold some credibility in the case of many developing economies where food production was not able to keep up with increases in population and this also resulted in holding back economic growth. 11

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 beliefs alongside economic compulsions (agricultural societies tend to have large families) High death rates: because of low standards of living. As a result the two normally balance each other and the population is largely stable.

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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: 2. Second stage: rapid population growth As the process of development begins there are improvements in the std. of living and the death rate falls. As population remains largely agrarian the fertility rate remains high. Fertility rate is approx. 2.5% per annum.

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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: 3. Third stage: birth and fertility rates converge As process of industrialisation, urbanisation and education progress people revise their attitudes regarding family size. Many feel inclined to have small families. o Womens education and employment also play a crucial role in determining smaller family size.

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2. Approaches to population analysis> 2.2. Theory of Demographic 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/capita ii. Fragmentation of land holdings; low productivity > 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. Relationship between population and economic development> 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 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 than food has to be imported leading to BoP problems

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3. Relationship between population and economic development> 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. 3. Looking at consumption levels; people in developed economies consume approx. 16 times more than those in developing economies. 4. In some countries e.g. Canada, Latin America, etc. population growth can actually help economic growth through fuller utilisation of available resources and creation of larger markets.
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3. Relationship between population and economic development> 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 economic problems. 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 economic development and therefore it is best to undertake some efforts of population control.
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4. Population policies for developing economies> Applied only to those developing economies which have population pressures. Comprises broadly of three kinds of measures: 1. Economic measures 2. Social measures 3. 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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4. Population policies > 4.2. Social measures >> 1. Education

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4. Population policies > 4.2. Social measures >> 2. Improving the condition of women

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4. Population policies > 4.2. Social measures >> 3. Raising the minimum age of marriage of women

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4. Population policies > 4.3. Family Planning Programme >> 1. Public information programme 2. Incentives and disincentives 3. Coercion

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

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