File Name: population growth and economic development .zip
- Finance & Development, March 1969
- Population, poverty and economic development
- Finance & Development, March 1969
Finance & Development, March 1969
Population growth plays a conflicting role in the development process of a country. It helps economic development and it retards economic development. To the Greek philosophers, about 2, years ago, population growth was undesirable as it adversely affects economic development.
Plato B. Aristole B. Sir William Petty presented an optimistic outlook on population growth. Adam Smith also regarded the growth of population as the basis of wealth. But the classical economists, Especially T. Malithus, sounded an alarm bell of rising population growth in a country. The relationship between population growth and economic development may be summarised in the words of Robert McNamara—the past president of the World Bank.
It is controversial. It is subtle. Above all, it is immeasurably complex. On the some vein, the then Prime Minister Mr. Thus, there is a conflicting role between population growth and economic development.
It can act both as a stimulus and as an impediment to growth and development. Such conflicting roles suggest that the relationship between population and economic development is intricate, complex and interesting. First, an increasing population means an increase in the number of working population who can function as active participants in the process of economic growth and development.
It is to be noted that labour, assisted by necessary tools and implements, was always and still is the greatest productive asset of nations. A growing population leads to an increase in total output. The sheer arithmetical increase in population creates work as well as incentives for production that impacts upon output and productivity quite favourably. Indeed, this argument is empirically important in addition to theoretical reasoning. Secondly, a growing population means a growing market for most goods and services and we know that division of labour is limited by the extent of the market.
A potentially expanding market may stimulate entrepreneurs to invest more and more in capital goods and machinery. Business activity will be spurred as a consequence. And more income and employment will be created in the process. Moreover, it will provide an outlet for the products of efficient, large scale, mass- production industries. The net effect may be favourable to the country.
Of course the size of the domestic market of country does not only depend on the number, but also on the per capita income level. But given the same low level of income per head, a country India offers a more favourable environment setting up heavy capital goods industries which depends so much on the economies of scale their success. In contrast, a thickly populated country with a small population base such as Sri Lanka seems to be especially handicapped by the all size of its domestic market.
Population growth has been a favourable factor in stimulating growth in many a country in; last two centuries, when vast areas remained largely unsettled.
Even in the USA, in the s, was apprehended that a slowing down of the rate population growth would lead to long run secular stagnation. Thirdly, an arithmetic increase in population permits in reaping economies of scale in production, greater division of labour, extension of the market, etc. Per capita measures of income should not be used to imply that the denominator, people, contributes nothing to the numerator, total income. Nor is population growth in itself the main cause of natural resource problems—air pollution, soil degradation, even food availability.
But Malthusians and neo-Malthusians think otherwise. First, they argue that population growth negatively affects economic development. Their argument is based on the law of diminishing returns in agriculture. Population growth acts as a barrier to economic development since the growth of population grows never in commensurate with the growth of food supply.
Actually speaking, as the rate of growth of population exceeds the rate of production, economic development is hampered. A growing population, within a limited geographical area, usually puts heavy pressure on the existing factor endowments, especially natural resources of the country. Moreover, if the society has a limited stock of capital, labour may have to be substituted for capital, in which case the production function will exhibit the law of diminishing returns.
Diminishing returns may become a serious problem if population growth is rapid. However, empirical evidence suggests that technological change—or the so-called green revolution in agriculture in different LDCs—has greatly offset the effects of diminishing returns in agriculture and the spectre of food problem and its aftermath huger, famine, etc. So, one must not view that population growth badly affects economic development.
Secondly, based on the Indian experience, Ansle Coale and E. Hoover drew attention to the likely adverse effects of population growth on savings and capital formation through the following effects: the age-dependency effect, the capital- swallowing effect, and the investment diversion effect. It is said that a rapid population growth causes an increase in dependency ratio—a high ratio of non-working population to working wage people or active population. When the number of dependents or the ratio of consumers non- producers to producers increase, there occurs a diversion of income from savings to consumption and a fall in per capita income.
But anti-Mathusians talk in a different vein. Further, additional mouths in the low income families tend to encourage people to work more. In this way, children themselves contribute to household and saving. Anyway, the impact. The capital-shallowing effect states that a rapid population growth lowers the ratio of capital to labour or workforce thus works with less capital and consequently the poor rate of savings.
This then reduces productivity of labour. As children remain engaged in productive works, the family may experience an increase in saving. Under the circumstance, the capital-shallowing effect may remain inoperative. High economic growth is accompanied with overall high savings ratio in many developing countries. This logic assumes that the expenditures on human capital are unproductive. Indeed, there are high returns to investment in human capital. Thirdly, Mathusians are convinced that population growth badly affects food supplies.
To them, the chronic food problem experienced by many poor developing economies is often attributed to rapid population. But the evidence tells a different story. Because of the introduction of green revolution technology in agriculture, yields have increased to such an extent that many countries, including India, have now been exporting food-grains. Unfortunately, the present global world is highly unequal.
We see an abnormally high level of malnourished children; starvation and famines occasionally visit in many countries. However, this must not be attributed to a mismatch between a high population growth and food supply. This can be referred to as the unequal distribution of purchasing power among different groups of population.
Hunger and famine, according to A. Fourthly, the question of unemployment and underemployment has assumed serious proportion, particularly in LDCs, because of rapid population growth. In fact, it is the technology that determines the absorption of unemployed labour force. The experiences of Korea and Taiwan tell that economic development in these countries proceeded successfully despite high population growth.
In recent years, as agriculture is becoming more and more unprofitable, the issue of engaging surplus labour has become a concern to the Government of India. This development, consequent upon Mathusian pressure, has been forcing many farm people to migrate to towns and urban areas in search of employment. However, this argument is a faulty one. Economic development is associated with declining importance of agriculture. Thus, the migration of the productive farm workers in other sectors needs to be attributed to the policy failure and not to the population pressure.
Finally, neo-Malthusians argue that excessive population growth and massive poverty in LDCs have greatly damaged the ecological balance by deforestation and land degradation. Consequently, these countries suffer badly from a variety of environmental hazards. Such canard is made by developed countries who are to be condemned outright for destroying ecological balance.
The current ecological crisis is caused by human economic activity or anthropogenic. The whole world is burning fossil fuels to drive the growth economy. Carbon dioxide emission is at its highest level. All these may be linked to a developed rich economy addicted to growth. The greatest and real obstacle to development is underdevelopment. Potentialities for development are adequate. By designing their development programmes, LDCs can raise their levels of income and living standards. Further, they argue that there is no population bomb in these countries.
It is not to be accepted that a slowing down of population increase might contribute substantially to our development prospects. So what is sauce for a goose may not be the sauce for a gander!
The moot point is that population growth may be either favourable or unfavourable to economic development, depending on where, when, and how it takes place. Today, an international consensus has been reached. A country may strike a higher growth and development if population increases slowly. No one should exaggerate either the beneficial or the unfavourable effects of population growth on economic development.
However, it is to be kept in mind three important issues. First, all problems of levels of living, inequality and poverty are not to be necessarily linked with high population growth. Secondly, population growth must involve the quality of life, and not the quantity perse.
Thirdly, but truly, rapid population growth makes prospect for development rather remote.
Population, poverty and economic development
Not a MyNAP member yet? Register for a free account to start saving and receiving special member only perks. Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. References Ahlburg, D. Allan, W. London: Oliver and Boyd. Arthur, W.
Finance & Development, March 1969
Economists, demographers and other social scientists have long debated the relationship between demographic change and economic outcomes. In recent years, general agreement has emerged to the effect that improving economic conditions for individuals generally lead to lower birth rates. But, there is much less agreement about the proposition that lower birth rates contribute to economic development and help individuals and families to escape from poverty. The paper examines recent evidence on this aspect of the debate, concludes that the burden of evidence now increasingly supports a positive conclusion, examines recent trends in demographic change and economic development and argues that the countries representing the last development frontier, those of Sub-Saharan Africa, would be well advised to incorporate policies and programmes to reduce high fertility in their economic development strategies. From the time of Malthus onwards, economists, demographers and other social scientists have been debating whether and how high fertility and rapid population growth affect economic outcomes and vice versa. There are at least four basic forms of the debate. Does a large number of children diminish a family's present well being and future prospects?
It seems that you're in Germany. We have a dedicated site for Germany. In this book, a model of long-term interrelationships between income distribution, population growth and economic development is developed and estimated from data for 54 countries. The results indicate that a reduction of income inequality leads to lower fertility and mortality, to improvedbasic needs satisfaction, and to lower labour force participation of young and old males and of females in Asia and Africa. The effect of income distribution on saving and consumption is found to be negligible.
Today one billion persons are being added every 15 years, and the world population is growing at a rate that is 30 times as high as the average rate of growth between the first century A. In less developed countries that rate is 40 times as high. Why are these rates so high? What are their economic implications? What are the prospects of a deceleration?
Population growth plays a conflicting role in the development process of a country. It helps economic development and it retards economic development. To the Greek philosophers, about 2, years ago, population growth was undesirable as it adversely affects economic development. Plato B.
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