Population Growth and
Economic Development
Causes, Consequences, and
Controversies
Outline
Trends in population growth
Definitions and concepts
The hidden momentum of population growth
The demographic transition
The causes of high fertility in developing
countries
Effects of Population growth on economic
development: Conflicting views
Policy options: Case study of Somalia
Case study
Population, famines, and entitlement
theory: Application to the case of Somalia.
Note: Three copies of the case study are
placed on reserve (ECON 320) in the
Main library
The Basic Questions
Is there a relationship between population
growth and QOL?
Six major issues:
Will developing countries be able to improve levels
of living given their anticipated population growth?
How will developing countries deal with the vast
increases in their labor forces?
How will higher population growth rates affect
poverty?
The Basic Issue
Population growth and QOL
Will developing countries be able to extend the
coverage and improve the quality of health care
and education in the face of rapid population
growth?
Is there a relationship between poverty and
family size?
Is affluence in developed countries more
harmful to global environment and to the poor
than the absolute increase in their numbers?
Population: Historical trends
Population Growth, 1750-2200:
World Population Growth Rates and
Doubling Times
Period
Growth rate
(%)
Doubling
time (years)
1650-1770
0.3
240
1850-1900
0.6
115
1930-1950
1.0
72
1960-1980
2.3
31
Present
1.3
54
Population Growth Rates in Developed and Countries,
1950-2000
Geographical distribution of population
Population: Historical and geographical
trends
Population: Historical and geographical
trends
Concepts and definitions
Rate of population increase is measured as
the percentage yearly net relative change in
population due to natural increase and net
international migration.
Natural increase is the difference in the fertility
rate and mortality rate.
Total fertility rate (TFR) is the average number
of children a woman would have assuming
that the current age-specific birth rates remain
constant throughout her childbearing years.
The child bearing years range between 15-49
years of age.
Concepts and definitions
Dependency burden:
Youth dependency ratio
Old age dependency ratio
The youth dependency gives rise to the
hidden momentum of population growth.
It is a dynamic latent process of population
growth where population continues to grow
despite a fall in birth rate due to larger number
of child bearing couples.
Population Pyramids: Less Developed and More
Developed Countries; 1998
Hidden Momentum of Population Growth
Hidden Momentum of Population Growth
Effects of Population Growth on
Economic Growth
1B
2B
3B
4B
1804
1927
1960
1974
123 YEARS LATER
33 YEARS LATER
14 YEARS LATER
5B
6B
7B
8B
9B
1987
1999
2012
2026
2043
13
12
13
14
17
The Demographic Transition
The Demographic Transition
Causes of High Fertility in Developing
Countries
The Malthusian population trap
Population grows at a geometric rate and food
supplies expand at an arithmetic rate.
Percapita incomes would fall to the subsistence level
Criticisms
Assumes decreasing returns to scale
Assumes relation between population growth rate and
levels of per capita incomes
Focus on the wrong variable- percapita income
Malthusian population model
Population tends to grow at a geometric rate,
doubling every 30 to 40 years
Food supplies only expand at an arithmetic rate
due to diminishing returns to land (fixed factor)
Malthusian population trap: countries would
be trapped in low per-capita incomes (per
capita food), and population would stabilize at a
subsistence level
1. preventive checks 2. positive checks
Causes of High Fertility: Malthusian
Population Trap
Malthusian Population Trap: Criticism
Causes of High Fertility in Developing
Countries
The Microeconomic Household Theory of Fertility
Individual or family decision making is the
principal determinant of family size
The interplay between microeconomic
determinants of family fertility are understood
using theory of consumer choice
Fertility decisions (family size) are taken at
the microeconomic level by households. It
is a rational economic decision of demand
for children.
Microeconomic Theory of Fertility
Why are there so many children in poor households?
children are an economic investment rather than a
consumption good
the expected return of the investment is given by
child labor and financial support for parents in old
age
In developing countries, parents have children up to
the point at which marginal economic benefit =
marginal private cost
Microeconomic Theory of Fertility
Empirical evidence
observations for population growth
Demand for Children Equation
Cd f (Y , Pc, Px, tx ), x 1,..., n
Where
Cd is the demand for surviving children
Y is the level of household income
Pc is the net price of children
Px is price of all other goods
tx is the tastes for goods relative to children
Demand for Children Equation
Cd f (Y , Pc, Px, tx ), x 1,..., n
Under neoclassical conditions, we would expect:
Cd
0
Y
Cd
0
Pc
Cd
0
Px
Cd
0
tx
Microeconomic Theory of Fertility: An Illustration
Views on population and economic
development
Pessimist view
Optimist view
Neutralist view
Please complement the slides with the lecture notes.
Effects of Population Growth on
Economic Growth
Population growth restricts economic
growth
The pessimistic Theory
Population growth promotes economic
growth
The optimistic theory
Population growth is independent of
economic growth
The neutralist theory
Effects of Population Growth on
Economic Growth: Pessimists
Negative consequences of population
growth on:
Economic growth
Poverty and Inequality
Education
Health
Food
Environment
International migration
Effects of Population Growth on
Economic Growth: Pessimists
Negative consequences of population
growth on:
Extremist argument
Population-poverty cycle theory
Effects of Population Growth on
Economic Growth: Optimists
Population is not the problem but the following
are:
Underdevelopment
Resource depletion and environmental degradation
Population distribution
Subordination of women
Extreme view
International dependence theory
Revisionist view point
Effects of Population Growth on
Economic Growth: Neutralists
No statistical relationship between
population and economic growth.
Developing countries can take advantage
of the demographic dividend.
CONCLUSION: CONSENSUS OPINION
ON POPULATION GROWTH
Effects of Population Growth on
Economic Growth: Consensus
CONCLUSION: CONSENSUS OPINION
ON POPULATION GROWTH