The Effect Of Population Growth On Economic Growth
Population growth and economic development have been written about in many empirical studies and then there are three distinct results that have come out regarding their inter relation (Hodgson, 1988). While few of the studies suggest that population growth acts a deterrent for economic growth, there are others that suggest just the opposite. Another set of studies reveal no connection between the two factors whatsoever. Therefore, it is quite difficult to come to a conclusion regarding the impact of population growth on economic growth.
The ‘Malthusian’ view regarding this subject suggests that increase in population results in poverty and a consequent deterioration in the economic condition of a nation. As such, over populated countries suggest ways and methods of family planning to keep the fertility rate in check. The ‘Revisionism’ theory is completely contradictory as population growth is perceived as an increase in human capital which subsequently should have positive effects on the economic condition. Therefore, such studies disregard ways of controlling the fertility rate in an attempt to boost the economy.
Population and economic growth are related only in the long run and possess minimal tendency in the short run horizon (Simon, 1989). The effects of population growth can be felt in economic growth only over a longer duration of time wherein productivity changes and contribution of new ideas are the facilitating factors.
Recent studies that use co-integration and error-correctional modeling technique to investigate the relation between population growth and economic growth suggest that an increase in population facilitates growth in population. Although most developing and developed countries follow this model, there are many others wherein economic growth is hampered by an increase in population. This sheds light towards the ‘transition’ theory that there is no proper relation between these two factors (Wheeler, 1984).
In the 21st century, human capital is considered to be the biggest weapon for any nation. As such, population rise should help the progress in economy provided that a talented and dynamic workforce is built out of the human capital generated. At the same time, there shall be too many people for the same resources which shall create a sense of inner strife that would affect the nation’s economic condition. China is one of the best examples wherein an increase in population has helped the growth in economy as the addition in human capital has been streamlined to generate value for the nation. Developing countries like India continue to fight the battle against overpopulation although their economic condition is quite stable as well.
Therefore, the current scenario clearly depicts that an increase in population does not affect economic growth adversely. However, it does affect human well being. The underlying reason behind this impact is that there is a shortage of resources and as such people have to be content with less. For example, an increase in population leads to shortage in land for dwelling purposes. As such, people have to move in to high-rise buildings and skyscrapers and those families intending to live in private bungalows are not given that option despite being financially sound to buy one. Although such problems do affect the material well being of a person, the overall effect on the nation’s economy is quite bright.
References
Hodgson D. Orthodoxy and Revisionism in American Demography, Population and Development Review, 1988, 541-569.
Simon J.L. On Aggregate Empirical Studies Relating Population Variables to Economic Development. Population and Development Review, June 1989, 323-332.
Wheeler, D. Female Education, Family Planning, Income, and Population: A Long-Run Econometric Simulation Model, in The Effects of Family Planning Programs on Fertility in the Developing World, ed. N. Birdsall, Washington D.C: The World Bank, 1984.
