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“THE EFFECT OF POPULATION IN EMPLOYMENT AND ECONOMIC

GROWTH: A COMPARATIVE ANALYSIS BETWEEN BRUNEI DARUSSALAM
AND VIETNAM”

A Concept Paper

Presented by

CLAIRE LARZEN Z. TELLO

To

Prof. Ernesto F. Bulayog

As a partial requirement for
Econ109- Human Resource Economics

October 2013

Population is considered as an asset since it will imply the manpower capacity of the nation in terms of employment---high employment. Overpopulation is defined as having a very high population that consumes capital and natural resources rapidly causing insufficiency and depletion. the government initiated a series of economic and political reforms. but too much of something is bad enough. By 2000. This study would then analyze if the theories on population and overpopulation is applicable to Brunei Darussalam and Vietnam. the country still suffers from relatively high . Vietnam has an estimated 90. it had established diplomatic relations with most nations. The country was unified under a Communist government. Population is an indicator of how many citizens reside in a particular nation.3 million inhabitants as of 2012. more taxes. leading to economic growth.I. overpopulation comes in. Vietnam's economic growth has been among the highest in the world since 2000. In 1986. inflation. The IMF also states in a 2011 estimate that Brunei was one of two countries (the other being Libya) with their public debt at 0% of the national GDP. However. etcetera. Introduction Human Resource plays a very vital role in driving the economy. Its successful economic reforms resulted from its joining the World Trade Organization in 2007. but was politically isolated and impoverished. Title “THE EFFECT OF POPULATION IN EMPLOYMENT AND ECONOMIC GROWTH: A COMPARATIVE ANALYSIS BETWEEN BRUNEI DARUSSALAM AND VIETNAM” II. and in 2011 it had the highest Global Growth Generators Index among 11 major economies. Brunei is ranked fifth in the world by gross domestic product per capita at purchasing power parity. sovereignty will not be achieved because human resource manages capital and natural resources in the country. and is classified as a developed country. These two countries are chosen because they have significant difference in population. Population means stability. It is the world's 13th populous country. which began Vietnam's path towards integration into the world economy. and the eighth-most-populous Asian country. Without it. Forbes also ranks Brunei as the fifth richest nation out of 182 nations due to its extensive petroleum and natural gas fields. According to the International Monetary Fund (IMF). Brunei Darussalam has the second highest Human Development Index among the Southeast Asian nations after Singapore. per capita GDP. Hence.

despite the rapid growth of their populations. acceleration of technological progress. more rapidly growing populations have fewer natural resources per person. induced institutional change. which seemed inconsistent with the Coale-Hoover view. But Nobel Prize economist Kuznets (1956). as well as Boserup (1965. Hence. Review of Related Literature Larger. all showing that more rapid population growth led to lower per capita income. Of course they must be economically worse off. 1981) and Simon (1981) suggested many possible positive effects of population growth. Later studies developed more neoclassical versions of these ideas. To determine the factors that affect the general labor condition in Brunei Darussalam and Vietnam 2. cheaper communication and transportation. His study was replicated by many others. Their results indicate that developing countries were able to shift their labor force from low-productivity agriculture to the higher-productivity industry and service sectors. and greater needs for new social infrastructure. To present trends on the macroeconomic indicators that affect the general labor condition 3. To determine the effects of population in the two countries III. The two aforementioned countries need to be studied since it is significant to compare and contrast them so that results can be generated to see if their populations affect their general labor condition and economic growth. and poor gender equality.levels of income inequality. The overall objective of this study is to compare and analyze the effects of population to the general labor condition and economic growth in Brunei Darussalam and Vietnam with the specific objectives: 1. less physical capital per worker. and easier collective social investments. Kuznets examined per capita income growth and population growth rates across nations and found no correlation. including economies of scale. and to increase productivity within those sectors. flexible market responses to emerging shortages. Bloom and Freeman (1988) examines the relationship between population growth and economic growth in developing countries from 1965 to 1985. income growth is related to the time path of population growth and that population growth due to high birth and death rates is associated with slower income growth than population growth due to relatively low birth and death rates. These intuitions shaped the earlier studies of population and economic development such as the seminal Coale and Hoover model (1958). more dependents. disparities in healthcare provision. the timing and . They also found that at given rates of population growth.

worldbank.300 2009 394. and the interaction term between the young dependency ratio and whether or not the rate of population growth is less than 1. Using interaction variables in light of the severe degree of multi co-linearity among explanatory variables.100 2008 388.000 2007 381. Minh Quang Dao (2012) found that based on data from the World Bank and using a sample of forty-three developing economies.2 percent per year.400 2004 360.697 83.500 2006 374. the mortality rate.components of population growth are important elements in the process of economic development.122. IV. they find that per capita GDP growth linearly depends on population growth.400 86. Data Table 1.500 . and whether or not the rate of population growth is less than 1.000 2010 400. the old dependency ratio.2 percent per year.org Year Brunei Darussalam Vietnam 2003 353. they find that the growth rate of per capita GDP is linearly dependent upon population growth. the mortality rate. both the young and old dependency ratios.468.932.700 2005 367.017 85.815 82.649 80.393.2 percent per year. and the interactions between population growth and both the young and old dependency ratios. Population in Brunei Darussalam and Vietnam POPULATION Data from: data.797 81.440 84.569 86. between population growth and whether or not the rate of population growth is less than 1.313.221.025.437.

775.238 88.206 Participation Rate in Brunei Darussalam and Vietnam Labor Participation Rate (% of total population ages 15 and up) Data from: data.worldbank.213.org Year Brunei Darussalam Vietnam 2003 167.worldbank.375.512 87.864 48.564.840.org YEAR BRUNEI DARUSSALAM VIETNAM .496 2005 175.444 2010 194.268.500 Table 2.2011 406.581.394 Table 3.033 47.706 49.794 44.418.486.976 2004 171.865 2007 182.749 50.951 51.128 2009 190.537.068. Labor 2011 198.789 2008 186.618 45.097 52.000 2012 412.055 2006 179. Total Labor Force in Brunei Darussalam and Vietnam TOTAL LABOR FORCE Data from: data.534 46.

10% 81.70% 81.10% 56.00% 77.4 8.90% 55.10% 66.2 7.47 2.90% 77.3 2.20% 78.1 0.9 2012 1.com Brunei Year Darussalam Vietnam 2004 4.4 1.80% 66.tradingeconomics.40% 77.00% 77.10% 73.70% 55.02 2.53 2.0 18.80% 55.40% 78.00% Male 82.20% Female 73.8 7.90% 76.50% 77.40% 73.70% 55.10% 76.20% 67.9 2.26 2.90% 77.4 2010 3.00% 76.9 2.81 INFLATION.10% 81.2003 2004 2005 2006 2007 2008 2009 2010 2011 Male 78.20% 81.70% 73.90% 73.00% 81.20% 73.41 2 2009 3.1 2006 4.10% 73.1 1. Consumer Prices (annual %) Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Data from: data.10% 77.worldbank.org Brunei Darussalam Vietnam 0.10% Table 4.30% 67. Inflation.7 0.3 2013 1.2 2005 3.3 3.49 2.9 2011 2.8 1.40% 81.70% 77.1 Table 5.90% 81.5 9.80% 76.30% 66.71 2.70% 55.70% 77.30% 77.2 8.3 2008 3.00% 81.3 0.0 7.50% Female 56.9 2. Unemployment Rate in Brunei Darussalam and Vietnam UNEMPLOYMENT RATE Data from: www.1 1.2 0.0 8.20% Total 77.10% 55.00% 73.1 23.5 2007 4.10% 56.40% 66.30% 66.50% Total 67. Consumer Prices in Brunei Darussalam and Vietnam .60% 66.50% 73.

6 1.129.3 30.0 1.1 6.0 5.3 1.3 557.1 -22.0 7.7 30.3 1.4 0.108.3 731.1 8.8 PER CAPITA GDP (current10.8 US $) Data from: data.2 12.2 10.9 843.5 21.1 1.212.1 6.070.2 40.2 18.819.4 19. GDP Per Capita in Brunei Darussalam and Vietnam .0 41.8 8.3 1.224.2 27.8 Table 7.worldbank. GDP Deflator in Brunei Darussalam and Vietnam INFLATION.2 37.worldbank.1 32.9 491.3 11.7 22.9 19.094.9 8.org Brunei Darussalam Vietnam 6.126. GDP Deflator (annual %) Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Year 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Data from: data.408.org Brunei Darussalam Vietnam 18.880.8 25.6 642.7 15.244.Table 6.913. Inflation.595.613.541.

. Data Analysis and Interpretation Basing on Table 1. clothing. and shelter. The total land area of Brunei Darussalam is 5.org.238 while Vietnam’s population is 88. water supply. This means that in Vietnam. Brunei Darussalam’s population is 412. Brunei’s population does not even exceed 500. the Population Density of Brunei is 72 people per one square kilometer and the Population Density of Vietnam is 268 people per one square kilometer. we compute Population Density using this formula: Population Density= ____ Population______ Total Land Area Using the 2012 Data from worldbank. The population densities imply the average number of people who compete for the resources per square kilometer of land.210 square kilometers. With this statistic.V. To prove this conclusion. and electricity supply. it can be concluded that the main variable for comparing economic growth and general employment condition is indeed population. education.500. Population characteristics such as population density (the ratio between total population over total land area to get the per unit area of population) is therefore very much different for both countries. etcetera compared to that of Brunei. there are more people clumped and there are more people who compete for food. Substituting these values to the aforementioned formula.765 square kilometers while Vietnam has 331.775. job opportunities. the population of Brunei Darussalam and Vietnam is very different.000 while Vietnam’s population is almost 90 million.

quarrying. The reason for this is that Vietnam has been moving towards gender equality and empowerment of women. Brunei Darussalam Statistical Yearbook 2010) One of the major differences of employment conditions in Vietnam and Brunei Darussalam is that Vietnam’s bulk of labor participants are employed in the agricultural sector. With a high literacy rate of adults in Brunei. Brunei is still a more developed and stable country in terms of economics because we can interpret that the bulk of the population in Brunei Darussalam is concentrated in ages 15-64 from year 1981 to 2001. mining. timber processing. their female labor participation rate is lower than that of the latter is because they have a stricter and traditional culture on gender equality although their ambassador has already seen a need for change in alleviating the status of women in their country in 2006 as he signed the Tokyo Joint Ministerial Communiqué ‘Toward gender equality in East Asia’. most of the employee bulk is in the Industry Sector especially in production of oil and liquefied natural gas. write. This is probably one of the reasons why most members of the labor force in Brunei belong to categories requiring the above mentioned literacy skills such as legislators. etcetera. the literacy rate of people ages 15 an up is relatively higher in Brunei Darussalam than in Vietnam (See Appendix 2 LITERACY RATE of ADULTS (% of people ages 15 and above). However. sawmilling. in the case of Brunei and Vietnam. (See Appendix 1 Labor Force Participation Rates from Brunei Darussalam Statistical Yearbook 2010). Invalids. and Social Affairs (MOLISA) in 2008. etcetera. Many studies have proven that the higher the labor force. administration and related workers. In fact Vietnam has established a Gender Equality Department in the Ministry of Labor. it can be concluded that most members of the labor force are able to read. (See Appendix 4 EMPLOYMENT in THREE MAJOR SECTORS in the year 2006) While in Brunei Darussalam. technicians. professionals. manufacturing. The labor force is considered to be the quantity of manpower and tax payers in the country. and perform numerical calculations. (See Appendix 3 Number of Employees in the Private Sector by Major Occupation Group. even if Vietnam has a significantly stronger labor force and labor participation rate. Brunei Darussalam Statistical Yearbook 2010) It can be observed that in Table 3. the faster the economic growth.The increasing trend of population for both countries in the year 2003 to 2012 would also result to an increasing trend in total labor force. Also. clerical workers. . Labor force comprises percentage of the population that belongs to ages 15 and up. (See Appendix 5 Number of Employees in the Private Sector by Major Industry. construction. the trends of labor participation rates for females in Vietnam are relatively greater than the rates in Brunei. As for Brunei.

In the trends shown above. In this case. the trends show that although human resource is an asset to sovereignty. then the economy is in full employment. Phillips in 1958 who stated that there is a short-run trade-off between unemployment and inflation. Overpopulation causes many problems such as economic and environmental problems since it tends to deplete resources faster than the natural rate of consumption. Although it can be argued that Brunei Darussalam and Vietnam are very different nations in terms of land area and system of government (Brunei Darussalam . it shows that the trends of per capita GDP in Brunei Darussalam and Vietnam are very different. VI. Table 4 then shows that in the year 2004 to 2013. Brunei Darussalam as well has a relatively low unemployment rate but its inflation rate at current prices remains relatively low. According to Investopedia. Conclusion and Recommendation With the data and interpretation presented above. The per capita GDP of Brunei is very high compared to that of Vietnam.The Unemployment Rate trends for both countries as shown in Table 4 are really low. Brunei Darussalam is performing better than Vietnam. In macroeconomic analysis. A rise in per capita GDP signals growth in the economy and tends to translate as an increase in productivity. very high populations cause an imbalance to the rate of resource regeneration. it can be concluded that unemployment and inflation has no relationship contrary to the Phillips Curve concept of Sir A. This means that the majority of the labor force is really participating in driving the economy. with higher per capita GDP being interpreted as having a higher standard of living. The per capita GDP is especially useful when comparing one country to another because it shows the relative performance of the countries.W. In Table 7. Since all natural and capital resources are scarce. when the unemployment rate is at 4% or less. it can then be concluded that in terms of economic development. The GDP deflator of Brunei might have rising and sudden fluctuations but there is no implication of its relationship to unemployment. Per capita GDP is sometimes used as an indicator of standard of living as well. Vietnam has a relatively low unemployment rate but has a high inflation rate both at current prices and at GDP deflator. a stable population like that of Brunei Darussalam is more beneficial for employment conditions and economic growth because of the theory of scarcity. Brunei Darussalam and Vietnam are operating in full employment meaning all resources are fully utilized. With this. per capita GDP is a measure of the total output of a country that takes the gross domestic product (GDP) and divides it by the number of people in the country. it can then be concluded that population has greatly affected employment and economic growth for both countries.

Vietnam on the other hand has also risen and is now moving towards development. This study has proven that Brunei Darussalam is already a developed country that is improving more each year. The Vietnamese government however should make reforms. the higher the labor force. Appendices Appendix 1 . programs. the time series data of indicators still show the effect of population in employment and economic growth. population has a good effect in the sense that the higher the population. For employment. For those who would want to improve this study. population has a good effect if population growth is stabilized with respect to land area and capital and natural resources. For economic growth. projects. VII.being constitutional sultanate and Vietnam being communist). It would even be better if an econometric model will be used to prove that population has an effect on employment and economic growth. They should also strive to increase their per capita GDP by increasing foreign direct investments and net exports. you are free to use the data I have presented. and laws to improve the mitigation of inflation in the country.

8 93.worldbank.1 93.Appendix 2 LITERACY RATE of ADULTS (% of people ages 15 and above) Data from: data.2 .org Brunei Darussalam Vietnam YEAR Male Female Total Male Female Total 2010 96.6 95.3 91.2 95.

Appendix 3 .

80% 24.Appendix 4 EMPLOYMENT in THREE MAJOR SECTORS in the year 2006 Data from: data.org Sector AGRICULTURE (% employment) INDUSTRY (% employment) SERVICE (% employment) Appendix 5 Vietnam Male Female 49.00% 30.30% .60% 53.worldbank.40% 15.90% 26.

aneki.edu.org/Vietnam/gender_in_vietnam.html http://www.com/terms/p/per-capita-gdp.asp http://www.tradingeconomics.php?country_1=Brunei&country_2=Vietnam http://jetems.com/vietnam/unemployment-rate http://data.investopedia.au/Documents/EASS/HRI/gender-budgets/brunei.tradingeconomics.worldbank.REFERENCES: http://www.unwomen-eseasia.pdf http://www.scholarlinkresearch.unisa.com/comparison.org/ Brunei Darussalam Statistical Yearbook 2010 .org/indicator?display=graph http://laborsta.pdf http://www.ilo.com/brunei/unemployment-rate http://www.org/articles/Effect%20of%20Unemployment.