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Tessy Varkey Tirthankar Sarkar Chaurasia
D D● E V E L L O O P P E E D D E E C C O O N N O O M M E E S S R S I E A M e m X p n N v a Population Growth in Economic Development s p O c D e j G e O r o u E d e G a r r t N a E g c O o s N e a t U f e O c i S 2 d U 1 c E o . G S % e x n p 5 r E l h % o m p e a o w p h e r u f n p t l e r a s e h o n t t H m r o y i i m e o o y f e a n l o e n r .
Historical changes in World Population 10002050 YEAR 1000 1750 1800 1850 1900 1930 1960 1980 1995 2025 2050 TOTAL DEVELOPED DEVELOPING 28 73 91 117 161 202 301 445 569 845 937 6 (21) 16(22) 22(24) 33(28) 57(35) 79(39) 107(36) 133(30) 153(27) 183(22) 188(20) 22(79) 57(78) 69(76) 84(72) 104(65) 123(61) 194(64) 312(70) 416(73) 662(78) 749(80) .
94 0.10 1.64 0.11 0.93 1.44 0.76 1.75 .09 0.53 2.Historical changes in Growth rates in World Population (1700-2050) YEAR 1000-1750 1750-1800 1800-1850 1850-1900 1900-1930 1930-1960 1960-1980 1980-1995 1995-2025 2025-2050 TOTAL DEVELOPED DEVELOPING 0.63 0.38 0.64 0.13 0.50 0.13 0.09 1.60 0.43 0.93 1.64 1.16 0.81 1.02 1.42 0.26 1.13 0.34 1.39 0.56 1.
Current World Population Growth Rate .
Total population Birth rate BIRTHS AND DEATHS PER 1000 PER YEAR Death rate NATURAL INCREASE NATURAL RATE OF POPULATION GROWTH (NR)= BIRTH RATE (BR) – DEATH RATE (DR) Stage 1 Stage 2 Stage 3 Stage 4 . The theory is based on an interpretation of demographic history developed in 1929 by the American demographer Warren Thompson.Demographic Transition Model The demographic transition (DT) is a model used to represent the transition from high birth and death rates to low birth and death rates as a country develops from a pre-industrial to an industrialized economic system.
RELIGIOUS/SOCIAL CR RATE CHAN Y NO ENCOURAGEMENT. GOOD HEALTH. IN FAMILY EA GE DISEASE FAMINE.HIGH DENSITY -URBAN SLUMS 191 0 30 L O W L O W 50 70 STABL E OR SLOW INCRE ASE FAMILY PLANNING. LATER AGE OF MARRIAGE GOOD HEALTH CARE. KNOWHOW. . MANY DEATH RATE WATER SUPPLY CHILDREN DIE AND SANITATION. POOR MEDICAL RATE CHANGE IN MEDICAL CARE.Demographic Transition Model in Britain BIRTH RATE DEATH RATE POPULATION NATURAL INCREASE PHASE 3 PHASE 2 PHASE 4 PHASE 1 H BIR I TH G RA H TE F DE H A AT I L H G L RA H S TE VE NATUR R RY AL STABL A RA INCRE E OR P PI ASE SLOW MANY CHILDREN NEEDED FOR I D REASONS FOR REASO INCRE D FARMING. MANY CHILDREN DIE AT IN FOR CHANGE IN BIRTH ASE NS L EARLY AGE. FEWER CHILDREN 175 0 H I G H 70 90 181 0 30 50 70 90 F A L L I FAL N LS G MO RE SLO INCR WL EAS Y E SLO WS REDUCTI DOW ON IN N AGE OF MARRIA GE. RELIABLE FOOD SUPPLY. WORSENED HYGIENIC CONDITIONS. PLANNING SE BIRTH REASONS FOR NUTRITION.
World Age Structure Database .
1920 TO 1960 • Precipitous drop in death rate. POPULATION OF INDIA .Demographic Transition Model .India BIRTH AND DEATH RATE IN INDIA 12 10 8 6 4 2 0 • 12 10 8 6 4 2 0 12 POPULATION GROWTH RATE PHASE I BIRTH RATE RATE PER 1000 POPULATION PHASE 2/3 10 8 6 4 2 0 DEATH RATE Rural (29) National (28) Urban (22) Rural (10) National (9) Urban (7) PHASE 1.decrease in death rate by more than 20 per 1000 within 40 years larger than the decrease for the entire period (over 150 yrs) of British Demographic transition •Phase 2 – not observable •Fairly Representative of Developing Economies (except China) The probability of low-income economies to escape from the strong pressure of exogenously given population growth appears to be relatively slim within the next couple of decades.
DEVELOPED ECONOMY DEVELOPING ECONOMY .
Subsistence wage rate .THE MALTHUSIAN MODEL (N ´/N) Population Growth Rate G O G ’ W´ H Wage Rate (W ) Thomas Robert Malthus (1766-1834) British scholar Influential in Political Economy and Demography N – Population N’ – Absolute increase in Population W – Wage Rate .
POPULATION GROWTH AND CARRYING CAPACITY Starvation Disease Pollution Resource depletion c h ras Population in billion 8 7 6 5 4 198 0 200 0 ov ot ers h o Carrying capacity 202 0 204 0 206 0 208 0 .
# World population curtailed due to increase in death rate due to food shortage and environmental pollution .THEORIES OF RESOURCE CONSTRAINT ON ECONOMIC GROWTH Malthus To The Club of ROME Reappearance of Malthusian concept in Dennis L. Meadows’ --The Limits to growth. • Concerning Population-Food crisis. • Crisis of Natural resources. • Environmental degradation due to over exploitation & waste of resources.
(Due to world scale crop failure) 1974 – Oil Crisis by OPEC Embargo Result > High increase in food and energy price. • .THEORIES OF RESOURCE CONSTRAINT ON ECONOMIC GROWTH Malthusian proved Crisis 1973 – World Food Crisis. • It is evident that simple extrapolation from past trends will produce future prediction. but the will deviate widely from actual outcome. Extract Public Awareness to the need and conservation of the environment and its natural resources.
By Building The Genuine Theory Of Economic Development. This Set Out A Series Of Theories Which Would Later Become Theoretical Underpinnings Of Both Marx's Das Kapital And Marshallian Economics. His Main Economic Ideas Are Contained In Principles Of Political Economy And Taxation (1817). this was the time when the population was highest. • . • His theory came into picture . towards the complication of industrial revolution in England.DAVID RICARDO • (1772 – 1823) He Clarified The Mechanism On How The Economic Growth Is Constrained By Natural Resources .
RICARDO MODEL Identified The Capital Accumulation In Modern Industries. • Concept CAPITA L WAGE FUND (sum of payments to labour in advance of commodities + payments for the tools) = = wage rate population • Demand of labour supply of labour • he termed this phenonemon as “short run” – it is the period where population is constant. Emerged From Industrial Revolution Where Economic Growth Was Main Factor. • .
• This result in in-migration and the supply of labour increases.CONCEPT PRODUCT MARKET FOR INDUSTRY C1 = LABOUR CAPITAL – sum of payments to labour in advance of sale of commodities produced by the labour applied. labour demand increases and wage rate increases. C2 = payments for the purchase of tools and structures complimentary to the use of labour. The increase in population results in the adjustment of the wage rate to the previous level. •Assuming in the short run supply of labour remains • constant. • PROFIT PROFIT . As a result of increased C1 C 1 C C2 2 WAGE RATE PRODUCT PRODUCT capital.
CONCEPT PRODUCT MARKET FOR AGRICULTURE A1 A2 A3 A4 - most fertile land 2nd grade land. 3rd grade land. A2. the less fertile land i.A4 have to be gradually put to use.A3. A1 A3 A4 A2 A2 A4 A3 At first the food requirement of the settlement is fully served • by A1. 4th grade land. • This increases the cost of cultivation and increases the food price.e. . population increases As the • corresponding to the increase in the industrial labour force .subsistence wage • Thus the rate increases .
As the labour demand increases with the accumulation of capital. wage rate tends to reach a • higher level. EMPLOYMENT • If the subsistence wage rate PRODUCT MARKET FOR INDUSTRY increases as a result of limited natural resources to W’ then the profit starts decreasing.in inmigration This results • .THE RICARDO MODEL OF ECONOMIC DEVELOPMEN • SS– Short run labour supply LS – subsistence wage (W) D W’ SS • • DD– labour demand curve W– present wage rate WS– modified wage rate • G E • WAGE RATE WS W profit A B D0 (K0) D1 (K1) C LS D2 (K2) Total wages given 0 and labour supply increases to L1 & L2 . (L) • As a result wage rate adjusts (L0) (L1) (L2) itself and reaches the subsistence level.
THE RICARDO MODEL OF ECONOMIC DEVELOPMEN (P) HS CORN PRICE D1 D0 P2 P0 D2 HS is the supply schedule of corn determined by its marginal cost. •D0D0 represents the corn demand curve corresponding to the labour force L0 (in the previous graph). • C WS D0 (N0 ) D1 (N1 ) Q1 D2 (N2 ) 0 Q2 (Q) CORN OUTPUT/ CONSUMPTION PRODUCT MARKET FOR AGRICULTURE As the population increases to L2 and demand for corn increases to D2D2. D1D1 to that of L1 and so on. It increases the marginal cost of production and in turn increases the corn •This effects in the price. • . the second grade of land needs to be utilised. increase of subistence wage rate in the industrial sector.
SUMMARY The theory predicts that .. food prices increases resulting from population growth. under given natural resources endowments in terms of fixed land areas by grade. • This will drive the economy into “stationary state” where the rate of profit is so low that it provides no incentive for additional investment and labourers’ real wage rates do not diverge from a subsistence minimum. • Landlords alone receive enlarged rent revenue. • This mechanism of fixed land resource endowments that constrain economic growth in early stage of industrialization is called as “Ricardian trap” • .
Ricardo proposed liberalization of grain imports. • removes tariff barriers. In modern context .CONSEQUENCES For rescuing the British economy from the Ricardian trap .for low income economies: • Not possible to solve this problem by liberalization of food imports alone. • repeal of corn laws . . • food prices become low. • cheap import of food grains. Ricardo model sets out clearly the problem of natural resources constraints that low income economies will have to face when they undergo industrial development when agriculture is stagnant. • The option is to advance agricultural technology concurrently with industrialization..
is a model in Development economics that explains the growth of a developing economy in terms of a labour transition between two sectors. or the Lewis model. a new 2-sector model . Arthur Lewis (1954) –built upon the thrust of the Ricardo model. • . • It is a theory of development in which surplus labor from traditional agricultural sector is transferred to the modern industrial sector whose growth over time absorbs the surplus labor. a traditional agricultural sector and a modern industrial sector. • The Dual Sector model.THE DUAL ECONOMY MODEL W. promotes industrialization.
CONCEPT The traditional agricultural sector -. • The end result of this transition process is that the agricultural wage equals the manufacturing wage. the agricultural marginal product of labour equals the manufacturing marginal product of labour. • Due to the wage differential between the 2 sectors. • The agricultural sector has a quantity of farm workers that are not contributing to agricultural output . an abundance of labour. This group of farmers is termed surplus labour since they could be moved to another sector with no effect on agricultural output. workers will tend to transition from the agricultural to the manufacturing sector over time to reap the reward of higher wages. and a demand for more workers initially. the modern manufacturing sector is defined by higher wage rates than the agricultural sector. • .characterized by low wages. and low productivity through a labour intensive production process.. higher marginal productivity. • In contrast. and no further manufacturing sector enlargement takes place as workers no longer have a monetary incentive to transition.
•Before reaching point T the industrial profit becomes so low that the capital accumulation stops.Shortage point •At S. •T – Turning point •From T.Agricultural labou S -. the whole surplus labour from agriculture has been migrated to industry.Industrial labour O2-O1 -. the agricultural wage rate starts increasing from W’. •The agricultural output decreases and the subsistence wage level of industrial labour starts increasing. • D0 O1 S T O2 W’ W’ R AGRICULTURAL OUTPUT .INDUSTRIAL WAGE RATE SL’ D1 G H SL O1-O2 -.
earning of foreign exchange through export of agriculture product . • . • Industrialization & modern economic growth can hardly be successful without healthy development in agriculture sector. • The successful industrialization cannot be expected without the efforts of increasing food production to avoid the danger of being caught in the Ricardian trap. • Contribution of agriculture to industrialization is not only supply of labour or food product but also providing platform for industrial commodities.CONCLUSION Contribution of agriculture has significant role in developing industrialization..
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