Economy of Pakistan Project

Topic

“Population Growth affects Economic Development in

Pakistan”

Submitted to:

Mam Fatima Saif

Group Members

Hammad Faheem 18L-0088

Usama Naseer 18L-0170
Ahsan Imran 18L-0076
Mohsin Tariq 18L-0081
Table of Contents

Introduction...............................................................................................................................................4

Background of Study.................................................................................................................................4

Population problem in Pakistan...........................................................................................................4

Population growth affects Economic Development.............................................................................5

Population growth does not affect Economic Development...............................................................5

Some figures of Pakistan’s Population.....................................................................................................6

Methodology..............................................................................................................................................6

Objectives of the Study..........................................................................................................................6

Research Questions................................................................................................................................7

Literature Review......................................................................................................................................7

Principle of population..........................................................................................................................9

The United Nations (1953)..................................................................................................................10

POPULATION GROWTH AND ECONOMIC DEVELOPMENT....................................................10

1st Argument: Population Growth is not a Problem.........................................................................11

2nd Argument: Capitalists’ Countries Conspiracy...........................................................................12

3rd Argument: Population Growth is Desirable...............................................................................12

POPULATION, ENVIRONMENT AND POVERTY..........................................................................15

CONCLUSIONS......................................................................................................................................16

Bibliography............................................................................................................................................18
Abstract

Pakistan is the 5th most populated country in the world. This colossal population and enormous population
growth rate, especially over the years has consumed or continually consumes most of the country’s
financial and natural resources and hence leaves little for development. The population growth is a
continuous challenge posed to the Pakistan economy as it increases expenditures on health, education
infrastructure and basic provisions of life. It also depletes natural resources, food, water etc.
In our study where we will be focusing on Pakistan, this situation has been worsened as the problem is
never given due attention and gravity of the problem with its multi-dimensional facets has become very
complicated. Despite limited possible government efforts, the fertility rate has not decreased to the
stabilized population growth rate at desirable level. The huge population size deprived of health care,
education and employment facilities is a huge load over the poorly managed economy growing at a slow
pace. The empirical analysis done in this study tends supports our topic, that population growth has an
impact on economic development.
Introduction

There are generally two point of views about the impact of population growth on economic development.
One view opposes population growth and simply accepts that population growth is indeed a real problem
while the other view is in favor of population growth. The first view of population growth and economic
development started from the Malthusian population trap which is a well-known theory of the relationship
between population growth and economic development. According to the Malthusian Population Trap
theory, population growth is slowly decaying economic development by hampering the economic growth
of a country and it is considered to be a real problem. The followers of the first view argue based on
population-poverty cycle theory. Rapid population growth gives way to negative economic consequences
and this should be a real concern for the developing countries like Pakistan, because population growth
completely destroys prospects of a better life for the already born by reducing savings at both the
household and national levels. The latter states that population growth is desirable and not a problem.
Rather it is considered to be one of the factors of production. According to this view population growth is
the real strength and power of a country. High population growth means high labour supply that leads to
division of labour and economic growth. Both the point of views present their arguments about
population growth and economic development in this research.

Background of Study

Population problem in Pakistan

Population problem lies at the heart of Pakistan’s social, economic and political problems. At the time of
independence, Pakistan (united Pakistan that included former East Pakistan now Bangladesh) was the
13th most populous country in the world with a population of 32.5 million but in 1996, it was seventh
with a population of 140 million. Today Pakistan is the 5th most populous country in the world with a
population of 162 million. In 2050 its rank would be 4th far exceeding the Bangladesh. United States and
Indonesia will retain their ranks. Thus, given the certain scenario, Pakistan’s population problem is
distressing its overall economic development and it’s time to do something about this.

Population growth affects Economic Development

Since its birth, Pakistan has made some significant economic development but not so prominent. The
intelligentsia always talk about slow pace of economic growth which is due to high population growth
rate especially during the 1960s, 1970s, 1980s, and 1990s.
As a lay man approach, one difference lies in the number of people i.e., 50 million and 167 million
people, with different population growth rates. Under the given circumstances, we tried to analyze the
point of controversy that Pakistan’s rapid population growth rate may be one of the main hurdles
restricting all government candid efforts for achieving the overall national development goals and
meeting socio-economic challenges. Even the fast-growing economies like China has adopted officially
one child policy and India has also concentrating on controlling the population for better future of the
people and national prosperity.
However, high population growth rate is not the only reason for lower economic performance. There
might be other reasons like destabilized political system, weak internal institutions, low productivity of
the people, a smaller number of education and health facilities, non-exploitation of the natural resources,
poor performance of agriculture and industrial sectors, low level of educational attainments, bad provision
of health facilities in the public sector, international power politics etc.

Population growth does not affect Economic Development

Population growth means that there will be high number of labour force and it will be output of a
particular production process. The population itself is not a problem but some others issues,
underdevelopment, world resource depletion, population distribution and subordination of women.
According to this view the under development is the real problem, which is a gift from the developed
world to developing world. If the correct policies are pursued and lead higher level of living, greater and
expand freedom, population will take care of itself. Population can only be an economic problem relative
to the supply of natural and material resources.

Some figures of Pakistan’s Population

Total Population 212.48 million

 Urban Population 35.10%
Rural Population 63%
Population Rate 1.95%
TFR 3.36
Birth Rate 27.034 per
thousand
Death Rate 6.835 per thousand

Methodology

In order to conduct our research, a qualitative approach has been selected. In this approach already
existing data that has been produced by other researchers, will be used. Research design consisted on
collecting data from secondary data sources. In this process, articles, journals and data have been selected
and used. Two scenarios will be dealt in this research, firstly, population growth affects economic
development Secondly, population growth does not affect economic development.

Objectives of the Study

 Analyze how the concept of economic development has evolved with respect to population
growth.
 Discuss present demographic patterns of our population in Pakistan, giving a comparative
analysis, regionally and globally.
 Investigate relationship between high population and economic development.

Research Questions
 How does population growth affect economic development?
 Are there other factors contributing towards poor economic development?
 Does Population growth have a negative impact on economic development?
  Is over population in Pakistan a sign of economic growth or economic deterioration?
 Is the government taking any initiatives to tackle this issue?

Literature Review

Article 1: Population Growth and Development Prospects of Pakistan by Fakhari A.

Siddiqui

Since the Pakistan came into being, it suffered from high population growth rate. In 1950, Pakistan was
the 13th largest country and moved to 7th largest country according to the Population size. It is estimated
that Pakistan will be the 3rd largest Population country by the year 2050.

In 1996, Pakistan lies 6th in population contribution in world Population growth after China and India.
One of the major problems is that large portion of Population in Pakistan is under 14 years and half of the
population is less than 20 years Another Problem which Pakistan is facing is the high fertility rates. There
is a huge difference between the birth rate and the death rate in Pakistan. The resources in Pakistan are
inadequate to meet the needs of the people which include health services, education and employment.
There is a high unemployment rate in Pakistan due to shortage of jobs. Labor force is continuously
growing. According to a study by Rashid Amjad, Pakistan needs to create 2.3 jobs every minute to
provide employment opportunities to the people of Pakistan. The education level of Females in Pakistan
is very low. We need to improve the status of women in our society to decrease the population growth.
20% of the Pakistan Population are females. If women are educated and skilled, they can help in
increasing the household income and will therefore increase the living standard of the people. In Pakistan,
Women are married in the age of 15-19 which is also the cause of increase Population growth. These
women should be educated and aware of the fact that marriage at the early age decreases the economic
development of the country. Pakistan should focus on Population control in order to provide basic
resources to the people. Huge Population is always a burden on the economy of developing countries.
Decrease in Population growth will cause increase in economic development and will bring economic
prosperity in Pakistan. (A.Siddiqui, 1998)
Article 2: Demographic Transition and Economic Growth in Pakistan by Shahzad
Hussain, Shahnawaz Malik and M. Khizar Hayat

Pakistan has a population of 165 million in 2006 and is the seventh largest populated country in the
world. Among many reasons, High fertility and declining mortality rates are the most important reasons
in Population growth in Pakistan. Current Population growth rate is around 2.7 % which is very high as
compared to international standards. Fertility rate was 6.5 % but it declined in 1990’s. At an average,
there are 4-5 children per women. According to UN prediction, Pakistan will be 3rd largest Populated
country by the year 2050.

However, Pakistan started its family planning program but failed to control the population growth rate. In
1990’s, there was a declining Population growth rate and is now under 2% as compared to 3 % in 1980’s.
It is predicted that there will be around 60 million people who will be in a working age group. It is seen
that after the year 2000, growth rate of labor is increasing. High Population growth rate is a burden on
economy of the developing country. Pakistan has failed to provide basic necessities such as education,
employment and health services to its people and the reason behind these problems is the high population
growth rate. Pakistan needs to control the growth rate by providing awareness to the people through its
family planning program. Family Planning program should be focused in rural areas of Pakistan which
contributes to 70% of the total Population. (Shahzad Hussain, 2009)

Article 3: Fertility in Pakistan, Past, Present and Future by Zeba A. Sathar

Population growth rate of Pakistan was 2.7% in 1960’s. Due to high population growth, Pakistan’s
Government decided to control the Population growth rate. In first twenty years of creation of Pakistan,
there was no change in fertility rates and it was 6 to 7 child per women and population growth rate
increased to 3%. However, in 1990’s, fertility rate declined to 4-5 child per women which was a good
achievement. In 2001, Population growth rate falls to 2.2%. In 1998 survey, Pakistan population was
130.5 million and is the 7th largest populated country in the world. The main reason for high Population
growth rate was high fertility. It was 6.7% in 1960’s and declined to 4.8% in 1990’s. The age at which
females were married was increased from 15-19 years to 20-22 years. In 1990’s, there was also high rate
of urbanization which caused decrease in fertility rates and decrease in Population growth. People started
to migrate from rural to urban areas for better living standards.

Pakistan has an official policy to control population growth since 1965 till present day. The model of its
family planning program is that the women themselves are expected to seek services of family planning
program. The program has not derived good results due to lack of political commitment. However, in
1990’s, Prime Minister Benazir Bhutto addressed the issue of Population growth as a national priority.
1250 family welfare centers were setup by the government and with the help of NGOs to control
Population growth. The basic aim was to educate and provide awareness to women in rural areas about
family planning. According to a survey, 40% of the married women don’t want to have more Childs.
Family planning services have improved in recent years and people now know how to control the fertility
rates. Lack of education and health has contributed to high fertility. 70% of the Pakistan population lives
in rural areas of Pakistan and there is high illiteracy in these areas. Due to lack of education, religious
customs and women status and power in society have decreased the motivation of women to control
fertility. Conservative people make use of fertility control when they are influenced by gender of the
child. People in Asian countries such as India, Pakistan and China have a preference of a male child as
compared to female one. This was one of the reasons in decrease in fertility rates and Population growth
rates in 1990’s in Pakistan. (Sathar, 2015)

Principle of population

The whole debate was started by Reverend [22] who provided two different propositions in a research
named as First Essay on Population, the first proposition stated that there would be a geometric growth
rate in population the main reason responsible for this would be the lack of conscious restraints exercised
by individuals on fertility and the second proposition states that there would be an arithmetic growth rate
with respect to availability of food which is largely due to the diminishing rate of return and limited
resources available as land. The outcomes from this situation would be food shortages leading to
starvation and deaths. The size of population in the long run would be under the influence of food
availability and morality. Increase in population would serve as a restrain in growth in per capita income
to lower level which is termed as Maltusian Trap, research was not largely supported by the findings of
the next centuries as couples were not engage in producing off spring without different types of restraint,
instead they were exercising conscious efforts in order to control fertility in accordance to their changing
needs and requirements. The issue of supply of food due to limited supply of land does not excessively
restrain as technological innovation enabled increased in food production in geographic locations in
which [22] focused in his studies. Food surpluses were also witnessed in some countries forcing
government to limit farm production.
Thus, the views given by with respect to link between growth in population and economic connection
were not complete and comprehensive and more profound analyses were needed in this context. The
urgency for these types of researches was result of many demographic events. For example, in the mid of
the 20th century it was revealed that the decrease in the mortality rate and increase in the fertility
sustainability were leading to high population growth in developing countries. A major concern that
surface in this context was that these rates would be not be sustainable in the long run. In the past the
fertility rate has shown a decline, and the outcomes of such declines and its effects on welfare, economic
prosperity and the environment and the pace of such events was not very much clear. Consequently,
Problem resurfaces and researches focused on examining population consequences have taken into
account different tasks, triggering the need for fresh reassessment initiative in this context

The United Nations (1953)

The first study that focused on examining the economic demographic interactions was highlighted in a
seminal study termed as the Determinants and Consequences of Population trends. This research provided
a comprehensive and balance view. This study focused on 21 economic linkages with demographics. The
study highlighted impact of population on these factors the findings revealed positive impact of some of
these factors which was due to the economies of scale whereas negative effect was due to diminishing
return, in addition some factors depicted a neutral outcome such as technological and social prosperity
concerns. The overall negative impact of related to undetermined size was largely visible in developing
countries and UN forecasted diverse nature of effect according to different conditions prevailing in a
country.

POPULATION GROWTH AND ECONOMIC DEVELOPMENT

For many years’ development economists and social scientists have debated the seriousness of the
consequences of rapid population growth. Those who are of the view that rapid population growth is not a
real problem have offered three arguments: (a) Population growth is not a problem but there are other
issues. (b) Population growth reduction is a conspiracy of the capitalists’ countries to keep developing
countries in their dependence (c) For many developing countries population growth is desirable.
1st Argument: Population Growth is not a Problem

Underdevelopment, and not population growth is the real problem. As long as majority of the people in
the developing countries remain poor, uneducated and physically weak large family will constitute the
only real source of social security. Population control programs are not expected to succeed when there is
no motivation for the poor families to limit the family size. Population can only be an economic problem
relative to the supply of natural and material resources. Developed countries with less than one-quarter of
the world population consume 80% of the world resources. The higher fertility of the developing
countries is the result of “over-consumption” of the world scarce resources by the rich countries. The
average North American or European consumer consumes almost 16 times as much of the world food,
energy and material resources as his or her counterpart in the developing countries. Thus the addition of
another child in the developed countries consumes as much as the 16 children consume in the developing
countries. The developed countries instead of asking the developing countries to check their population
growth should reduce their unwarranted consumption standards. Moreover, population distribution is
causing the population problem. Some regions are under-populated (e.g. Baluchistan province in
Pakistan, few regions in Brazil and parts of sub-Saharan Africa) while other are over-populated
(metropolitan cities in Pakistan Karachi, Lahore and Faisalabad or in other developing countries) due to
concentration of employment opportunities and rural-urban migration, resulting from lopsided land and
other productive resources distribution. Therefore, instead of checking population growth, government
should discourage rural-urban migration so that more natural spatial distribution of population gains
ground. Another important factor responsible for population growth is the natural outcome of the
women’s lack of economic opportunity. Women often bear the disproportionate burdens of poverty, poor
education, lack of jobs and limited social mobility. Their inferior status and roles are manifested in their
high fertility. If women’s roles and status, their education and economic well-being are improved, this
will lead to smaller families and lower population growth.

2nd Argument: Capitalists’ Countries Conspiracy

The second pro-population growth argument is closely related to the neocolonial dependence model
which is an indirect outgrowth of Marxist thinking. It has been argued that over anxiety of the developed
countries about the population growth of the poor countries is an attempt to arrest the development of the
developing countries in order to maintain international status quo that serves their self-interest. The
developed countries also passed through a period of considerable population growth that accelerated their
own development. But the developed courtiers are pressurizing the poor countries to adopt aggressive
population control programs to restrict their population growth that supports the second line of the pro-
population growth argument.

3rd Argument: Population Growth is Desirable

The third argument is a conventional argument. According to this argument, though rapid population
growth results in additional demand for food, clothing, shelter, social services like education and health,
and growing employment opportunities, the high population growth also adds to the labor supply that can
be used for productive purposes and provides potential for large markets for goods and services and
therefore large population affords a big opportunity to benefit from demographic dividend which can add
to growth. Neoclassical economists argue that free markets will always adjust to the problems created by
population growth.

It has also been argued that many rural areas in the developing countries are under populated due to
scarcity of labor despite the availability of arable land and large increases in agriculture output will occur
if labor were available to cultivate it. Many regions in Africa, Latin America and some
parts of Asia have this situation. Furthermore, there are many ethnic, racial and religious groups in
developing countries that are enamored of large families, and high population growth is considered
desirable for political and military power. The last argument does not carry a significant weight because
the peculiar situation obtaining in few regions does not warrant high population growth.

These arguments carry some weight but this need to be weighed against the counter arguments of those
who believe that rapid population growth is a real problem for LDCs (less developed countries). One
view is that all of the world’s economic and social problems result from excessive population growth. The
advocates maintain that population control or even decline is the most urgent task of the LDCs even if it
requires severe and coercive measures like compulsory sterilization in India and Bangladesh.

Economists argue based on population-poverty cycle theory that rapid population growth gives way to
negative economic consequences and this should be a real concern for the developing countries because
population growth retards prospects of a better life for the already born by reducing savings rate at the
household and national levels.
Empirical evidence divides the negative consequences of population growth into seven categories. Rapid
population growth lowers per capita income growth in most LDCs. The poor bears the brunt of the
negative effects of population growth. They become landless, face loss in jobs, and the
government reduction of expenditure on education and health. It is generally agreed that large family size
and low incomes limit the opportunities of parents to educate all their children. High fertility harms the
health of mothers and children. Rapid population growth generates food security problem and contributes
to environmental degradation in the form of deforestation, soil erosion, unsafe water, air pollution and
urban congestion. Rapid population growth is the major factor causing increasing international migration
both legal and illegal.

The Malthusian population trap is the well-known theory of the relationship between population growth
and economic development. According to this theory, human population grows geometrically while
means of subsistence grow arithmetically being subject to the law of diminishing returns. This theory has
convinced many development economists, demographers and policy makers that rapid population growth
retards economic development by tightening job markets, generating underemployment and discouraging
labor force mobility across sectors. Malthus Theory is based on a number of simplistic assumptions and
hypotheses
that do not stand the test of empirical verification.

In recent years, economists have attempted to apply the theory of consumer behavior to explain family
size decisions in which children have been treated as consumption (and in LDCs investment) good, so
that family’s demand for children relative to other goods becomes a rational economic response. The
economic theory of fertility has gained strong support in diverse developing countries. We have put
forward a theory emphasizing family economics and capital formation. According to this theory rapid
population growth forces families to consume what otherwise would be savings, adversely affecting
national savings rates and thus capital formation and investment rates as well.

Though the cross-countries evidence for a negative relationship between population growth and per capita
economic growth is inconsistent, some studies find the expected relationship; others find no relationship.
Studies done in the context of Pakistan’s experience have not examined the impact of population growth
on the economic development of Pakistan. The problem of population growth is not simply a problem of
numbers but has welfare implications. If development means improvement in living standard, then how
does the present population situation in Pakistan affect the goals of development not only for present
generations but
also for future generations? Since cross-countries studies differ on the relationship between population
growth and development, given the present population situation in Pakistan, we examine empirically the
relationship between population growth and economic development in Pakistan.

POPULATION, ENVIRONMENT AND POVERTY

Like most developing countries, Pakistan faces serious environmental problems. Rapid population growth
and impressive GDP growth have put immense pressure on the country’s natural resource base and have
significantly in-creased levels of pollution. Rapid expansion in industrial production and urbanization has
led to increased levels of industrial waste, water pollution, solid waste, and vehicle emissions that have
resulted in serious health problems in many areas of the country. [17] has attempted to value
environmental costs in Pakistan and has put the estimate of environmental damage at $1 billion to $2.1
billion per year, or 2.6 to 5.0 percent of GDP in 1992 values.

There is a close association between rapid population growth and poverty. With stagnant or deteriorating
employment opportunities, a persistent increase in population would result in increasing relative and
absolute poverty. More recent evidence on the incidence of poverty indicates that poverty that declined in
1970s and 1980s increased in 1990s that have adversely affected the poor families demand for education
and the health and housing conditions have also deterirated.5

The issue of poverty in Pakistan has its significance for sustainable development. Long- run development
is not possible without protecting the rights of the vulnerable groups and the participation of the entire
population in the development process. The incidence of poverty increased in 1990s mainly because of
dismal economic growth. Growth has always helped
in poverty reduction. The dominant effect of growth has been of poverty reduction [19]. Poverty can be
taken care of if the economy succeeds in achieving a respectable economic growth of more than 6%.
Diverse policy options could be used to take care of poverty incidence. Policies are adopted that reduce
the concentrated control of assets and unequal access to education and income- earning opportunities.
Since rapid economic growth and population growth are incompatible, population growth must be
reduced.
CONCLUSIONS

Since the publication of Thomas Malthus Essay on the Principle of Population in 1798 development
economists and policy makers have devoted a good deal of effort to address the problem of population
growth. There is divergence of opinion regarding the desirability of population growth. Some view rapid
population growth a real problem while others assert that it is not a matter of grave concern. Cross-
countries evidence on the population growth and economic
growth relationship is not consistent and uniform. These studies are based on the unrealistic assumption
that parameters are similar across countries and aggregating the experience of all developing countries is
to attribute common elements that may not have any real existence.

Availability of time series data has made the country-specific studies desirable and useful as they throw
light on the distinguishing features of a country.

Rapid population growth has assumed alarming proportions in Pakistan. It was the 13th most populous
country with a population of 32.5 million in 1947; today Pakistan is the 6 th most populous country in the
world with a population of 162 million. Pakistan’s population problem is distressing given its momentum
and structure. Pakistan has the highest birth as well as total fertility rate among the Asian countries.
During the five decades 1950-2001, Pakistan’s population has increased 430 percent. Government of
Pakistan policies and programs to contain the uninhibited population growth has not made an enviable
success. The common man does not realize the negative economic consequences of rapid population
growth due to social reasons and cultural factors.

We estimated a simple model to examine empirically the relationship between population growth and
economic development in Pakistan. Specification and diagnostic tests supported the statistical
appropriateness of the model. Highly significant and negative coefficient of population growth
demonstrates that population growth is a real problem in Pakistan because it adversely affects the
economic growth. Resources instead of being directed to productive channels are consumed by the
exploding population.

Positive and highly significant investment coefficient implies that investment growth will considerably
contribute to economic growth which in turn depends on high saving rate. Foreign investment and export
promotion are expected to have benign impact on economic growth of Pakistan. However, foreign
investment has to be carried out cautiously and vigilantly. Without investigating in depth the positive and
negative aspects of foreign investment, it is most likely that the uncritical acceptance of foreign
investment may turn disagreeable like foreign aid. Pakistan has the highest dependent population that
hinders economic growth because this population encompasses non-productive members of the society.

Poverty can be taken care of if the economy succeeds in achieving a respectable economic growth of
more than 6%. Plans to reduce population growth over the years do not seem to have succeeded.
Therefore, population growth has become a critical issue that discourages economic development and
must be addressed seriously and squarely in order that the country has respectable economic growth.
Provision of scientific and liberal education in educational institutions and independent media can make
the people think independently and rationally that will help encourage a smaller family.

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