Chapter 1

Population Growth and Economic Development

Causes, Consequences, and Controversies
The Basic Questions Is there a relationship between
population growth and Quality of Life(QOL)?
Six major issues:
1. Will developing countries be able to improve levels
of living given their anticipated population growth?
2. How will developing countries deal with the vast
increases in their labor forces?
3. How will higher population growth rates affect
poverty?
 The major Issue…
Population growth and Quality of Life

4. 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?
5. Is there a relationship between poverty and family
size?
6. 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
Geographical distribution of population
Fertility and mortality trends
The rate of population increase is quantitatively measured
as the percentage yearly net increase (decrease, in which
case it is negative) in population size due to the natural
increase and net international migration.
Natural increase simply measures the excess of birth over
deaths or in more technical terms the difference between
fertility and mortality.
Population increases in developing countries depends
almost entirely on different between their birth and death
rates.
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: World population today is very
youthful, particularly in developing world. Children under
the age 15 constitute almost 40% of the total population of
developing countries, but less than 20% of the population
of developed nation.
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.
The hidden momentum of population
growth
Perhaps the least understood aspect of population growth is its
tendency to continue even after birth rates have declined
substantially. In the case of population growth, this momentum
can persist for decades after birth rates drops. There are two
basic reason for this.
First high birth rates cannot be related altered substantially
overnight. The social, economic and institutional forces that have
influenced fertility rates over the course of centuries do not
simply evaporate at the urging of national leaders.
The second and less obvious reason for the hidden momentum of
population growth relates to age structure of LDC populations
Population Pyramids: Less Developed
and More Developed Countries; 1998
Hidden Momentum of Population Growth
The Demographic Transition
The Demographic Transition
Causes of High Fertility in Developing
Countries
The Malthusian population trap
Population grows at a geometric rate(exponential) and food
supplies expand at an arithmetic rate (linear).
Per capita incomes would fall to the subsistence level

Criticisms
Assumes decreasing returns to scale (they do not take
adequate accounts of the role and impacts of technology)
Assumes positive relation between population growth rate
and levels of per capita incomes
Focus on the wrong variable- per capita 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 (birth control) on their population
growth.
2. positive checks (starvation, disease, wars) on
population growth will inevitable the restraining force.
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
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 Cd
0 0
Y Px

Cd Cd
0
0
Pc tx

Cd
 0
Y The higher the households income, the greater
the demand for children.

C
P
d

c
 0 The higher the net price of the children, the
lower quantity demanded.

C d

P x
 0
The higher the prices of all other goods
related to children, the greater the quantity of children
demanded.

C d
The greater the strength of testes for goods
 0
t x
relative to children, the fewer children demanded.
Microeconomic Theory of Fertility: An
Illustration
Views on population and economic development
Pessimist view
Optimist view
Neutralist view
 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
development
• Economic growth
• Poverty and Inequality
Education
Health
Food
Environment
International migration
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