Haramaya University

College of Business and Economics

Department of Economics
Development Economics II

CHAPTER ONE
Population Growth and Economic Development: Causes,
Consequences, and Controversies

1
Content
• The Basic Issue: Population Growth and the Quality of Life
• Trends of population growth and age structure
• The Hidden Momentum of Population Growth
• The Demographic Transition
• The Causes of High Fertility in Developing Countries: The Malthusian and
Household Models
• The Consequences of High fertility: Some Conflicting Opinions
• The Empirical Argument: Seven Negative Consequences of Population
Growth
• Some Policy Approaches

2
1.1 The Basic Issue: Population Growth and Quality of Life
How does development affect population growth?
•Every year, ≥ 75 million people are being added to the world’s population(97% in
developing countries).
•Problem of population is not simply a problem of numbers.
•It is a problem of human welfare and of development.
•Rapid population growth can have serious consequences for the well-being of all
humanity.
•Important question about population growth is therefore:
•How does the contemporary population situation in many developing countries
contribute to or detract from their chances of realizing the goals of development,
not only for the current generation but also for future generations? Conversely, how
does development affect population growth?
3
 Basic issue ….Continued
•Six major issues:
–Will developing countries be able to improve levels of living given anticipated
population growth?
–How will developing countries deal with the vast increases in their labor
forces?
–How will higher population growth rates affect poverty?
–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?
–Is there a relationship between poverty and family size?
–How does affluence in the developed world affect the ability of developing
countries to provide for their people?

4
1.2 Population Growth: Past, Present, and Future
• World population growth through history
Table 1.1 Estimated World Population Growth

Lower population growth rate: combined effects of famine, disease, malnutrition, plague, war;
Declining mortality/doubling time: technological and economic control of diseases; rapid
technological advances in modern medicine and the spread of modern sanitation
5
Figure 1.1 World Population Growth, 1750-2050

Figure 1.1 Total population grew rapidly after 1950 in comparison with the two centuries before
that. Population growth, most of which has been in developing countries.
6
1.2 Population Growth: Past, Present, and Future
• Structure of the world’s population
• Geographic region(see figure 1.2)
• ≥3/4 lives in developing countries:
• Larger population: India, China, Nigeria, Bangladesh, Indonesia(
see figure 1.3)
• ≤1/4 lives in developed countries
• Fertility and Mortality Trends
• Rate of population increase= natural increase and net international migration .

• Birth rates, death rates , Total fertility rates

• most developing nations Birth Rate is [15,40] per 1,000.
• almost all developed countries Birth Rate is < 15 per 1,000.
• Population increases in LDCs depend almost entirely on the difference between
their birth rates and death rates.
7
Figure 1.2 World Population Distribution by Region, 2010 and 2050

8
Figure 1.3 The Population Map: World Map with Country Sizes Proportional to
Population, 2005

9
 1.2 Population Growth: Past, Present, & Future
• Between 1970 and 2009:
• declining in BR in rapidly growing [Taiwan, South Korea, and China]; less
rapid[Mexico & Bangladesh; and stagnated[Zimbabwe] economies (
see Table 1.3).
• Nevertheless, TFR remains very high in sub- Saharan Africa (5.3) and Western
Asia (3.1).
 During last three decades death rate has fallen [by 50% in Asia and Latin
America & by over 30% in Africa and Middle East].
 b/c of modern vaccination campaigns against malaria, smallpox, yellow fever,
and cholera as well as the spread of public health facilities, clean water
supplies, improved nutrition, and public education.
 in 1950, life expectancy at birth: developing countries [35, 40]years, [62, 65]
years in the developed world.
10
 1.2 Population Growth: Past, Present, and Future
 Considerably reduced the under-5 mortality rate between [1990, 2008] it fell
(per 1,000):
 from 121 to 74 in South Asia; from 73 to 38 in SE Asia; from 52 to 23 in LA and the
Caribbean; and from 184 to 144 in SSA
 In 2009 life expectancies, SSA (51), developed (78), East Asia(74), Latin
America (73).
Age Structure and dependency burdens
As of 2009, about 30% of LDCs, 43% of Ethiopia’s, 45% of Nigeria’s, 38% of
Pakistan’s, 32% of both India and Mexico population is under 15 but in developed
it is 17%
•Workforce age group (15 to 64) amounts to about 68% in North America, 69% in
Europe, about 54% in SSA.
•Over age 65 age group amounts 15% in Europe, 3% in SSA
•The more rapid the PG rate, the greater the YDR=>High DR 11
Table 1.3 Fertility Rate for Selected Countries, 1970 & 2009

12
1.3 The Hidden Momentum of Population Growth

• The phenomenon whereby population continues to increase even after a fall in

birth rates because the large existing youthful population expands the population’s
base of potential parents. This due to the fact that:
• High birth rates cannot be altered overnight
• Age structure of developing country’s population (large number of youth) (
see Figure 1.4 )
• LDCs population pyramid: wider base

13
Figure 1.4 Population Pyramids: All Developed and Developing Countries and
Case of Ethiopia

14
 1.4 The Demographic Transition
• The phasing-out process of population growth rates from a virtually stagnant
growth stage characterized by high birth rates and death rates through a rapid-
growth stage with high birth rates and low death rates to a stable, low growth
stage in which both birth and death rates are low.
• There are three stages in demographic transition: Stage I, Stage II, and Stage III
• Stage I: High birthrates and high death rates
• Stable or very slow-growing populations
• Stage II: Continued high birthrates, declining death rates
• Better health methods, healthier diets, higher incomes, and other improvements,=>▼in
mortality
• Raise in life expectancy
• Modernization(development)
• Not immediately accompanied by a decline in fertility => sharp increases in
15
The Demographic Transition… cont.…
• Stage II marks the beginning of the demographic transition.
• Stage III: Falling birth rates and death rates, eventually stabilizing.
• forces and influences of development causes the beginning of a decline in
fertility;
• eventually, falling birth rates converges with lower death rates, leaving little or
no population growth.
• Two typical examples of demographic transition: West Europe and LDCs
• In western Europe before early 19th century, birth rates was around 35/1,000; death rates
was around 30/1,000 (see figure 1.5)

• Stage 2, initiated around the first quarter of the 19th century by slowly falling death rates.
16
 The Demographic Transition… cont.…
• Decline in birth rates (SIII) begun in the late 19th century,
• Contemporary developing countries, DT fall into two patterns.
• Birth rates in many developing countries today are considerably higher
• women tend to marry at an earlier age.
• During 1950s and 1960s, stage 2 of the DT occurred throughout most of the
developing world.
• modern medical and public health technologies caused death rates in developing countries
to fall much more rapidly
• has been characterized by population growth rates in excess of 2.0% per annum
• Stage 3, two broad classes of developing countries(see figure 1.6).
• Case A , fall in death rates as low as 10 /1,000 & birth rates also falling rapidly to
levels between 12 & 25 per 1,000.
• This is the case because of the following:-
17
The Demographic Transition… cont.…
• modern methods of death control
• rises in levels of living
• Countries: Taiwan, South Korea, Costa Rica, China, Cuba, Chile, and Sri Lanka, entered S3
• Case B , After an initial period of rapid decline, death rates have failed to drop
further(see figure 1.6): b/c of
– persistence of widespread absolute poverty;
– low levels of living, and recently b/c of the AIDS.

• countries, SSA and Middle East, still in SII

• So, when and under what conditions are developing nations likely to experience
falling birth rates and a slower expansion of population?

18
Figure 1.5 The Demographic Transition in Western Europe

19
Figure 1.6 The Demographic Transition in Developing Countries

20
1.5 The Causes of High Fertility in Developing Countries: The
Malthusian and Household Models
The Malthusian Population Trap
• The threshold population level at which population increase is bound to stop
because life sustaining resources, which increase at an arithmetic rate, would be
insufficient to support human population, which increases at a geometric rate.
• Rising population and diminishing returns to fixed factors result in a low
levels of living(population trap see figure 1.7)
• Solution: moral restraint & limit number of progeny: Birth control!

21
1.5 The Causes of High Fertility in Developing Countries: The
Malthusian and Household Models
• When income is very low, say, below S per year, nutrition is so poor that people
become susceptible to fatal infectious diseases, pregnancy and nursing become
problematic; and, ultimately, outright starvation may occur (left in figure).
• But after this minimum level of income per capita is reached, population begins
to grow, eventually reaching a peak rate; and then the population growth rate
begins to fall until at last a fairly stable population is reached (a growth rate close
to zero).
• This pattern of population growth first increasing and then decreasing as per
capita income rises corresponds to the pattern of the demographic transition.

22
 Figure 1.7 The Malthusian Population Trap

Per capita income growth is, the difference between income growth and population growth: hence
the vertical difference between these two curves.
23
How Demographic Transition and
Malthus Population Trap Model are
related?

24
1.5 The Causes of High Fertility …cont
• Criticisms of the Malthusian Model
• Ignores Impact of technological progress(see Figure 1.8)
• Currently no positive correlation between population growth and levels of per capita income
in the data
• Microeconomics of family size ; individual and not aggregate variables

25
Figure 1.8 How Technological and Social Progress Allows Nations to Avoid the
Population Trap

26
1.5 The Causes of High Fertility …cont
The Microeconomic Household Theory of Fertility
• The Demand for Children in Developing Countries
• Concerned with microeconomic determinants of family size to understand
observed falling birth rates with stage 3 DT
• Uses traditional neoclassical household and consumer behavior; principles of
economics and optimization to explain family size decision.
• In developing countries the first two or three children are considered as
“consumer goods”(not very responsive to relative price change), and additional
children as “investment goods”:
• Because children work on family farm, microenterprise: child labor
• Serve as old age security

27
1.5 The Causes of High Fertility… cont
 Demand for Children Equation
• If other factors are held constant, the desired number of children can be
expected to vary directly with household income(Y), the prices of all other
goods (Px), inversely with the price (cost) of children, and inversely with the
strength of tastes(tx) for other goods relative to children. Mathematically, these
relationships can be expressed as follows:

Cd  f (Y , Pc, Px, tx ), x  1,..., n

Where
•Where Cd, the demand for surviving children, is a function of the given level of
household income (Y), the “net” price of children (the difference between
anticipated costs, mostly the opportunity cost of a mother’s time, and benefits,
potential child income and old-age support, Pc), the prices of all other goods (Px),
and the tastes for goods relative to children (tx). 28
Figure 1.9 Microeconomic Theory of Fertility: An Illustration
Point “f” is optimum point given budget constraint.
Increase in income shifts parallelly budget line to a’b’
new optimum point “h”. Simultaneous increase in
income and price of children shifts outward and rotates
downward the budget line (dashed cd point “g”): lower
children higher consumption relative to point “f”.
Increase in price of children rotates budget line to ab’’
point “e’
The upshot: higher levels of living for low
income families in combination with a relative
increase in the price of children will motivate
households to have fewer children while still
improving their welfare.
29
1.5 The Causes of High Fertility …cont
• Some empirical evidence
• Implications of Women’s Education for Development and Fertility.
• Birthrates among the very poor are likely to fall where there is:
• Raise women’s education, role, and status
• More female nonagricultural wage employment, which raise s the price or cost of their
traditional child-rearing activities
• Rise in family income levels
• Reduction in infant mortality
• Development of old-age and social security, which lessen the economic dependency of
parents, specially women, on their offspring
• Expanded schooling opportunities – so that parents can better substitute child quality for
large number of children.

30
1.6 Consequences of High Fertility: Some Conflicting Perspectives
Population growth: “It’s Not a Real Problem”:
• The real problem is not population growth but the following,
• Underdevelopment
• World resource depletion and environmental destruction
• Population Distribution
• Subordination of women
• Overpopulation is a Deliberately Contrived False Issue;
• Population Growth is a Desirable Phenomenon.

31
1.6 The Consequences of High Fertility…cont
• “Population Growth Is a Real Problem”
– Extremist arguments:Population and Global Crisis
– Theoretical arguments: Population-Poverty Cycles and the Need for Family-Planning
Programs
– Empirical arguments
Seven negative Consequences
1. Lower economic growth
2. Poverty
3. Adverse impact on education
4. Adverse impact on health
5. Food issues
6. Impact on the environment
7. Frictions over international migration

32
Goals and Objectives: Toward a Consensus

• Despite the conflicting opinions, there is some common ground on the following:
• Population is not the primary cause of lower living levels, but may be one factor.
• Population growth is more a consequence than a cause of underdevelopment.
• It’s not numbers but quality of life.
• Some Policy Approaches
• Attend to underlying socioeconomic conditions that impact development.
• Family planning programs should provide education and technological means to regulate
fertility.
• Developed countries have responsibilities too.

33
1.8 Some Policy Approaches
• What Developing Countries Can Do
• Persuasion through education;
• Family planning programs;
• Address incentives and disincentives for having children through the principal variables
influencing the demand for children;
• Coercion is not a good option;
• Raise the socioeconomic status of women;
• Increase employment opportunities for women (increases opportunity cost of having more
children, as in microeconomic household theory)
• What the Developed Countries Can Do Generally
• Address resources use inequities;
• More open migration policies;
• How Developed Countries Can Help Developing Countries with Their
Population Programs
• Research into technology of fertility control;
• Financial assistance for family planning programs;
34