Population Growth and
Economic Development
Aravinda Meera Guntupalli
Facts on world population
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Total world population: 6.1 billion
About 75% of people live in developing
countries
About 60% of the population lives in Asia and
Oceania
About 40% of people live in only 15 countries
By 2200, over 90% of population will live in
what today are developing countries
Topics
Demographic measures
 Population growth in the world
 Theories of population
 Policies
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Demographic measures
Birthrate
 Death rate
 Rate of natural increase
 Infant mortality rate
 Life expectancy at birth
 Doubling time
 Dependency ratio
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Terms used
Fertility
 Mortality
 Migration
 Age structure
 Hidden momentum of population growth
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Population and economic growth
Reduction in birthrates can raise percapita income in 2 ways
 lower dependency ratio
 low consumption and high savings
 Shift of labor force investment from
capital widening to capital deepening
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Different issues related to
development
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Some important quality of life indicators
related to population growth
– Improvement of levels of living
– Increase in the labor forces
– Higher population growth rates and poverty
– Quality of health care and education
– Relationship between poverty and family
size
Population Growth, 1750-2200: World,
Less Developed Regions, and More
Developed Regions
Population Pyramids: Less Developed
and More Developed Countries; 1998
The Demographic Transition
Stage I: high birthrates and death rates
 Stage II: continued high birthrates,
declining death rates
 Stage III: falling birthrates and death
rates, eventually stabilizing
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Dependency problems
Old age structures and young age
structures both create problems with
supporting dependents; they are just
different problems.
 Young age structure requires expanding
labor markets, investments in education
 Investments in older people less likely
to enhance productivity
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The present demographic
transition in developing
countries
Stage II already occurred in most of the
developing world,but with higher
birthrates than in the developed world.
 Stage III:
– has been similar to developed countries
for some developing countries like Taiwan,
South Korea, China,Chile, Costa Rica
– has not occurred yet for other countries
mainly in Sub-Saharan Africa and the
middle east.
Rapid and Slow Transition
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Rapid transition
 Japan
 South Korea
 Taiwan
 Singapore
 Thailand
 Indonesia
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Slow Transition
Pakistan
India
Bangladesh
Philippines
Papua New Guinea
Miracles of rapid transition in
East Asia
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Rapid demographic change creates windows
of opportunity for accelerated economic
growth
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Rapid growth of labor force
Saving and investment
Changing roles of women
Human resource investment
Stage of Demographic Transition
and population requirement
Population growth may be good at the
beginning
 In the middle factors like political
stability, cultural resources, and
economic efficiency may be much more
important than population growth
 Reaching high income may require
slowing growth
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Fertility and income
Malthusian population model
1798
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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.
– Preventive and positive checks
– Technological progress is not considered
Household theory of fertility
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Family size is a decision taken at the
microeconomic level by households based on
a rational economic decision on “demand for
children”
 Income effect: Higher income allows for
larger family size
 Substitution effect: Higher cost of children
implies smaller family size
 Other theories
Why are there so many
children in poor countries?
Because children are an “investment”
rather than a “consumption good” the
“expected return of theinvestment” is
given by child labor and financial
support for parents in old age
 Parents have children up to the point at
which their marginal economic benefit is
equal to marginal cost
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Hidden momentum of
population growth
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It is the tendency of population growth
to continue, even after birthrates have
decline substantially.
– Substantial changes in birthrates may take
decades
– when the young population is large, in the
near future high-fertility population will be
high,even if fertility levels are lower.
Policy approach to deal with the high
population growth
Decrease “marginal economic benefit of
children”:
 Increase the minimum-age child labor
 provide better old-age social security
 Increase “marginal cost of children”
 Increase education, employment and
wages for women
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Policy approach
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Better water and public health programs in
rural and urban poor areas to lower infant
mortality
Implementation of family-planning programs
Improvement of quality of care of health and
family planning programs
Monetary subsidies to small families
Political commitment and role of religious
leaders