The effect of population growth on economic development

Written by shane hall
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The effect of population growth on economic development
Many economists have suggested that population growth hampers economic development. (world population image by Marvin Gerste from Fotolia.com)

The relationship between population growth and economic development is one of the oldest themes of study in the field of economics, going as far back as the late 18th century. The pessimistic--if not alarmist--findings of many studies have led some critics to brand economics "the dismal science." Over the years, however, many economists have revisited the issue, finding the relationship between population and development more complicated than previously thought.

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Theories/Speculation

The intuitive view among many economists and demographers is that population growth means more people competing for limited natural and economic resources. The consequences of this include more dependents to be cared for, lower per capita incomes, and an overall lower standard of living than in nations with lower birth rates.

History

English economist Thomas Robert Malthus was the first to predict dire consequences resulting from population growth. In a 1798 work Malthus contended that populations would expand at a faster rate than society's ability to produce food for itself. The long-term consequences of these trends, he warned, include famine, starvation, death, and wars over land. Economics became known as "the dismal science" in part because of Malthus' gloomy forecast.

Considerations

Malthus' work preceded the Industrial Revolution of the 19th century. Therefore, he could not have predicted the growth in technology that revolutionised agricultural and industrial production techniques. In addition, birth control technology, coupled with social and cultural changes, such as the decline in religious influence, have led to lower birth rates in many industrialised nations, such as those in Western Europe.

Later Studies

Research suggesting that population expansion negatively impacted economic development continued into the 1970s. A 1958 study by economists Ansley Coale and Edgar Hoover concluded a lower rate of population growth could enhance economic development. They suggested higher birth rates diminish family savings and cause governments to shift funds from economic investment toward health and education expenditures. Studies in the 1970s by the National Academies of Science and the United Nations sounded similar pessimistic notes.

Identification

In 1981 economist Julian Simon challenged the consensus that population growth hampers economic development. His work suggested that population growth could have positive economic impacts in many developing countries. Simon emphasised technology as a key factor driving development and suggested that population growth could influence the pace of technological change. A series of studies reassessing the relationship between population and development followed in the 1980s. The National Research Council and the World Bank produced studies suggesting population growth has a mix of positive and negative economic impacts.

Significance

Contemporary studies of population growth and its impact on economic development suggest that the link is not as clear or as simple as previously suggested. These studies have emphasised the role of other factors, including political and legal institutions. Population growth appears likely to have a negative impact economic growth in countries where land and water are scarce, government policies are ineffective, and property rights are poorly defined.

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