ECON 3051:

Topics in Economic
Development
Population Growth and Economic Development:
Causes, Consequences, and Controversies
 1. World population growth through history: Trends
2. Structure of the world’s population
3. The Hidden Momentum of Population Growth
4. The Demographic Transition
Outline 5. The Causes of High Fertility in Developing Countries:
Malthusian and Household Models
6. Implications for Development and Fertility
7. Consequences of high fertility
8. Some Policy Approaches
 There are 6 main issues related to this question:

1. Will developing countries be able to improve levels of

6.1 living given anticipated population growth?
2. How will developing countries deal with the vast
increases in their labor forces?
How does
3. How will higher population growth rates affect
development poverty?
affect 4. Will developing countries be able to extend the
population coverage and improve the quality of health care and
education in the face of rapid population growth?
growth? 5. Is there a relationship between poverty and family
size?
6. How does affluence in the developed world affect the
ability of developing countries to provide for their
people?
 World population growth through history
Table 6.1 Estimated World Population Growth

6.2

Population
Growth: Past,
Present, and
Future
 Figure 6.1 World Population Growth, 1750-2050

World
population
growth
through
history
 Total population grew after 1950.
World The majority of this growth has been in developing countries (both
population in absolute value and share of population).
E.g. In 1750, the world population growth rate was 0.3% per year
growth through By 1950s this tripled to 1%
history: Today it is at 2.35%
The growth rate in Africa is high at 2.3% per year.

Trends So what changed??? What caused this rapid growth in population?

Technology!
Before people suffered immensely from famine, disease, plague,
war. By the 20th Century these conditions were curbed.
 Figure 6.2 World Population Distribution by Region,
2010 and 2050
World
population
growth
through
history
 The world’s population is very unevenly distributed in
terms of:
Geographic region
Fertility and Mortality Trends
Structure of Rate of population increase
the world’s Birth rates, death rates , Total fertility rates
population Age Structure and dependency burdens
 There is a hidden momentum of population growth.

Population growth has a tendency to continue even after birth

rates have declined substantially.
The Hidden
Momentum of How come????
Population 1. High birth rates cannot be altered substantially overnight
The social, economic, and institutional forces that have influenced
Growth fertility rates over the course of centuries do not simply evaporate at
the urging of national leaders
2. Age structure of many developing countries’ populations.
Again, most future population growth will take place in the
developing world. Those trends overpower that of the developed
world.
 Figure 6.4 Population Pyramids: All Developed and Developing
Countries and Case of Ethiopia

The Hidden
Momentum of
Population
Growth
 The process by which fertility rates eventually decline to replacement
levels is explained by the demographic transition.
It explains why all contemporary developed nations have more or less
passed through the same three stages of modern population history.

6.3 Stage I: High birthrates and death rates

Stage II: Continued high birthrates, declining death
The rates because of improved medicine and technology.
Demographic
Transition Stage III: Falling birthrates and death rates,
eventually stabilizing due to improved medicine and
decline in the fertility rate
 Figure 6.5 The Demographic Transition in Western Europe

The
Demographic
Transition:

An illustration
• Stage 1: Before the early 19th Century - High birth and death rates
• Stage 2: Around 1945 – Slowly falling death rates as a result of improving
economic conditions and the gradual development of disease and death
control through modern medical and public health technologies.
• Stage 3: Only began in the later 19th Century – most of the fall in birth rates came
after modern economic growth. But was also due to late marriage and celibacy.
 Figure 6.6 The Demographic Transition in Developing
Countries

The
Demographic
Transition:

An illustration
The Causes of High
Fertility in Developing
Countries
The Malthusian AND Household Models
 The idea that rising population and diminishing
returns to fixed factors result in a low levels of
living (population trap)
The Malthusian Population Trap
Essay on the Principle of Population (1798)
6.4 Concept of diminishing returns
Theory of the relationship between population growth and economic
The development.
Malthus postulated a universal tendency for the population of a
Malthusian country, unless checked by dwindling food supplies, to grow at a
Population geometric rate, doubling every 30 to 40 years. At the same time,
because of diminishing returns to the fixed factor, land, food supplies
Trap could expand only at a roughly arithmetic rate.
Growth in food supply would not keep up with the rising population –
so per capita income tends to fall.
Solution: “Moral restraint”
 Figure 6.7 The Malthusian Population Trap

The
Malthusian
Population
Trap
 Growth rate (%)

The 5 Growth

Malthusian 4
B Population growth rate C
Population 3 Trap
Trap

Trap
2

1
A
Growth Income per capita
0
Y0 Y1 Y2 Y3 Y4
-1
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6-17
All rights reserved.
 Criticisms of the Malthusian Model
Impact of technological progress
Currently no positive correlation between
The population growth and levels of per capita
Malthusian income in the data
Population Microeconomics of family size; individual and
Trap not aggregate variables
 The Malthusian Model is based on a number of simplistic
assumptions.

1. Ignores the impact of technological progress.

The This can offset the growth-inhibiting forces of rapid
Malthusian population increases.
Modern economic growth has been closely associated with rapid
Population technological progress . Hence, increasing rather than decreasing
returns to scale is exhibited in practice.
Trap:
2. It is based on a hypothesis about a macro relationship
between population growth and levels of per capita income
Criticisms that does not stand up to empirical testing of the modern
period.
3. It focuses on the wrong variable, per capita income, as the
principal determinant of population growth rates.
 Figure 6.8 How Technological and Social Progress Allows Nations to
Avoid the Population Trap

The
Malthusian
Population
Trap
 1. Many people still believe it holds in poor countries
today, despite the recent evidence.

The 2. It seems clear that such traps have occurred in the

Malthusian historical past and may have been factors in
Population population collapses including in the pre-
Trap: Columbian Americas.

Why study it 3. The fact that this model no longer applies

then? underlines the importance of factors that can
prevent its emergence.
This includes increases in women’s empowerment and
freedom to choose—along with their incomes—which
reduce the old-age security motive behind high fertility
 Economists started to examine the microeconomic
determinants of family fertility.
To provide a better theoretical and empirical
The explanation for the observed falling birth rates
Microeconomic associated with stage 3 of the demographic transition.
Household
Theory of Used traditional neoclassical theory of household and
consumer behavior!
Fertility
Where children is the good :/
 Demand for Children Equation

The
Microeconomic
Where
Household Cd is the demand for surviving children
Theory of Fertility 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
Copyright © 2009 Pearson Addison-Wesley.
6-23
All rights reserved.
 Figure 6.9 Microeconomic Theory of Fertility: An Illustration

The
Microeconomic
Household
Theory of
Fertility
 Studies support the economic theory of fertility.
High female employment opportunities outside the home and
greater female school attendance are associated with significantly
lower levels of fertility.
As women become better educated, they tend to earn a larger
Empirical share of household income and to produce fewer children.
Plus there is a strong association between declines in child
evidence mortality and the subsequent decline in fertility.
Increased female education and higher levels of income can
decrease child mortality and therefore increase the chances that
the firstborn will survive.
This shows the importance of educating women and improving
public health and child nutrition programs in reducing fertility
levels.
 Policies of fertility reduction:
Implications Raise women’s education, status and economic and social role
More female nonagricultural wage employment
Rise in family income levels

for Reduction in infant mortality

Development of old-age and social security
Development
Expanded schooling opportunities
and Fertility
 Population growth: “It’s Not a Real Problem”:
The real problem is not population growth but the following,
Underdevelopment
Consequences World resource depletion and environmental destruction
Population Distribution
of high Subordination of women
fertility: Overpopulation is a Deliberately Contrived False Issue
Neocolonial dependence theory of underdevelopment…
Radical neo-Marxist interpretation…
Conflicting
Perspectives
Population Growth is a Desirable Phenomenon
More conventional economic argument - that of population
growth as an essential ingredient to stimulate economic
development
 “Population Growth Is a Real Problem”

Consequences Extremist arguments

of high Theoretical arguments
Empirical arguments
fertility: Lower economic growth
Poverty
Adverse impact on education
Conflicting Adverse impact on health
Perspectives Food issues
Impact on the environment
Frictions over international migration
 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

Consensus Population growth is more a consequence than a cause of

underdevelopment
It’s not numbers but quality of life
Market failures: potential negative social externalities
Voluntary decreases in fertility is generally desirable for
most developing countries with still-expanding
populations
 Attend to underlying socioeconomic conditions that
impact development

Some Policy Family planning programs should provide education

Approaches and technological means to regulate fertility

Developed countries have responsibilities too

 What Developing Countries Can Do;
Persuasion through education
Family planning programs
Address incentives and disincentives for having children
Some Policy through the principal variables influencing the demand for
children
Approaches 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 Generally Do:
Address resources use inequities
More open migration policies
Some Policy
Approaches
How Developed Countries Can Help Developing
Countries with Their Population Programs:
Research into technology of fertility control
Financial assistance for family planning programs