Aravinda Meera Guntupalli

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Population Growth and Economic Development

• Aravinda Meera Guntupalli

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Facts on world population

• 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

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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 per-capita
  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

• 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

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Population Growth, 1750-2200 World, Less
Developed Regions, and More Developed Regions
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Population Pyramids Less Developed and More
Developed Countries 1998
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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.

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Rapid and Slow Transition

• Rapid transition
• Japan
• South Korea
• Taiwan
• Singapore
• Thailand
• Indonesia

• Slow Transition
• Pakistan
• India
• Bangladesh
• Philippines
• Papua New Guinea

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Miracles of rapid transition in East Asia

• Rapid demographic change creates windows
• of opportunity for accelerated economic growth
• Rapid growth of labor force
• Saving and investment
• Changing roles of women
• Human resource investment

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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
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Malthusian population model 1798

• 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

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Household theory of fertility

• 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

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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

• 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.

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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

• 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