population growth and economic development · pdf file01.02.2016 · the basic...

Copyright 2012 Pearson Addison-Wesley. All rights reserved.
Population Growth and Economic Development
1

Some Facts About World Population
Total world population: 6.1 billion at beginning of 21st century
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 World population estimated to reach 9.2 billion in 2050
and 11 billion by 2200 By 2200, over 90% of population will live in what today
are developing countries
2

The Basic Issue: Population Growth and Quality of Life
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?
3

The Basic Issue: Population Growth and Quality of Life
Six major issues (contd): 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?
To what extent are low levels of living an important factor in limiting freedom of parents to choose a desired family size? i.e. Is there a relationship between poverty and family size?
To what extent does affluence in the developed world affect the ability of developing countries to accommodate (provide for) their growing populations?
4

Population Growth: Past, Present, and Future
World population growth through history 0.002% annual growth since human existence on
earth until about 300 years ago 0.3% per annum by 1750; growth rate had
accelerated by 150 times by 1950 growth rate had tripled to about 1% growth rate continued to accelerate peaking at
2.35% around 1970 current growth rate around 1.3% per annum but Africas rate of growth relatively higher at 2.4%
per year
5

Estimated World Population Growth
6

World Population Growth, 1750-2050
7

Structure of the worlds population Geographic region Rate of population increase Birth rates, death rates , Total fertility rates Age Structure and dependency burdens
8

Geographic Region:World Population Distribution by Region, 2010 and 2050
9

Geographic Region: The Population Map: World Map with Country Sizes Proportional to
Population, 2005
10

Population growth rates in developed and developing countries, 1950-2000
11

Fertility Rate for Selected Countries, 1970 and 2009
12

Population growth rate equals natural increase plus net international migration
Natural increase is birth rate minus death rate Net international migration negligible Difference between developing and developed nations in
terms of growth rate is higher difference in birth (fertility) rates than in death (mortality) rates
Total fertility rates higher in Sub-Saharan Africa (5.6) than in Western Asia (3.7)
13

The Hidden Momentum of Population Growth tendency for population growth to continue, even
after birthrates have declined substantially High birth rates cannot be altered overnight
substantial changes in birthrates may take decades Age structure of developing country populations
youthful when the young population is large, in the near future
high-fertility population will be high, even if fertility levels are lower or declining
14

children aged under 15 more than 31% in developing countries but just 18% in developed nations
46% Ethiopia; 44% Nigeria; 41% Pakistan; 33% India as at 2002
results in high youth dependency ratio (under 15/economically active)
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, etc. Investments in older people less likely to enhance
productivity
15

Population Pyramids: All Developed and Developing Countries and Case of Ethiopia
16

The Demographic Transition
The transition from high birth and death to low birth and death rates as a country develops from a pre-industrial to an industrialized economic system
Stage I: High birthrates and death rates Stage II: Continued high birthrates, declining death
rates Stage III: Falling birthrates and death rates,
eventually stabilizing at low growth rates
17

The Demographic Transition in Western Europe
18

The Demographic Transition
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.
19

The Demographic Transition in Developing Countries
20

The Causes of High Fertility in Developing Countries: The Malthusian and Household
Models Thomas Malthus 1798 Relationship between population growth and economic
development 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) Hence, fall in per capita food production (or per capita incomes) to
subsistence levels leading to chronic low levels of living (absolute poverty)
Preventive and positive checks Need for moral restraint and limits to number of children else positive checks;
hunger, disease and war
21

Models
The Malthusian Population Trap The idea that rising population and diminishing
returns to fixed factors result in low levels of living (population trap)
Countries would be trapped in low per-capita incomes (per capita food).
22

The Malthusian Population Trap
23

Models Criticisms of the Malthusian Model
Impact of technological progress not considered can offset growth-inhibiting forces of rapid population increase
Assumes that national rates of population increase are directly related to per capita income
There appears to be no clear correlation between population growth and levels of per capita income in the data
Microeconomics of family size; individual and not aggregate variable (per capita income) as principal determinant of family size decision making
24

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

Fertility in Relation to Income in Developing Countries Birthrates seem to show no rigid relationship with per capita income levels
26

The Causes of High Fertility in Developing Countries: The Malthusian and Household Models
The Microeconomic 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
27

Microeconomic Theory of Fertility: An Illustration
28

nxtPPYfC xxcd ,...,1),,,,( Where
Cd is the demand for surviving childrenY is the level of household incomePc is the net price of childrenPx is price of all other goodstx is the tastes for goods relative to children
Demand for Children Equation
29

nxtPPYfC xxcd ,...,1),,,,(
0
YCd
0
c
d
PC
0
x
d
PC
0
x
d
tC
Under neoclassical conditions, we would expect:
Demand for Children Equation
30

The Demand for Children in Developing Countries In many developing countries, theres strong intrinsic
psychological and cultural determinant of family size First two or three children as consumer goods Additional children as investment goods:
Work on family farm, microenterprise Old age security motivation
For additional children parents assumed to weigh private economic benefits against private costs
31

Some empirical evidence Strong statistical support for economic theory of fertility
High female employment opportunities outside home and higher female school attendance associated with lower fertility
Implications. Fertility lower if Raise womens education, role, and status More female nonagricultural wage employment Rise in family income levels Reduction in infant mortali

population growth and economic development · pdf file01.02.2016 · the basic...

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