Population Growth and Economic Development

Topics: Economics, Investment, Capital accumulation Pages: 8 (2594 words) Published: November 14, 2010
The consequences of population growth on economic development have attracted the attention of economists ever since Adam smith wrote his Wealth of nations. It was only Malthus and Ricardo who created an alarm about the effect of population growth on the economy. Population and Economic Development

However, the consequences of population growth on the development of LDCs are not the same because the conditions prevailing in these countries are quite different from those in the developed economies. These economies are poor, capital scarce and labor abundant. Population growth adversely affects their economic development in the following ways, first faster population growth makes the choice more scarce between higher consumption now and the investment needed to bring higher consumption in the future. Economic development depends upon investment. In LDCs the resources available for investment are limited. Therefore, rapid population growth retards investment needed for higher future consumption. This is particularly the case where the majority of people are dependent on agriculture for their livelihood. With rapidly rising population agricultural holdings become smaller and un-remunerative to cultivate. There is no probability of increasing farm production through the use of new land (extensive cultivation). Consequently, many households continue to live in poverty. In fact, rapid population growth leads to the overuse of the land thereby jeopardizing the welfare of future generations. Even in countries where natural resources are untapped such as Brazil and other Latin American countries, rapidly increasing population makes it difficult to invest in roads, public services, drainage and other agricultural infrastructure needed to tap such resources. Lastly, with rapidly growing population, it becomes difficult to manage the adjustments that accompany economic and social change. Urbanization in LDCs creates such problems as housing, power, water, transport, etc. besides, growing population threatens permanent environmental damage through urbanization in some rural areas. Population and per Capital Income

The effect of population growth on per capital income is unavoidable. The growth of population tends to retard the per capital income in three ways; i.It increases the pressure of population on land

ii.It leads to rise in costs of consumption goods because of the scarcity of the co operant factors to increase their supplies, and iii.It leads to a decline in accumulation of capital because with increase in family members, expense increases. Proportion and Living Standards

Since one of the important determinants of the standard of living is the per capital income, the factors affecting per capital income in relation to population growth equally apply to the standard of living. A rapidly increasing population leads to an increased demand for food products, cloths, houses, etc. but their supplies cannot be increased in the short run due to the lack of co operant factors, like raw materials, skilled labor, capital, etc. consequently, their costs and prices rise which raise the cost of living of the masses. This brings down further and already low standard of living. Poverty breeds large number of children which increases poverty further and the vicious circle of poverty, more children and low standard of living continues. Population and Agricultural Development

In LDCs people mostly live in rural areas. Agriculture is their main occupation. So with population growth the land man ratio is disturbed. Pressure of population on land increases because supply of land is inelastic. It adds to disguised unemployment and reduces per capital productivity further. As the number of landless workers increases, their wages fall. Thus lower capital productivity reduces propensity to save and invest. As a result, the use of improved techniques and other improvements on land are not possible....
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