Population Growth and Economic Development

Topics: Population growth, Economics, Population Pages: 4 (1152 words) Published: September 27, 2011

Thomas Malthus in his published book “An Essay on the Principle of Population” claimed that there is a tendency for the population growth rate to surpass the production growth rate because population increases at a geometrical rate while production increases at an arithmetic rate. Thus, the unfettered population growth in a country could plunge it into acute poverty. However, the pessimist view has proven unfounded for developed economies in that they managed to achieve a high level of economic growth and thus, both population and the real gross domestic product (GDP) per capita were able to increase.

Population growth is seen from both negative as well as positive sides. One side, Population growth enlarges labour force and, therefore, increases economic growth. A large population also provides a large domestic market for the economy. Moreover, population growth encourages competition, which induces technological advancements and innovations. On the other side, a large population growth is not only associated with food problem but also imposes constraints on the development of savings, foreign exchange and human resources.

The issue of population and economic growth is also closely related to the issue of minimum wage. Population growth enlarges labour force and, therefore, will push wage down. The standard economic labour demand model predicts that low wage will raise the demand for labour. As a result, the welfare of the economy is likely to increase. Moreover, low wage would encourage industries that are labour intensive. Low wage is said to be an important factor that has contributed to the industrialization of the Central Asian Economies (CAEs), namely, Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan.

The relationship between population and economic growth is complex and the empirical evidence is ambiguous, particularly concerning the causes and impacts. It can be...
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