Question

In: Economics

briefly discuss the role of population in economic development and include the Malthusian population theory in...

briefly discuss the role of population in economic development and include the Malthusian population theory in your discussion

Solutions

Expert Solution

There are two different schools of economic thought - one is the one which argues that population growth is necessary for sustained development, and other one which argues that population is burden.

Robert Solow in his first paper demonstrated that the rate of output growth in economy depends on the population growth and in the steady state growth is equal to population growth. Various other economic models also uses population or population growth as a parameter in their models, mainly because populations serves a supplier of input (labor) for production and a consumer for the finished products, thus playing a vital role in economy. The question of whether population can be utilized in economic growth or is a burden depends on the level of productivity (human capital) of the population. If a country is young and qualified & productive then the economy can benefit from it and reap the demographic dividend. In that case, a decrease / stagnation in population may lead to slow down or recession in the economy. A prominent example of this type is Japan where population is declining which has stagnated the Japanese economy. However, if a population is less productive, they become burden on the economy. Since they can't participate in the economic activities due to low productivity, their ability to earn also hampers which in turn reduces their ability to spend and create demand in the economy.

Malthus’ pessimistic model of population is that population growth is exponential (it grows as a geometric progression) while food grain production is linear (it grows as an arithmetic progression). According to Malthus, "food is necessary to the existence of man and that the passion between the sexes is necessary and will remain nearly in its present state and the power of population is infinitely greater than the power in the earth to produce subsistence for man". Thus Malthus concluded that an ever increasing population would continually strain society’s ability to provide food for itself.

The world population continues to grows and is currently at ~7.7 billion, much more than 0.8 billion at the time of Malthus. What Malthus missed in his analysis is the advent of new technology, new discoveries and inventions such as usage of high yield varieties, highly mechanized farms, pesticides, fertilizers which enable farmers to grow even at a higher rate than population growth. Although another aspect of his analysis, "passion between the sexes" continues to strong today, usage of modern birth control severely limits the pace of population growth. (Some countries like Japan have negative population growth rate)


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