a not so clear relationship

Will there be any relationship between population growth and economic growth? In practice it might seem so. Countries like China or India have greatly increased their populations while the growth rates of their respective economies have skyrocketed. Nevertheless, the relationship between the two variables is not very clear.

It is possible that by increasing the population of a specific country during a more or less continuous period of time, this has the consequence that its economic situation improves. However, the reasoning could also be just the opposite, that is, that economic growth and the good performance of the economy encourage families to have more children.

As we can see, the positions on the relationship between economic growth and demographic growth are found. In general there are three types of positions in this regard: those who defend that there is a relationship, those who do not and the followers of Thomas Malthus.

More population means more growth

World Population

The defenders of this reasoning affirm that the increase of the population of a country constitutes a quite important stimulus to favor the economic growth of the same. This was the position held by many of the classical economists. The most important of them, Adam Smith.

The classics based their opinion that to grow you only needed increase some of the productive factors: natural resources, labor or capital. Therefore, as the population increases, the labor factor would increase and, with it, the production of goods and services.

These economists also argued that population growth was itself a stimulus to use much more productive production techniques. Thus, if the population grows, companies become much more efficient in their production methods, which has an impact on the amount of goods and services they produce to grow, and this obviously translates into economic growth.

More population does not have to mean more growth

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There is another current of opinion that is just the opposite: population growth and demographic growth are not related in any way, but rather other factors cause economies to grow.

For these economists, economic growth depends on other factors such as technology, investment in vocational training and education, investment in capital, etc., so that it is these variables and not population growth itself that cause the production of goods and services to increase.

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According to this argument, the opposite could even be the case: that population growth becomes a problem in itself for development. As an example, the Third World countries with very high birth rates and whose economies are in recession or growing at very low rates. Are they poor because they grow at a very high demographic rate, or do they grow demographically a lot because they are poor? The debate is served.

The Malthusian economy

Thomas Malthus

Finally, we meet the followers of the ideas of Thomas Malthus, Anglican pastor and professor of economics, whose main work was the Essay on the principle of population (1798), in which he theorized about the relationship between population and economy and predicted famines, wars and epidemics by which the world population would decrease; above all, that belonging to the most disadvantaged groups, which would lead to a subsistence economy, or even to the extinction of the human species, unless people with fewer resources had fewer children.

Malthusian economics developed a well-known theory according to which the world population grows in geometric progression, that is, it doubles every 30 or 40 years, unless it is affected by a famine, while food does so in arithmetic progression.

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For Malthus, economic growth should be greater than population growth, since this was the origin of all economic problems. His ideas had a great boom at the time. However, the passage of centuries has shown that their predictions were not true. In fact, it turns out that families in poorer countries have more children than in richer countries, and industrialization and improved agriculture have increased food production, avoiding the catastrophes you spoke of. Still, his ideas are still being debated today.

So can we come to a definitive conclusion?

Her Poblacion 10 2711

We fear not. It is true that in times of economic prosperity many families living in developed countries decide to have more children, since they can meet the costs of upbringing and education with less problems. However, we also observe how in underdeveloped countries population growth is very high. Are the countries with the highest demographic growth growing more? It seems that not necessarily.

Therefore, it is clear that we follow the position that we follow we should take into account that the birth rate is not only influenced by economic factors, but also social and cultural ones, and it is the interaction of a myriad of variables, one of them demographic growth, that gives rise to greater or lesser economic growth.

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On the other hand, it is also important to take into account that sustained population growth over time would lead to a world overpopulation, which in itself is also a big problem, due to the effects it entails: overexploitation of natural resources, excessive pollution, etc. Therefore, continued growth in the world population could become economically unsustainable. And be careful, because this problem can occur within not too long.

Source | Economy. FJ González Álvarez. Anaya

Images | Wikipedia

In The Salmon Blog | What if negative rates were simply a consequence of demographics?


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