Population and Economic Growth

The twin relationship between population and economic growth has always been a subject of great interest to economists, as population is a resource that supplies the labour force needed for industrialization that symbolises economic growth. However, it is an established principle that labour alone cannot produce anything without the help of other resources. If other resources needed for production are available in sufficient quantity, then a larger lobour force could become a productive asset of a country.

Growth Rate of Population

At any point of time, all countries have some people living there, the number of these people constitutes the size of population of that country at that time. This number, however, keeps on changing continuously through birth, deaths and immigration. Therefore, increase in the number of people during a fixed period of time, in a country, is called the growth rate of population.

The rate of growth of population during a period is estimated as the ratio of increase in population during a period to the total population at the beginning of the period. The growth rate of population depends upon the birth rate (estimated as total number of birth per thousand of population). The difference between birth rate and death rate during a year per 1000 population.
There is a reciprocal relationship between rate of growth of population of a country and its economic growth. On the one hand population growth of a country is effected by its economic growth and on the other; economic growth too can be affected by population growth rate.

Effects of Population Growth Rate on Economic Growth

The effects of high growth rate of population on economic growth of developing countries, such as ours, can best be explained by examining its effects on the resources of these countries. These resources are: Human resources, natural resources and capital (man-made) resources.

Effects on Human Resources

As population supplies human resources, the large human resources are the sources of large potential labour force that can be both a source of strength and a source of weakness as well. However, labour alone cannot produce anything as production requires natural resources and capital too. For the engagement of large and fast increasing labour more and more other resources are needed.
In developing countries like India, where there is already a shortage of capital, natural resources are getting scarce with a fast increasing population. These developing countries are unable to utilize even their existing labour force that is main cause behind the large level of unemployment there. The high rate of growth of population also creates problems in the process of improving the quality of human resources. As modern production techniques require highly skilled labour force. In this context, the literacy level is quite low in developing countries. Due to the already large size of population huge capital resources are required for removing illiteracy and for skill formations; this problem becomes more intense because of the fast rate of growth of population.

Effects on Natural Resources

Natural resources include land surface, minerals, forests and water, etc. a large part of the land area, fixed one, of a country is used for agriculture. The high growth rate of population creates many problems by increasing pressure of labour force on land. It results in further division of land holdings, that ultimately and adversely affect the productivity of the land, sometimes further subdivisions of the land lead to the wastage of land itself.
The fast growing population on the one hand and lack of work opportunities on the other results in more people than required for working in agriculture. This increasing pressure on agricultural land thus results in unemployment.
In addition, fast urbanization creates many other problems such as congestion, slums, insanitation population etc. One of the most crucial factors that create a land related problem in the process of Urbanization is the migration of the people to urban areas in search of work. All these problems cast negative effect on economic growth. The intensity of the problem can be comprehended from the fact that the pressure of population of land has been steadily increasing resulting in the increase of density from 117 per sq. km. in 1951 to 324 in 2001.

Effects on Capital Formation

In economic growth of any country capital plays a very important and more or less a decisive role. A large part of resources for investment that developing countries generate are eaten away by their fast growing population as fast growth rate of population results in rapid increase in the requirements of consumption.
The high growth rate of population reduces the supply of these resources for raising the per capital income and quality of life of people in developing countries, due to which economic growth of these countries are adversely affected.

Effects of Economic Growth on the Growth rate of population

Numerous studies on the economies of the world have displayed that as in the underdeveloped countries both the birth rate and the death rate remain high, the gap between birth rate and death rate remains low, hence the rate of growth of population in such countries is slow. In these countries the income level is so low that malnutrition and undernourishment have become a permanent feature. Medical and sanitation facilities are nearly non-existent. Even safe drinking water is not available to a very large section of the population.
When economic growth takes place, the income levels start increasing, that eventually lead to improvement in standard of living. Medical and sanitation facilities improve and some diseases are eradicated; all these have a direct effect on death rate that starts falling rapidly.
As economic growth catches momentum, there appears a further improvement in the level of income and nutritional levels. Literacy level rises and standard of living improves. There is a greater acceptance of small family norm. All these changes affect both the death rate as well as birth rate. During this phase of economic growth, through which India is passing, the decline in birth rate is faster. As a result of this faster decline in birth rate and the death rate stagnating at a low level, the gap between birth rate and death rate is again very small, clearly indicating that the rate of growth of population is very slow, a trait that all developing countries share and show how much is it important to create a balance between economic growth and population growth to achieve the final aim of creating a developed society.