Demography, development and demagogues. Is population growth good or bad for economic development?
Sanni Yaya, Helena Yeboah and Ogochukwu Udenigwe
The relationship between population growth and economic growth has been debated extensively among economists and demographers. The burning question of whether population growth is good or bad for economic growth has not arrived at a consensus or clear generalization despite several years of debate but proponents of pessimistic and optimistic views on the matter can point to research to support their views. Early discourse on population was initiated by Thomas Malthus who suggested that excessive population growth ought to be controlled to avoid impending (economic) disaster (Peterson 2017). Malthus deemed various types of preventive checks necessary to keep population growth at an adequate level to meet sustenance needs. These preventative checks arguably exist in present-day policies that directly or indirectly influence population trends. For instance, while population related targets are not explicitly mentioned in the sustainable development goals (SDGs), some goals and targets are directly relevant to population trends. The SDG targets in the areas of reproductive health and on universal primary and secondary education will impact population growth (Abel et al. 2016). Proponents of the Malthusian view argue that a fast growing population and high fertility heightens the pressure on natural resources and burdens the economically active population (Mberu and Ezeh 2017). In this scenario, investments in health and education will not be high enough to cover the needs of the population, therefore, resources will be channeled to feeding the growing population thereby impacting future economic growth. Recent studies have reflected this argument. Yao, Kinugasa, and Hamor (2013) concluded that population size impacted economic growth negatively in China. Banerjee (2012) also contended that population growth negatively impacted per capita GDP growth in Australia. In Uganda, Klasen and Lawson (2007) found a negative impact of high population growth on per capita economic growth. Therefore, from the pessimists’ viewpoint, countries with higher population growth will record lower economic growth while those with lower population growth are more likely to score higher economic growth rates.
Contrary to the Malthusian argument, other bodies of work have viewed population growth as an opportunity for economic growth. Esther Boserup contradicted the prevailing Malthusian view with claims that population growth catalyzes technological inventions and advancement which spurs economic growth (Marquette 1997). Boserup’s views have historical roots in the works of Adam Smith and Karl Marx. In explaining the concept of economy of scale, Adam Smith identified the need for a growing population that will enhance an efficient division of labor. This, as Smith indicated, is key to achieving better return on production (Ucak 2015). Similarly, Marx and Engels explained that in the middle ages, a large population was necessary to allow for division of labor and increase commerce. For Marx, population growth is a consequence of capitalism and a condition for capitalist mode of production (Marx and Engels 1932). Boserup contends that population is an independent factor in developing advanced agricultural technologies which in turn increases productivity. With a focus on sub-Saharan Africa, Boserup argued that economic advancements were hindered by various factors in the region including a historically sparsely population due to the slavery era, a lack of investment in infrastructure dating back to the era of colonization, ineffective governance and Africa’s dependence of foreign aid and imports (Marquette 1997).
More recent discourses have posited population growth as a critical component of economic growth. Thomas Piketty, in Capital in the Twenty-First Century, contends that the economic growth of a nation “always includes a purely demographic component and a purely economic component” (p.27) (Piketty 2014). Piketty’s narrative suggests that high levels of economic growth and economic equality that occurred in the Global North decades after world war II were enhanced by surging birth rates. The sheer bulk of population in China and India is arguably a part of the reason for their current GDP growth rate, which remains among the highest in the world. With the decline in population around the globe, Piketty argues that economic output will be much slower than the norm. Similar discourses agree on the importance of population growth in economic growth and on the detrimental effect of a slow growing population to population growth per capita output while cautioning on the adverse effect of rapid population growth in low-income countries (Peterson 2017). Other recent studies have found statistically significant and positive effects of population growth on economic growth among Common Market for Eastern and Southern Africa (COMESA) member countries (Tumwebaze and Ijjo 2015). The findings show that while population grows, positive factors such as market enlargement, cheap labor, economies of scale and specialization as well as technological progress contribute to increase productivity, which yields greater per capita income.
To the optimist therefore, population growth is among the robust drivers of economic growth (Sethy and Sahoo 2015; Tumwebaze and Ijjo 2015).
Another argument is that the demographic structure of a country provides two channels, fertility rate and mortality rate, and these channels have different impacts on economic growth rate (Mierau and Turnovsky 2013). Population growth resulting from reduction in mortality rates stimulates economic growth while population growth stemming from increase in fertility tend to slow economic growth. Proponents of this argument explain that newborns are considered “resource users” who have little accumulated wealth and so rapid increases in birth rates depletes per capita stock and aggregate savings which tend to reduce economic growth. Working adults on the other hand, are regarded as the “resource creators” and therefore, decreases in mortality rates, particularly adult mortality, will eventually increase economic growth rates.
These unfolding arguments have implications for the African continent where the population continues to grow at a rapid rate. In this chapter, the authors argue that Africa’s demographic features do not necessarily spell doom for economic growth in the region. In fact, economic growth can be furthered by a fast-growing population and labor force. We employed extensive literature review; databases searches of the World Bank, UN Department of Economic and Social Affairs; and analysis of relevant secondary data as we sought to analyze the relationship between economic growth and population growth in African countries.