Effects of Population growth on Economic

Describes Effects of Population growth on Economic Development:

It was only Mathew and Ricardo who created an alarm about the effects of population growth on the economy.

But their fears have proved unfounded because the growth of population in Western Europe has led to its rapid industrialization.

Effects of Population growth on Economic Development, Some effects are as under:

Population and Economic Development

The consequences of population growth on the development of LDCs are not the same because the conditions prevailing in these countries are quite different from those in the developed economies.

Population growth adversely affects their economic development in the following ways. First, economic development depends upon investment.

In LDC, the resources available for investment are limited. Therefore, rapid population growth retards the investment needed for higher future consumption.

Second, rapid population growth tends to ever use natural resources. So the agricultural holdings become similar and un-remunerative to cultivate.

Lastly, with a rapidly growing population, it because difficult to manage the adjustments that accompany economic and social changes.

Population and Per Capita Income

The effect of population growth on per capita income is unfavorable. The growth of the population tends to retard the per capita income in three ways.

  • Increases the pressure of population on land.
  • Leads to a rise in the costs of consumer goods.
  • It leads to a decline in the accumulation of capital because, with an increase in family members, expenses increase.

Thus, the effect of population growth is to lower the per capita income.

Population and Standard of Living

Since one of the important determinants of the standard of living in the per capita income.

A rapidly increasing population leads to an increased demand for food products, clothes, houses, etc.

This brings down further the already low standard of living.

Population and Agricultural Development

In LDCs people mostly live in rural areas. Agriculture is the main occupation, so with population growth, the land-man ratio is disturbed.

The pressure of population on the land increase because the supply of land is inelastic. This trend further reduces per capita productivity with rising unemployment.

Population and Employment

A rapidly increasing population plunges the economy into mass unemployment and underemployment.

A rapidly increasing population reduces incomes, savings, and investment. Thus capital formation is retarded and job opportunities are reduced, thereby increasing unemployment.

Population and Social Infrastructure

A rapidly growing population necessitates large investment in social infrastructure and diverts resources from directly productive assets.

Due to lack of resources, it is not possible to provide not only education but also health, medical, transportation, and housing facilities to the entire population.

There is over-crowding everywhere. As a result, the quality of all services is extremely low.


Population and Capital Formation

Population growth retards capital formation, the effect of population growth on private savings per capita to fall.

Capital formation is adversely affected by the diversion of governmental resources from their more productive uses to current uses to provide the people with their more urgent needs.

It is difficult for the government to levy taxes on the people. As a result, state revenue declines which reduce investment and capital formation.

Population and Environment

Rapid population growth leads to environmental damages. The scarcity of land pushes a large number of people to hillsides the tropical forests.

It leads to overgrazing and cutting of forests for cultivation leads to environmental damage.

Population and World Economy

Rapid population growth also affects the LDCs in relation to the world economy in a number of ways.

First, rapid population growth tends to increase income disparities between LDCs, and developed countries.

Second, rapid population growth encourages international migration. Third, emigration tends to increase the wages of workers substantially at home.

Fourth, another beneficial effect of this is that emigration remits large sums of money back home.

In addition, the balance of payments deficit helps countries to recover from remittances through migrants.

Finally, as the population grows, so does the domestic consumption of exportable goods.

Related Articles

Definition of Demand

Leave a Comment

%d bloggers like this: