Variations of Economic Growth by Population

The population of the world is increasing rapidly. Population growth was the maximum in the 20th and early 21st centuries. India and China were the leading countries in terms of population growth. This was seen as a huge problem as rapid population growth puts a lot of pressure on natural resources, causing them to deplete more rapidly, which is against the idea of sustainability. Hence, both countries tried to develop ways to reduce the rate of population growth. But it is not like population growth is always disadvantageous. In developed countries, the rate of population growth is very low, which has caused certain problems for their economy. The relationship between economic growth and population is complex.

Negative Consequences of Population Growth on Economic Growth

First, let’s study how a high rate of growth in the population can negatively affect a country’s economic growth. In countries that are socially backward or have low technological advancement, the population is considered a positive hindrance to economic growth. The following points explain why this happens:

1. Affects the rate of capital formation: In developing countries, a large percentage of the population comes under the category of ‘dependents’. This means they are not able to contribute to the economic growth on their own and depend on somebody else to provide for them. It happens due to low educational levels and subpar health infrastructure in these countries.
   Since many people in the working-age population cannot earn on their own, it reduces the rate of capital formation in the country. 
2. More investment required: The more the number of people in a country, the more is the amount of capital investment required to sustain the population. The general public’s capacity to save money also decreases.
   There is a huge investment requirement and there is not enough capital to fulfil those demands. 
3. Unemployment: Massive unemployment is another disadvantage of having a large population with low development levels. The job market is not able to absorb all the eligible people. This increases the unemployment level, which decreases productivity. The population of dependents also increases. People are forced to find work below their qualification levels. Also, the level of crime also increases because people tend to use illegal ways to feed themselves and their families.
   This creates a negative cycle wherein a jobless couple cannot afford to send their kids to a good school, which puts the kid at a disadvantage, and so on. 
4. Hunger problem: As the population increases, the number of people required to be fed also increases. This can result in food scarcity if food production levels do not increase as rapidly as the increase in population. Poor food supply leads to problems like malnutrition in people, which makes them more prone to health problems and adversely affects their productivity.
   Moreover, the government is forced to import food grains from other countries to fulfill the food requirements. This puts a strain on the country’s foreign reserves and also increases the trade deficit. In such a situation, the country’s currency can depreciate, also increasing inflation.
5. Affect on Environment: With the increase in population, the dependence on natural resources for survival increases. The natural resources which are non-renewable do not get replenished and deplete at an alarming rate. Problems like deforestation and pollution increase, which affects the future generation’s chances of survival.
6. Economic inequality: Economic inequality is created when the rate of population growth is too high. The rich get richer and the poor get poorer.

Positive Consequences of Population Growth on Economic Growth

At this point, it may seem like population increase is entirely unwanted. The truth is that healthy population growth does more good for the economy than harm. It is the rapid population growth that causes the above mentioned problems.
In countries like North America, Japan, and European nations, major economic growth came at a time of their moderate population growth. A rise in population increases the demand for products and services, boosts the economy. Technological advancement is also encouraged as a rising population increases demand for better and faster ways to produce goods and services. 

Also, there is easy availability of cheap labour in countries with high population numbers. In such a scenario, large corporations prefer to set up their manufacturing plants in these countries to reduce their cost of production. It provides employment to people and leads to economic growth. China is a prime example of this. Their economic growth was fuelled by the availability of cheap labour. Today, the country is among the fastest-growing nations in the world, at par with the USA.

Conclusion

In western countries, where the population growth has significantly reduced, the demographics are now skewed. The population of older people is more than ever. Since they come in the category of dependents, this puts a strain on the country’s economic development. India’s population growth is at a moderate rate now and it is a positive sign for the nation’s economic growth. By all projections, India will be one of the fastest-growing economies in the world and its population is a major driver.