Effects of Population Growth on Economic Development

6. Effects of Population Growth on Economic Development

Rapid population growth affects nearly every dimension of economic development — some effects

are adverse, and a few, under the right conditions, can be positive (echoing the dividend-versus-

burden idea of Section 5).

Adverse effects, when growth outpaces the economy's capacity:

• Pressure on per capita income. Even when total national income (GDP) grows, a rapidly growing population means that same output must be divided among more people, slowing the growth of per capita income — the more meaningful measure of whether average living standards are actually rising.
• Strain on natural resources. More people place greater demand on land, water, forests, and food supply; India's per-person availability of cultivable land and fresh water has been falling steadily as population has grown, even though total output of both has risen.
• Pressure on infrastructure and social services. Housing, transport, sanitation, healthcare, and education systems all have to expand continuously merely to maintain existing per-person service levels, let alone improve them — a fast-growing population makes this continual expansion far more difficult to keep pace with.
• Unemployment and underemployment. A labour force that grows faster than the number of new jobs the economy can create results in open unemployment and, especially in agriculture, widespread disguised/underemployment — a theme this syllabus develops fully in the following Unemployment chapter.
• Environmental degradation. Higher population density intensifies pressure on forests, soil, and water bodies, and generates more waste and pollution, particularly around fast-growing urban centres.
• Slower capital formation per worker. A larger share of national income must go toward simply maintaining the existing (larger) population's current consumption, leaving proportionately less available for savings and investment in new productive capacity — slowing the rate at which the economy can build new capital per worker.

Potentially positive effects, when the economy IS able to absorb growth productively:

• A larger labour force can mean higher total output, provided productive employment is available.
• A larger domestic market — more consumers — can support economies of scale in production and encourage investment aimed at the domestic market. …