Population Growth and Asian Developing Countries Essay Example

M. Solos (year not provided), took a different approach by focusing on the rate of population growth rather than the overall population level. Solos argues that an increase in the rate of population growth can have detrimental effects on productivity and economic growth, reducing both capital per worker and steady-state output per worker.

However, there are individuals who hold a different perspective and suggest that population growth can actually have a positive impact on economic growth. Lullaby (1998) provides support for this viewpoint by proposing that a larger population can lead to both "technology pushed" and "demand pulled" effects.

This paper aims to explore the effects of population growth on economic growth in Asian developing countries facing challenges due to this growth. It examines whether increased population growth benefits or hinders economic growth. The paper is divided into four sections, with the first section focusing on factors influencing population growth - mortality and fertility rates. Section 2 analyzes the positive and negative effects of population growth on economic growth, including economies of scale and technological progress. Solos model is used to illustrate negative consequences. In Section 3, Linear Regression tests using data from eight Asian Developing countries between 1965 and 2010 are examined to determine the impact of higher population growth on economic growth in these countries. Finally, Section 4 predicts future population trends and their potential influence on economic growth in Asian Developing countries.The objective of this study is to investigate the correlation between population growth and economic growth in Asian developing countries. Specifically, we aim to analyze the relationship between population growth rate and GDP per capita in these nations. However, it is important

to acknowledge some limitations. Firstly, our analysis relies on the Solos model, which includes assumptions that may not be entirely accurate. These assumptions assume no interrelation or closed economy situations among all countries, as well as technological progress being considered as an assumption with validity dependent on its sensitivity to final results. Additionally, collecting data for the multiple regression test is time-consuming and there is insufficient available data prior to 1980, which affects the accuracy of our regression test. Moreover, due to constraints related to the Solos model and limited data availability within specific time constraints, we were unable to incorporate investment rate data into our regression model test. We assume that other variables have minimal impact on our regression test results. To analyze the impact of population growth on economic growth in Asian developing countries, we conducted a literature search using various sources such as published works, textbooks, and internet sources. This thesis examines the relationship between population growth and economic growth through theoretical and numerical analysis.We conducted multiple regression tests in Microsoft Excel to analyze the impact of population growth on the economies of eight Asian developing countries from 1965 to 2010. Our primary objective was to determine whether higher population growth has a positive or negative effect. One crucial factor influencing population growth is the change in mortality rates, which have experienced significant shifts in Asian countries over the past two centuries (18th century to 20th century). Demographers use life expectancy at birth as an indicator for mortality levels. It is worth noting that life expectancy at birth has notably risen since the 18th century.

Figure 1 presents data on life expectancy in

Asian developing countries obtained from workloads.org during the years 1960-2000. This data illustrates that life expectancy increased by approximately 1.5 times, going from 48.17 to 68.75. The improvement in life expectancy can largely be attributed to advancements in overall living standards like housing, food, and water quality. Higher income levels also contribute to better nutrition and enhanced disease resistance among individuals.

For instance, China witnessed an increase in GDP per capita from $92 USD in 1960 to $111.62 USD in 1970 (approximately a growth of 1.3 times). Concurrently, life expectancy rose from around 46 years to roughly 61.97 years (also a multiplication of about 1.3).The introduction of new technologies such as medical treatments, drainage systems, and vaccines against diseases like smallpox and measles has contributed to the improvement in life expectancy in Asian countries. This has led to a faster increase in life expectancy compared to Western nations. Another significant factor that contributes to the rise in life expectancy is the decline in total fertility rates (TFR) observed in Asian developing countries over the past three decades. According to the United Nations Population Division, the average TFR decreased from 6.27 in 1965 to 2.47 in 2009. Several factors contribute to this decline including government-led family planning programs and socioeconomic factors like delayed marriages and rising costs of healthcare and education for children. Additionally, increasing income levels raise the opportunity cost associated with raising children. Education, particularly female education, also plays a crucial role in influencing fertility rates as highly educated women have a preference for well-educated children which further increases expenses and challenges connected with raising a large number of offspring. The economy's growth has resulted

in higher education levels to meet its demands, as indicated by Cochrane's 1983 studies which suggest that increased education levels have a negative impact on fertility rates.
The Net rate of reproduction (NOR), as defined by David N. Well in 2008, is a valuable measure for examining the relationship between mortality and fertility. NOR represents the average number of daughters each girl can be expected to give birth to and is calculated using the formula NOR=?F(I) * 0(I), where F(I) represents the specific fertility rate at age I and 0(I) represents the probability of being alive at age I. Both birth rate and mortality rate are important factors that determine NOR's value.

In our sample, most countries have seen an increase in life expectancy. However, data from the United Nations Population Division reveals that NOR consistently declined from 1970-2005 due to a faster decline in total fertility rate (TFH). For instance, taking India as an example, over a span of 45 years from 1955-2000, despite an increase in life expectancy from 42.6 to 62.1, NOR only slightly decreased from 1.75 to 1.43 as TFH experienced a significant decline from 5.92% to 3.45%. The impact of "declining infant mortality rate" on fertility rate holds great significance.

It should be noted that every family has its own desired fertility rate based on factors such as infant death rates (h). For example, if a family desires a fertility rate of two children but the infant death rate is high (h), they would need to give birth to four children in order to ensure that two will survive in the future.The reduction in infant mortality rates over time, as observed in Indonesia

(from 201/1000 to 27/1000), leads to a decrease in overall fertility rates even if desired fertility remains stable or decreases. Population growth has both positive and negative effects on economic growth. One positive effect is the concept of "Economies of Scale," which suggests that despite the Malthusian theory's prediction of diminishing returns due to limited resources, population growth can actually benefit a nation's economy. Scholars such as Sunset (1956), Booster(1965), Simon (1981), and Kindlier (1977) support this argument by highlighting how economies of scale contribute to increased productivity per unit of labor within a country.

However, it is important to note that rapid population growth can also pose challenges for a country. It may lead to capital dilution, scarcity of vital resources, and potential poverty, famine, and starvation for the entire population.

In summary, population growth can have positive effects on a country's economy through the concept of "economies of scale." A larger population creates a bigger market size, necessitating larger and more efficient manufacturing plants. This results in reduced production and setup costs per output. Additionally, a larger population provides an abundant workforce that allows firms to divide tasks through division of labor.The specialization of laborers leads to increased production and improved working skills. The high demand for products due to a large population decreases the time required for production, resulting in cost reduction and improved efficiency. Additionally, rapid population growth has positive impacts on communication and transportation within the country. Investing in transportation infrastructure such as railroads and highways is necessary to accommodate the growing population density.

China's population density significantly increased from 110 people per square kilometer in 1985 to 910 people per square kilometer

in 2010. Consequently, the length of railroads increased by 75%. Improving transportation is a common trend for economic development; however, it is evident that population density strongly influences the construction of transportation infrastructure.

According to Julian L. Simon's "The Ultimate Resource," population growth contributes to an enhanced transportation system that stimulates economic development (Simon, 1998). The Industrial Revolution shifted away from the Malthusian population growth model and emphasized the significance of technology for economic growth.

In Caboodles' model, output per worker (y) is represented by y = C * h^A equation where A represents productivity and h represents human capital per worker. Technological progress indicated by an increase in parameter A leads to higher output per worker with the same input.Solos (1956) emphasized the significant role of technological change, prioritizing it over capital accumulation. Multiple theories support the positive impact of population growth on technology advancement. Economists Booster (2004) and Simon (1998) challenge the Malthusian perspective and share an optimistic view. Their theories suggest that when a population faces critical events like food or essential goods shortages, individuals find solutions by increasing workforce, adopting new production methods, or inventing tools and machines. Simon-Statesman's economic growth model further demonstrates that a larger total population leads to greater technological growth, resulting in higher per capita income. Moreover, a high population growth rate signifies a rapid increase in school-age population for a country. Instead of investing in other industries to enhance overall capital accumulation, the government should allocate more public spending towards schooling and educational facilities. However, having an abundance of school-age individuals creates pressure on the nation's general education level thus impeding progress.However, when a significant investment is made

in education, it can result in the accumulation of human capital. This includes competencies, knowledge personalities, and the ability to generate economic value. Human capital has two impacts on economic development: it serves as a productive factor akin to machines and vehicles, while also positively influencing productivity. Thus, the link between population growth and technological advancement becomes evident. The increase in workforce size due to population growth leads to lower average wages. In developing nations, this decrease in wage rate is crucial for industrialization and modernization, both of which contribute to a country's prosperity. Moreover, directing resources towards research and development (R) rather than excessive labor costs allows businesses to make significant strides in technology, ultimately resulting in enhanced productivity.