Economics of Rapid Population Growth (Demography and Development)
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Last updated 4 Jan 2023
Is population growth good or bad for economic development? This topic video focuses on countries where population growth has been and is rapid in relative terms.
Assess the extent to which rapid population growth stimulates economic growth & development
- A young median age and fast natural population growth contributes to an expanding population of working age which can increase long-run aggregate supply (LRAS) causing an outward shift of the PPF.
- Providing per capita incomes are rising, then population growth increases the size of domestic markets - encouraging economies of scale in production and increased capital investment spending by businesses.
- More people in work leads to a widening of the tax base to help improve government finances & public services
- Population growth and urbanisation tend to go together - population growth increases density and, alongside rural-urban migration can lead to benefits from agglomeration economies.
- A fast-growing growing population can be a catalyst for research and development and innovation in farmingdesigned to increase crop yields – encouraging a “green revolution”
- Many young people entering the labour market creates challenges in providing sufficient jobs in the formal economy to prevent a large increase in youth unemployment.
- Fast-growing population holds back the annual growth of per capita incomes. This makes it harder to satisfy everyone’s basic needs and wants and can lead to rising malnutrition.
- Rapid population growth puts increasing pressure on the natural environment including demand for water and energy and can threaten biodiversity.
- High rates of rural-urban migration can lead to problems associated with urban density such as crime, the spread of disease and increased inequalities of income and wealth.