Q: Explain the relationship between the opportunity cost of time and population growth.
On a basic level, the link between population increase and per capita income growth is obvious. After all, total income divided by population equals per capita income. The difference between the growth rate of income and the growth rate of population is generally equivalent to the growth rate of per capita income.
Various economists have expressed their opinions on the definitions of population growth and economic development, as well as the link between the two and how they affect or effect various economies.
According to the popular Malthus theory, while population grew in a geometric fashion, food supply grew in an arithmetic mode. This is also Todaro et al. (2009)’s point of view, who claim that Malthus’ postulation of a country’s population growth was rising at a geometric pace and could be suppressed by a decrease in food availability. According to him, the food supply will grow at an arithmetic rate as diminishing returns affect agricultural land produce over time, and population growth will result in competition for land use, with the opportunity cost of either agricultural use or other needs such as housing, hospitals, and so on.
Opportunity cost ( economic groth)
Economic development may be defined as the process of improving the citizenry’s or population’s quality of life. This can be accomplished by raising people’s living standards – particularly by increasing food, healthcare, and education consumption levels; establishing political, social, and economic sectors that promote human dignity, thereby increasing people’s sense of worth; and expanding people’s opportunities by increasing the variety of goods and services available to them.
Economic development may also refer to a better state of the economy as it moves from a lower level of activity to one marked by technological breakthroughs and activity.
Growth of the Population
Population growth is defined as a numerical rise in the number of people living in a certain region over time. When individuals are born in a nation or immigrate to a country other than their native country, the population grows. As people die or leave from their natal nation, the population falls in equal measure.
Assessing the relationship between population growth and economic development may be done by looking at the impact of population expansion on economic development and vice versa. The stages of Demographic Transition theory may be examined in three distinct time frames to better understand the population growth pattern: before the transition, during the transition, and after the transition. The primary driver of global population rise is natural increase, or the excess of births over deaths. In every subdivision of the world, net migration, or the difference between out- and in-migration, is a factor.
In Less Developed Countries, rising population has a tendency to decrease per capita income growth, resulting in income distribution disparities. It also stifles savings and capital investment, lowering the nation’s Gross National Product growth rate. If increased per capita income (or production) is employed as a metric for improving the average standard of living, then follows that an economy with stagnating total income and a growing population is likely to have its average standard of living deteriorate throughout the time period under consideration.
Population growth competes with capital formation. The dependency ratio (i.e., the ratio of the non-working population to the working population) may continue to climb as a result of the growing population, forcing more money to be spent on the dependent ratio at the expense of other expenditures. The relationship between population and economic growth may be investigated from a demand and supply viewpoint. On the demand side, population growth raises demand for food, services, and other finite resources. On the supply side, the availability of more labor to produce more goods and services is considered.
The presence of insufficient demand indicates that the pace of investment is less than available resources, therefore population expansion may be beneficial to economic advancement. As a result, demand shifts to more capital-intensive items like houses. Furthermore, encouraging urbanization and the development of agricultural areas stimulates investment since population growth boosts demand and accelerates production growth. Individuals may be encouraged to work harder and be better equipped to perform land clearing, enclosure, and reclamation as a result of population increase, i.e. a greater rate of investment is likely to result in more effort on the side of the cultivator.
It’s also crucial to distinguish between developed and developing countries or communities, as their impacts are vastly different. The major economic consequences of fast development in less developed nations are on supply, productive capabilities, and capacities, but in developed countries, the effects are primarily observed on demand levels.
Coale, A. J., & Hoover, E. M. (2015). Population growth and economic development. Princeton University Press.
Furuoka, F. (2009). Population growth and economic development: New empirical evidence from Thailand. Economics Bulletin, 29(1), 1-14.
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