Relationship Between Population Growth & Economic

Development

Nanda Lal Darnal

Teaching Assistant
Tribhuwan University
Hyatrung Jharana Campus,
Sakranti Bazar-1, Tehrathum

1. Introduction
After the Second World War several Asian, African and Latin
American countries were freed from colonial rule. With the achievement
of political independence cam heightened hops and on political
independence ware heightened hopes and aspiration for eradicating
poverty and wiping out the evils and miseries associated with poverty.
These newly independent nations also aspired to raise the standard of
living of the masses in order to improve the quality of their life. They
chose the pa/\th of planned development and adopted time-bound
national development plans for the achievement of the social and
economic betterment of their people1.
The United Nations recognized the need for action for
development and designated the decade of the 1960s as the "United
Nations Development Decade" 2. The efforts of this body were directed
to the achievement of a self-sustaining growth of the economy of the
individual nations and their social advancement. The preparation of
proposals for action during the development decade led to a better
1
Asha A. Bhende, and Tara Kanitkar,, "Principle of population studies", Himalaya publishing house- Bombay-1996 p.396

2
United Nations, The united Nations Development Decade proposals for Action, E/3613, New York:1962 P.III
understanding of the objectives of the development process. It soon
came to be recognized "that development concerns not only man's
material needs, but also the improvement of the social conditions of his
life and his broad human aspirations. Development is not just economic
growth; it is growth plus change.
While the developing nations were enthusiastically planning for a
rapid improvement in their standard of living, an important change in
demographic trends was silently taking place. The death rates of these
nations ware declining rapidly, with consequent rapid increases in
population. The population census operations conducted in the 1950s
revealed that the rates of growth had increased and that there had been
an unprecedented spurt in the population growth of many developing
countries. The realization that the rapidly increasing population could
hamper the efforts for economic development stimulated demographers,
sociologists, economists, development planners and administrators to
study, in greater depth, the interrelationship between population growth
and economic development. The various aspects of socio-economic
development covered in these studies included the following: national
and per capita income, resources and productivity, saving and
investments, manpower utilization; food and nutrition, health, education,
social welfare and social security, status of women, child development,
housing, environment etc. The problem was studied both at the empirical
as well as the theoretical levels. As a result, the general picture of the
relationship between population growth and economic development is
fairly clear. It is now generally accepted that a rapid population growth
obstructs development efforts and complicates the existing problems
associated with development3.

2. The Concept of Economic Development

3
Asha A. Bhende, and Tara Kanitkar,, "Principle of population studies", Himalaya publishing house- Bombay-1996 p.396
 Generally speaking, economic development refers to the problems
of under developed countries. Though the study of economic
development has attracted the attention of economists' right from Adam
Smith to Marx and Keynes, yet they were mainly interested in the
problems which were essentially static in nature and largely related to a
western European framework of social and cultural institutions. It is,
however, in the forties of the 20th century and especially after the
Second World War that economists started devoting their attention
towards analyzing the problems of underdeveloped countries and
formulating theories and models of development and growth. Their
interest in the economics of development has been further stimulated by
the wave of political resurgence that swept the Asian and African
nations as they threw of the colonial yoke after the Second World War.
The desire on the part of new leaders in these countries to promote rapid
economic development coupled with the realization on the part of the
developed nations that 'poverty anywhere is a threat to prosperity
everywhere', has aroused further interest in the subject4.
Various economists have defined economic development
differently. Development is a multidimensional process involving major
changes in social structure, popular attitudes and national institutions as
well as the acceleration of economic growth, the reduction of inequality
and the eradication of absolute poverty 5. Prof. Meier and Baldwin
Say-"Economic development is a process whereby an economy's real
nation income increases over a long period of time." According to prof.
Meier-" Economic development is the process whereby the real per-
capita income of a country increases over a long period of time, subject
to the stipulations that the number below an absolute poverty line does
not increase and the distribution of income does not become more
4
M.L.Jhingan, "The Economics of Development and Planning", 40th Edition, India, Vrinda publications(P) Ltd. 1997
p.1
5
Todaro, M.P.(1997), Economic Development. Sixth Edition. London: Addision-wesley Longmen.p.23
unequal."According to UNO-"Development concerns not only man's
material needs, but also the improvement of social conditions of his life.
Development is, therefore, not only Economic Growth but Growth plus
Change-social, cultural and institutional as well as economic."
We may conclude that development is both a physical reality and a
state of mind in which society has, through some combination of social,
economic and institutional process, secured the means for obtaining a
better life. Whatever the specific components of this better life,
development in all societies must have at least the following three
objectives6.
(a) To increase the availability and widen the distribution of basic life
sustaining goods-such as goods, shelter, health and protection.
(b) To raise levels of living- including, in addition to higher incomes,
the provision of more jobs, better education and greater attention to
cultural and humanistic values, all of which will serve not only to
enhance materials well-beings but also to generate greater individual
and national self esteem.
(c) To expand the range of economic and social choices-available to
individuals and nations by freeing them from servitude and
dependence not only in relation to other people and nation-states but
also to the forces of ignorance and human misery.
3. Difference Between Economic Development and Economic
Growth
Economic development refers to the problems of under developed
countries and economic growth to those of developed countries.
Maddison makes the distinction between the two terms in this sense
when he writes:" The raising of income levels is generally called
economic growth in rich countries and in poor ones it is called economic

6
Ibid p.18
development 7.The problem o f underdeveloped countries are concerned
with the development of unused resources, even though their uses are
well-known, while those of advanced countries are related to growth,
most of their resources being already known and developed to a
considerable extent8. Schumpter makes the distinction clearer when he
defined development, "as a discontinuous and spontaneous change in the
stationary state which forever alters and displaces the equalibrium state
previously existing; while growth is a gradual and steady change in the
long run which comes about by a gradual increase in the rate of savings
and population."9
Thus economic growth is related to a quantitative sustained
increase in the country's per capita output or income accompanied by
expansions in its labour force, consumption, capital and volume of trade.
On the other hand, economic development is a wider concept than
economic growth. It is taken to mean growth plus change. It is related to
qualitative changes in economic wants, goods, incentives, institutions,
productivity and knowledge or the "upward movement of the entire
social system"10. However these two words may be used as synonyms.
4. Population Growth and Economic Development
The consequences of population growth on economic development
have attracted the attention of economists over since Adam Smith wrote
his Wealth of Nations. Adam Smith wrote," The annual labour of every
nation is the fund which originally supply it with all the necessaries and
conveniences of life." It was only Malthus and Ricardo who created an
alarm about the effects of population growth on the economy. But their
fears have proved unfunded because the growth of population in
7
A. Maddison, Economic progress and policy in Developing countries, 1970.p.21

8
V. Hicks.,"Learning about Economic Development," O.E.P., Feb.1957 p.42
9
J .A.Schumpter,. The Thory of Economic Development, 1934.p32
10
M.L.Jhingan, "The Economics of Development and Planning" , 40th Edition, India, Vrinda publications(P) Ltd. 1997
p.45
Western Europe has led to its rapid industrialization. Population growth
has helped the growth of such economies because they are wealthy, have
abundant capital and scarcity of labour. Population growth affects
economic development in two ways: First, by promoting economic
development and second, by retarding economic development.
4.1 Population Growth: A Factor Promoting Economic
Development
Kuznets, Lewis, Meier, Hirschman and other economists have
shown that the growth of population has been an important factor in the
economic growth of developed and under developed countries in the
following ways11:
(a) Increase in Per Capital Product:- Prof. Kuznets in his study
Modern Economic Growth has pointed out that substantial rates of
population growth in Europe have led to high rates of increase in total
product and per capita product. The growth of national product in
turn, has been due to the enormous addition to population which has
led to large increase in working labour force. Kuznets points out that,
"in modern times growth in population has been accompained by
growth in aggregate output for many countries so large that there was
also a marked secular rise in per capita product.
(b) Rise in Labour Productivity:- The rise in the rate of per capita
product is the result of rise in labour productivity. It is improvement
in the quality of labour which increases productivity per unit of
labour. This means a rise in the efficiency of labour which leads to
greater output per unit of labour. Studies made by schultz, Harbison,
Kendrick, Solow and a host of other economists reveal that one of the
important factors responsible for the rapid growth of American
Economy has been the increase in labour productivity. According to

11
Ibd.p.416-417
 prof. J.K. Galbraith, a large part of America's industrial growth has
been from improvement brought about by improved men.
(c) Source of Capital Formation:- It has been proved by recent
researches that the growth of physical capital stock depends to a
considerable extent on human capital formation which is the" process
of increasing knowledge, the skills and capacities of all people of the
country."The spread of education, knowledge and know-how raise the
level of skills and physical efficiency of the people and thus increase
the productivity of physical capital. The latter, in turn, raises the
national product.
4.2 Population Growth: A Retarding Factor to Economic
Development
Prof. Villard, Prof. Meier, H.W. Singer, H. Leibenstein and other
economists are in favour of the population growth is one of the main
obstacles to economic development. But the consequences of population
growth on the development of Under Developed Countries (UDCs) are
not the same because the conditions prevailing in these countries are
quite different from those of the developed economies. These economies
are poor capital scare and labour- abundant. Population growth
adversely affects their economic development in the following ways12:
(a) Investment:- Rapid population growth makes the choice more
scare between higher consumption now and the investment needed to
bring higher consumption in future. Economic development depends
upon investment. In UDCs the resources available for investment are
limited. Therefore, rapid population growth retards investment needed
for higher future consumption.
(b) Overuse of Resources:- Rapid population growth tends to overuse
the country's natural resources. This is particularly the case where the
12
M.L.Jhingan, "The Economics of Development and Planning" , 40th Edition, India, Vrinda publications(P) Ltd. 1997
p.45
majority of people are dependent on agriculture for their livelihood.
With rapidly rising population, agricultural holdings become smaller
and unremunerative to cultivate. There is no possibility of increasing
farm production through the use of new land (extensive cultivation).
Consequently, many households continue to live in poverty. In fact,
rapid population growth leads to the overuse of land, there by
endangering the welfare of future generations.
(C) Employment:- A rapidly increasing population plunges the
economy into mass unemployment and underemployment. As
population increases, the proportion of workers to total population
rises. But in the absence of complementary resources, it is not
possible to expand jobs. The result is that with the increase in labour
force, unemployment and under-employment increases. As a result,
reduces income, savings and investment. Thus capital formation is
retarded and job opportunities are reduced, thereby increasing
unemployment. Moreover, as this labour force increases in relation to
land, capital and other resources, complementary factors available per
worker decline. As a result, unemployment and underemployment
increase.
(d) Environment:- Rapid population growth leads to environmental
damage. Scarcity of land due to rapidly increasing population pushes
large number of people to ecologically sensitive areas such as hill
sides and tropical forests. It leads to overgrazing and cutting of forests
for cultivation leading to severe environmental damage. Moreover,
the pressure of rapid growth of population forces people to obtain
more food for themselves and their livestock. As a result, they over-
cultivate the semi-arid areas. This leads to desertification over he the
long run when land stops yielding anything. Besides, rapid population
growth leads to the migration of large numbers to urban areas with
industrialization. This results in severe air, water and noise pollution
in cities and towns.
(e) Capital Formation:- Population growth retards capital formation.
As population increases, per capital available income declines. People
are required to feed more children with the same income. It means
more expenditure on consumption and a further fall in the already low
savings and consequently in the level of investment. Further, a rapidly
growing population by lowering income, savings and investment
compels the people to use low level technology which further retards
capital formation.
(f) Urbanization:- With rapidly growing population, it becomes
difficult to manage the adjustments that accompany economic and
social change. Urbanization in UDCs creates such problems as
housing, power, water, transport etc. Besides, growing population
threatens permanent environmental damage through urbanization in
some rural areas.
(g) Agricultural Development:- In UDCs, people mostly live in rural
areas, Agriculture is their main occupation. So with population
growth the land-man ratio is disturbed. Pressure of population on land
increases because the supply of land is inelastic. It adds to disguised
unemployment and reduces per capita productivity further. As the
number of landless worker increases, their wages fall. This low per
capita productivity reduces the propensity to save and invest. As a
result, the use of improved techniques in agriculture suffers and the
economy is bogged down to the subsistence level. The problem of
feeding the additional population becomes serious due to acute
shortage of food products. Thus, the growth of population retards
agricultural development and creates a number of other problems
discussed above.
(h) Standard of Living:- Since one of the important determinants of
the standard of living is the per capita income, the factors affecting
per capita income in relation to population growth equally apply to
the standard of living. A rapidly increasing population leads to an
increased demand for food products, clothes, houses etc. But their
supplies cannot be increased in the short run due to lack of co-operant
factors like raw materials, skilled labour, capital, etc. Consequently,
their costs and prices rise which rise the cost of living of the masses.
This brings down further the already low standard of living. Poverty
breeds large number of children which increases poverty further, and
the vicious circle of poverty, more children and low standard of living
continuous.
(i) Social Infrastructure:- Rapidly growing population necessities
large investments it social infrastructure and diverts resources from
directly productive assets. Due to scarcity of resources it is not
possible to provide educational, health, medical, transport and
housing facilities to the entire population. There is over-crowding
everywhere. As a result, the quality of these services goes down. To
provide these social infrastructures requires huge investment.
(j) Per Capita Income:- The effect of population growth on per capita
income is unfavorable. The growth of population tends to retard the
per capita income in three ways:
(1) It increases the pressure of population on land;
(2) It leads to rise in costs of consumption goods because of the
scarcity of cooperant factors to increase their supplies;
(3) It leads to a decline in the accumulation of capital because with
increase in family members; Expenses increase. These adverse effects
of population growth on per capita income operate more severely if
the percentage of children in the total population is high. A large
number of children in the population entail a heavy burden on the
economy, because these children simply consume and do not add to
the national product. Another factor is the low expectancy of life in
underdeveloped countries. It means that there are more children to
support and few adults to earn thereby bringing down the per capita
 income. Whatever increase in national income takes place that is
nullified by increase in population. Thus the effect of population
growth is to lower the per capita income.
(5) Population Growth and Economic Development in Nepal
5.1 Population in Nepal, Size and Growth
Nepal's population problem may be viewed from three aspects:
i) The absolute size of population;
ii) The rate of growth of the population;
iii) The age structure of the population;
i. The absolute size of population:- Nepal is a developing
country. According to the 1981 census, the total count of the
population of Nepal was 1, 50, 22, 839. The size of population in
1991 and 2001 census was increased and the total number of
population was 1, 84, 91, 097 and 2,31,51,423 respectively .
According to the 2011 census, the number of population is 2, 64, 94,
504. Thus, the size of population in Nepal is increasing.
ii. The Rate of Population Growth:- Even a low rate of
population growth would add a large population to the country each
year. The geometric rate of population growth in Nepal during 1991-
2001 was 2.24 % and during 2001-2011 was 1.35%. Although the
growth rate appears to be low, it has a tremendous effect on
population growth.
iii. The Age Structure:- Any population does not become a
problem just because it is quantitatively large. The age structure of
the population is also an important aspect of the problem, for this
affects the process of development: when a country's birth rate is
high, as in Nepal, a large number of non-productive persons are
added to the population every year. The declining infant mortality
 rates in many developing countries increase the number or children
in the total population. The high birth rate and the large number of
children in the population increases. The pressure on different kinds
or services, such as maternal and child health services, nutritional
services for pre-school children, primary and secondary school
services etc. According to the 2011 census of Nepal, 34.91% of the
total population was below the age of 15.
5.2 Population Growth and Educational Attainment in Nepal
Education is a key to every type of development and therefore each
of Nepal's development plans accords a high priority to education.
Population growth and education are closely related. The demand for
primary education has increased as a result of high population growth. In
the 2001 census, It was found that the general literacy rate in Nepal was
54.1%. It may be observed that the rate of literacy has increased from
54.1% in 2001 to 65.9% in 2011. The rapidly increasing population
places heavy obstacles in the path of educational planning. When the
number of school-going children is very large, the number of new
entrants to the school-going as every year is also very large. The
government is spending its huge percent of national budget on
education. Still there are great challenges to overcome. Rapid population
growth has made difficult to attain the goals of education.
5.3 Population Growth and Health and Medical Services In Nepal
Health, as defined by the World Health Organization (WHO), is a
state of complete physical, mental and social well-being, and not merely
the absence of disease or infirmity. It is an important aspect of the
quality of human life, which can be improved by the provision of
efficient human services. It is taken that there should be one doctor for a
population of 3500 and one hospital bed for a population of 1000(Health
service and planning committee, 1986, India). In Nepal there is one
doctor for 13, 300 populations and one hospital bed for 4777 population.
It is estimated that only 20% of total population is benefited from health
services.
6. Economic Consequences of Rapid population Growth
A Rapid population growth slows down the growth of per capital
income and also restricts the growth of the gross national product by
holding down the rate of savings and capital formation. As food
production, sufficient for the growing population has to be given
priority, the allocation of resources to their aspects of socio-economic
development becomes limited. Rapid population growth also tends to be
perpetuate the disparities in income distribution which exist in the
developing countries.
With Rapid population growth, the number of new entrants to the
labour force increases each year. Unemployment and underemployment
increase because the country's economy finds it difficult to provide jobs
for all these new entrants. The surplus labour force is, therefore,
compelled to work in the agricultural sector, as a result of which there is
pressure on land. The availability of cheap labour inhibits the
development of technology.

7. Conclusion
The consequences of a rapidly increasing population are to retard
all development efforts in an underdeveloped country unless
accompanied by high rates of capital accumulations and technological
progress. But these counteracting factors are not available and the result
is that population explosion leads to declining agricultural productivity,
low per capital income, low living standards, mass unemployment, low
rate of capital formation and adverse balance of payments.
 References
Bhende, A.Asha and Kanitkar, Tara, "Principle of population
studies", Himalaya publishing house- Bombay-1996

Hicks.v,"Learning about Economic Development," O.E.P.,

Feb.1957
Jhingan, M.L.(1997), "The Economics of Development and
Planning", 40th Edition, India, Vrinda publications(P) Ltd.

Kuznets, S., Modern Economic Growth, 1996

Kuznets, S.,"Population and Economic Growth.," proceeding of
the American philosophical society, Vol .iii, No.3, June
1967.
Lewis, W.A., Economic Development with Unlimited
Supplies of Labour," Manchester School," May 1954.
Maddison, A. Economic progress and policy in Developing
countries, 1970.
Nurkse, R., Problems of capital Formation in
underdeveloped countries, 1951.
Population Monograph of Nepal (CBS), 2003.
Schumpter, J.A.,The Thory of Economic Development,
1934.
Todaro, M.P.(1997), Economic Development. Sixth
Edition. London: Addision-wesley Longmen.
United Nations, The united Nations Development Decade
proposals for Action, E/3613, New York:1962 P.III.