Chapter:7 POPULATION GROWTH World Population Figure 7-1 in Radelet: World population was below half billion and had increased very slowly until 1500. In 1804 1 billion, in 1927 2 billion, in 1960 3 billion, in 1974 4 bn, in 1987 5 bn, in 1999 6 bn. We reach each one billion in less time. And so on? What happens if ? Malthus (1766-1834) said that population would increase geometrically with increasing income, but the only way to control population would be wars, epidemic diseases and disasters since the arithmetic increases in the amount of food. He defend that people wouldn’t control rises in the population themselves. Malthus did not take account of Technology and increased productivity in agriculture. World Population In 1973, The president of World Bank,Robert Mc Namara: “The biggest single obstacle in front of the economic and social development of the underdeveloped world is the galloping rate of population growth.” Why is he so pessimistic? According to Solow (1956), rapid population growth causes a decrease in per capita income and the disintegration of capital available to more people. If the population growth rate is greater than the increase rate of total production (income) in the economy, per capita income falls. World Population In recent years, the World Bank, United Nations and others have softened the alarmist expression. The president of WB(1995-2005), James Wolfensohn: “Today, the Bank and partner countries are using new approaches to develop women's health and family planning for couples ” Population growth is seen mostly in underdeveloped countries : in 2000, 80% of the world's population live in the developing countries and only 20% of it live in the developed countries. These rates is also growing against the developed countries. World Population The share of Europe was 12% in 2003 and this share will be a 7% in 2050. This creates a concern. Africa, Middle East and South Asia are the fastest growing regions. Demographic Transition Process Every country is going through some common demographic stages. Natural population growth= Crude birth rate – crude death rate Increase in total population: equal to the natural population growth for the whole world but, for each country is equal to the natural population growth minus the net migration. Crude birth (death) rate: the number of live births (deaths) per year also per 1000 people. Demographic Transition Process The demographic transition process of Finland: Figure 7-2. The first stage: in 1785, high birth (38) and high death (32) rates. 0,6% natural increase. The second stage: death rates fall rapidly: in 1825 24. The birth rate is constant or increases: 39. the rate of increase: 1,4%. The reason: better nutrition, medical facilities,hygiene. The third stage: Death rates fall more slowly, at 1910: 17. Birth rates fall: 29. The rate of increase:1,2%. The reason: families have fewer children Demographic Transition Process The fourth stage: Natural population growth rate approaches zero. Both the birth rate (11) and the death rate (9) are low (2003). By this trend, the Finnish population of 5 million, of which at the moment may not doubled any more at all. The natural increase: 0,2%. In Germany and Italy, the natural increase is negative. If there was no migration, their populations would fall. Demographic Transition Process Developing countries: Draw figure 7-3. Between 1950-2000 similar process. First high birth and death rate. Both falling rapidly but the death rate is falling faster. As a result, population growth reached 2,5% in 1960s. But the natural increase since then falls. In 2000, in the developing countries natural increase is 1,5%. Main reason is falling birth rates. Demographic Transition Process The total fertility rate (TFR): Depends on the average number of children per woman. Between 1962 and 2002, there was a decline in all regions and countries. To keep the population constant in a country, TFR should be at least 2.1: “replacement level”. 2.1 taking into account infant and child mortality... Regional dynamics: total population growth in developed country group is 0.3% ; this is entirely due to immigration. TFR fell to 1,5 in Europe and Central Asia. Radelet page 245. In Africa, TFR is 5. In MENA: 3 and East Asia &Pacific: 2. Demographic Transition Process In countries including Germany, Italy, and Japan, where the TFR is below the replacement level and immigration rates also are low, policy makers are concerned about the increasing number of elderly people dependent on a shrinking labor force. The social security system may collapse. Retired/ working is increasing. What will happen ? According to estimates (UN), around 2050 the average population stabilizes at 9 billion. The Demographic Future Population momentum: Populations that have been growing rapidly, as they have been especially in the developing world, have large numbers of people in or about to enter the most fertile age brackets. Even if these people have just two children, the total population would continue to grow for a long time. In 2050, the most crowded countries: (Table 7-2 Radelet). India, China, USA, Pakistan, Indonesia, Nigeria, Bangladesh, Brazil, Ethiopia, Congo. Factors Affecting Fertility When opportunities for women working outside the home increases, fertility decreases. When income increases, fertility may increase or decrease. If the increase in income due to participation of women in working life, or the quality of children becomes very important for women’s entry into the layer of the upper socioeconomic, fertility decreases. But elsewhere the increase in income will reduce the cost of a child in the budget and is expected to increase fertility. The data says that falling fertility. Why? Factors Affecting Fertility Decreasing infant mortality lowers fertility, because fewer births are needed to produce a given desired number of surviving children. Because it is now easier to reach the desired number of raised children. ( the adult son preference in some countries increases the fertility). In the case of children's contribution to family income fertility is higher than the situation did not. If there is an institutionalized system of social insurance, the need for children in old ages decreases. So fertility decreases. Or developed capital market also shows the same effect… Factors Affecting Fertility Becker (1960) sees having children as a consumer goods and he explains rationally. The things a family buy while maximizing the common happiness: 1-number of children, 2quality of children, 3- normal goods and services. Here the choice between the quality and the number of children varies. The opportunity cost of time of woman in the family particularly increases as her gain increases(substitution effect). Women's income increases, so does demand for child (income effect) but if substitution effect is higher than the income effect, fertility decreases. Population Growth-Development Relation The relationship between population growth and development is expected to be negative. (Income p.c. = total income/population) . But in the period of 1990-2002 plotting the growth rate of population and the growth rate of GDP p.c. among 125 low&middleincome countries, no relation can be seen. (Radelet pg. 256). Jordan 3.7%, Armenia 1.3%. Population Growth-Development Relation If the population grows rapidly, for a given level of total income, per capita income falls but, in reality increase in total revenue is not independent from the population growth. Labor force is one of the production factors. Population optimists: Population growth and intensification (urbanization) triggering technology, increasing the efficiency factor. Romer endogenous growth model tells that. Economies of scale provides in production and consumption of various infrastructure services: if there are many people to use roads and hospitals, it is more efficient. Julian Simon: human ingenuity entrepreneurs which is the “ultimate resource” occur in a large population. Population and Market Failures Population growth and externalities: There can be positive or negative externalities to the society in determining the number of children. The optimum choice for individual may not be optimum for society. Government services, health, education, sanitation, transport, etc. are public properties. These properties may not increase with the same speed of population growth, if it grows rapidly. Population Policy The difference between the number of children that women “plan to have” and “have already”. In Haiti 2000, %40 of the women, one of every 4 children is “undesirable” throughout the world. (John Bongaarts). In China, 1979, “single child” policy. It causes to fall girls ratio below 50%. (110 male per 100 female). Girls' education and employment opportunities. “Us Two, Our Two” policy in India. “Two is enough” policy in Indonesia, Philippines, Zimbabwe.