The Impact of Population and Economic Growth on Global Poverty
Economic growth measures the capacity to produce goods and services in a country; it occurs due to the rise of labor or capital, technology or profitability of workers and involves Gross Domestic Product (GDP). On the other hand, the aspect of population growth focuses on fertility, family size and the ratio of children compared to working-age adults, also known as the youth dependency ratio. Economic and population growth relates to the way societies manage assets and allocate goods and services (Coale & Hoover, 2015). Economic growth has been a main tool in poverty eradication and improvement of living standard while population growth has influenced global poverty negatively and positively.
Economic growth is very critical in eradicating poverty and improving people’s lives. It is a source of job opportunities due to entrepreneurship and opportunities to produce more, which results to entrepreneurs who influences improved governance (Schneider et.al., 2011). China, India, and Mozambique are examples of countries that have shown a drastic fall in poverty over a short period of time due to rapid economic growth. Economic growth also has a direct impact on human development, which is achieved through access to improved health and quality education. India demonstrated a seven percent reduction in mortality rate due to a 10 per cent increase in GDP (Lin, 2003). Both primary and secondary school enrollment rates are due to increased levels of per capita income.
Population growth is caused by an increase in fertility and may lead to a rise in global poverty levels. It lowers per capita income due to the number of people willing to supply cheap labor and also limits quality educational opportunities due to the high number of individuals competing for the few chances available. In places where there is rapid population growth, there are many cases of limited food due to large families, low level of living and environmental degradation (Schneider et.al., 2011). However, population growth also has a positive contribution in the reduction of global poverty. These include; increase in consumer demand, which results in the creation of a market for goods, countries tend to enjoy economies of scale, and also a source of sufficient labor supply at low cost, leading to greater economic growth, thus reducing poverty.
Population growth may limit economic development when measured by per capita income and gross domestic product (GDP). The growth of GDP is constrained by high dependency ratios, due to huge numbers of children and youth compared to the labor force, thus increasing global poverty (Coale & Hoover, 2015). It also limits the ability of savings and investment in physical assets due to the high expenditure in big families. Many countries that have registered a decline in fertility over the last 25 years have achieved a drastic poverty reduction and an improvement in living standards. Economists have emphasized that the decline in poverty and improvement in life standards that have occurred are as a result of fertility reduction policies that these countries pursued simultaneously (Kanbur & Sumner, 2012).
Coale, A. J., & Hoover, E. M. (2015). Population growth and economic development. Princeton University Press.
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Lin, B. Q. (2003). Economic growth, income inequality, and poverty reduction in People’s Republic of China. Asian development review, 20(2), 105-124.
Schneider, U. A., Havlík, P., Schmid, E., Valin, H., Mosnier, A., Obersteiner, M., … & Fritz, S. (2011). Impacts of population growth, economic development, and technical change on global food production and consumption. Agricultural Systems, 104(2), 204-215.