Gift Kasika

The relationship between population growth and economic development has been a recurrent topic since at least 1798 when Thomas Malthus argued that population
growth would depress living standards in the long run.

Due to the overexploitation of natural resources for human development, the international policy, focused on mitigating the impact of human population growth, is focused on the Sustainable Development Goals, which seek to improve the standard of living globally while reducing the impact of society on the environment while advancing human well-being. 

Population growth influences a country’s development and affects a nation’s Human Development Index score to a greater extent. High population growth rates have positive and negative effects on a developmental path. 

On the positive side, a high population means a substantial internal market for producers and, therefore, less dependence on export markets.

A large market facilitates economies of scale and specialisation in production, while high population growth is associated with the availability of a cheap labour force, as labour supply is above demand and a potential for more room for brilliant minds to be trained in more specialised fields. 

High population growth increases the rate of technological progress and the chances of new inventions. Large local markets for locally manufactured goods have an extra advantage in that the market provides timely feedback in terms of improvements or changes to be made to the product. 

In the process of satisfying a local market, producers acquire the necessary experience and efficiency and, therefore, improve the product’s market share on the international market and become more competitive in other markets. 

I guess this might explain the competitiveness of Windhoek Lager/Draught on the international stage.   Despite the long list of benefits
associated with a large population, the positive sides must be weighed against the unpleasant effects on national development. 

It is widely agreed that the negative effects of high population growth on development outweigh the positives.  To begin with, high population growth has detrimental effects on economic development, and there is evidence pointing out that the poor performance of Sub-Sahara Africa is to some extent attributed to the high population growth rates. 

Population growth tends to be higher in less developed countries than in developed countries and exerts more pressure on national resources, such as land for agricultural purposes and residential, and it is associated with negative environmental effects, such as degradation and pollution.  High population puts pressure on the available food stock, leading to food shortages and forcing the importation of the deficit and, therefore, negatively affecting the nation’s balance of payment and the depreciation of the exchange rate.

A fast-growing population raises the unemployment rate, whereas the number of persons joining the labour market exceeds the available employment opportunities. On top of that, it is a challenge for parents to educate a bigger family than a small one.  Evidence points to the fact that children from large families have lower educational attainment, compared to children from smaller families. Low educational attainment level has a feedback effect on population growth. 

It is argued that highly educated women have a higher opportunity cost of bearing children as they engage in economic activities than uneducated women; educated parents have few kids, which reduces the population growth rate, while parents with low education attainment seem to have bigger families. 

The poverty syndrome is another social factor related to education. Families that have had a lifetime of poverty tend to pass on the situation to the next generation, and their
kids will exhibit a tendency of poverty inheritance. 

If parents cannot afford education for their children, they grow up with no skills – and it becomes a challenge to improve their economic position. 

Children work on the same family farms and marry into families with similar conditions as they become adults. They, in turn, pass on the tradition to their children.

People with education or training and skills are in a better position to apply ideas and knowledge to fixing basic problems and enhancing their livelihoods. 

They are, moreover, able to plan, follow instructions, as well as access information, tools and support that can improve their livelihoods. 

In the absence of training, skills or education, people cannot help themselves – and it becomes a challenge to apply new methods of solving problems.

Lower savings due to a higher dependency ratio associated with a high population diminishes the capital formation of a country. 

The result is the reduction of the productivity of its workforce, and it leads to diminishing turns to scale.   High population growth rates mean the government has to devote more resources to the provision of basic facilities, such as primary education and health care, instead of the development of infrastructure necessary for economic development. 

With a low savings rate, an imbalance between the high investment required and insufficient savings reduces development and results in poor service delivery.  Lower productivity, fuelled by the scarcity of savings for investments, reduces capital formation and per capita income, as well as the standard of living. After the Second World War, the World Bank adopted the Gross National Income per capita, measured in US dollars as a standard criterion for defining a country’s level of development.  Developing countries or less developed countries, notably that of Sub-Saharan Africa, are characterised by a low gross national income as compared to more developed countries of Japan and Latin America.  The World Bank has been estimating global income poverty with the per capita income benchmark since 1990. 

Using the income per capita definition, the World Bank defines a developing country as having a yearly income per capita of less than US$736  and a developed nation as having a per capita income of more than US$9 075. Although the per capita benchmark was accepted as a development index, it has some inconsistencies. Countries with low GNI were doing better than other countries with high GNI in areas such as health and education. The inconsistency stems from the biased nature of the GNI criteria and, therefore, the GNI per capita does not accurately represent the overall well-being of a country’s citizens. 

The reason is that it is an average representation; a small group of relatively rich people can raise the average per capita of the whole population.

* Gift Kasika is a local economist.ss