Population as an Economic Concern

For this individual project, I chose population as my topic of economic concern. This economic concern effect several countries in the world today. A large population produces a large labor force which will in turn produce more total production. With a fixed amount of assets and an increasing labor force, the amount of assets per worker will be less. With fewer assets, production output per worker will be less because the worker won’t have enough equipment and machines to use. This demonstrates the principles of diminishing returns. The quantity of wealth by total GDP (Gross Domestic Product) carries a perverse incentive to boost population and cause further environmental harm, and is not a guide to individual standards of living within a country. The growth of gross domestic product can be constrained by high dependency ratios, which result when rapid population growth produces large proportions of children and youth relative to the labor force. Because governments and families spend far more on children than the children can quickly repay in economic production, especially as modern schooling and health care replaces child labor, economists expect consumption related to children to retard household savings, increase government expenditure and ultimately cut into the growth of GDP.

Having a large population doesn't guarantee the citizens of a country a better standard of living. Neither does having a small population. Neither is a perceived link between population growth and economic growth always supported by historical fact - there have been periods when populations have grown but got poorer, and when

populations have declined but got richer. The link can confuse cause and effect. A declining population usually results from declining employment, for example. To simplify, regional job losses resulted from the death of coal mining - coal mining did not stop because of local population loss. Economists have always suspected that population influences economic growth, employment and poverty, and the management of resources.

In many countries experiencing rapidly growing population, and thus growing dependency ratios, the flood of young people into the job market exceeded the jobs created. According to the UN Development Programme, "in many cases [in the developing world] a lot of employment was being created, but not fast enough to match the rapid growth in the labor force."

The first country that I chose was China. As shown in chart A the population of China has increased from 987.1 in 1980 to 1,284.9 in 2002. That is an increase of 30% over a period of 22 years. At the same time the GDP for China (Chart B) rose from 452 in 1980 to 10,479 in 2001. That is an increase of 2,318% over a period of 21 years. With this information you can see that the GDP surpassed the population increase by over 7 times.

Chart A 1980 1990 1995 1999 2000 2001 2002

China

Total population 987.1 1 1,143.3 1 1,211.2 1 1,259.1 1 1,267.4 1 1,276.3 1 1,284.9 1

Gross domestic product 452 2 1,855 2 5,848 2 8,207 2 8,947 2 9,732 2 10,479 2

Notes: 1 - End of year. 2 - Billions of yuan renminbi.

Gross domestic product Gross domestic product.

Unit: Millions of national currency

Sources: United Nations Statistics Division; International Monetary Fund; World Bank; Asian Development Bank; National Sources;

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