popu_growth

8/7/2019 popu_growth

1/29

POPULATION GROWTH AND THE CONSTRAINTOF NATURAL RESOURCES

Submitted by : Tessy Varkey Tirthankar Sarkar & UjjwalaChaurasia


2/29

METHEDOLOGY

POPULATION GROWTH

ECONOMIC THEORIES

THEORIES OF


3/29

Population Growth in Economic Development

Majo

racceler

ation

Aver

age1%pe

ryea

r

ENDO

GENOUSph

enome

n

Incr

easedEmp

loyme

n

Spee

dofGrow

thof

Aver

age2.5%

pery

e

EXOG

ENOUSphe

nomen

o

Impo

rtationo

fHea

l

Reso

urceExha

ustio

n


4/29


5/29

Historical changes in Growth rates in WorldPopulation (1700-2050)

YEAR TOTAL DEVELOPED DEVELOPING

1000-1750 0.13 0.13 0.13

1750-1800 0.44 0.64 0.38

1800-1850 0.50 0.81 0.39

1850-1900 0.64 1.10 0.43

1900-1930 0.76 1.09 0.56

1930-1960 1.34 1.02 1.53

1960-1980 1.93 1.09 2.26

1980-1995 1.64 0.94 1.93

1995-2025 1.16 0.60 1.42

2025-2050 0.63 0.11 0.75


6/29

Current World Population Growth Rate


7/29

Demographic Transition Model

Stage 1 Stage 2 Stage 3 Stage 4

BIRTHSAND

DEATHS

PER10

00PER

YEAR

Birth rate

Death rate

Total population

NATURALINCREASE

The demographic transition (DT) is a model used to represent thetransition from high birth and death rates to low birth and death rates as acountry develops from a pre-industrial to an industrialized economic system.The theory is based on an interpretation ofdemographic history developed in1929 by the American demographer WarrenThompson.

NATURAL RATEOF POPULATIONGROWTH (NR)=

BIRTH RATE(BR) DEATH

RATE (DR)
http://en.wikipedia.org/wiki/Birth_ratehttp://en.wikipedia.org/wiki/Death_ratehttp://en.wikipedia.org/wiki/Economic_systemhttp://en.wikipedia.org/wiki/Demographyhttp://en.wikipedia.org/wiki/Warren_Thompsonhttp://en.wikipedia.org/wiki/Warren_Thompsonhttp://en.wikipedia.org/wiki/Warren_Thompsonhttp://en.wikipedia.org/wiki/Warren_Thompsonhttp://en.wikipedia.org/wiki/Demographyhttp://en.wikipedia.org/wiki/Economic_systemhttp://en.wikipedia.org/wiki/Death_ratehttp://en.wikipedia.org/wiki/Birth_rate


8/29

PHASE 1

PHASE 2

PHASE 3 PHASE 4

BIRTH RATE

DEATH RATE

POPULATION

BIR

TH

RA

TE

DE

AT

H

RA

TENATUR

AL

INCRE

ASE

REASONS FOR

CHANGE IN BIRTH

RATE

REASONS FOR

CHANGE IN

DEATH RATE

H

I

G

H

H

I

G

H

STABLE OR

SLOW

INCRE

ASE

DISEASE FAMINE,

POOR MEDICAL

KNOWHOW. MANY

CHILDREN DIE

H

I

G

H

F

A

L

L

S

R

AP

I

D

L

Y

VE

RY

RA

PI

D

IN

CR

EA

SE

REASO

NS FOR

CHAN

GE IN

BIRTH

RATENUTRITION,

MEDICAL CARE,

WATER SUPPLY

AND SANITATION.

FEWER CHILDREN

MANY CHILDREN NEEDED FOR

FARMING. MANY CHILDREN DIE AT

EARLY AGE. RELIGIOUS/SOCIAL

ENCOURAGEMENT. NO FAMILY

PLANNING

F

A

L

L

I

N

G

FAL

LS

MO

RE

SLO

WL

Y

INCR

EAS

E

SLO

WS

DOW

N

REDUCTI

ON IN

AGE OF

MARRIA

GE.WORSENED

HYGIENIC

CONDITIONS- HIGH

DENSITY -URBAN

SLUMS

LO

W

L

O

W

STABL

E ORSLOW

INCRE

ASEFAMILY PLANNING.

GOOD HEALTH.

LATER AGE OF

MARRIAGE

GOOD HEALTH

CARE.

RELIABLEFOOD SUPPLY.

NATURALINCREASE

1750

70 30 70 30 7090 1810

50 90 1910

50

Demographic Transition Model in Britain


9/29

World Age Structure Database


10/29

Demographic Transition Model - India

0

2

4

6

8

10

12

0

2

4

6

8

10

12

PO

PULATIONOF

INDIA

POPULAT

IONGROWTHR

A TE

0

2

4

6

8

10

12

BIRTH AND DEATH RATE IN INDIA

RATE

PER1000POPULA

T ION

PHASE 1- 1920 TO 1960 Precipitous drop in death rate- decrease in death rate bymore than 20 per 1000 within 40 years larger than the

decrease for the entire period (over 150 yrs) of BritishDemographic transitionPhase 2 not observableFairly Representative of Developing Economies (exceptChina)

DEATHRATE

BIRTH RATE

PHASE I PHASE2/3

Rural (29)National(28)Urban (22)

Rural (10)National (9)Urban (7)

The probability of low-income economies to escape from the strong pressure ofexogenously given population growth appears to be relatively slim within the

next couple of decades.


11/29

DEVELOPEDECONOMY

DEVELOPINGECONOMY


12/29

THE MALTHUSIANMODEL

Thomas RobertMalthus(1766-1834) Britishscholar Influential inPolitical Economy andDemography

(N/N)

(W

)

WO

G

G

Populatio

nG

rowth

Rate

Wage Rate

H

N PopulationN Absolute increase inPopulationW Wage Rate

- Subsistence wage rate


13/29

POPULATION GROWTH ANDCARRYING CAPACITY

Popula

tio

nin

billion7

4

2000

2020

2040

2060

2080

1980

StarvationDiseasePollutionResourcedepletion

Carryingcapacity

oversho

ot

crash

5

6

8


14/29

THEORIES OF RESOURCE CONSTRAINT ONECONOMIC GROWTH

Malthus To The Club ofROME

Reappearance of Malthusian concept in Dennis L.Meadows -

--TheLimits to growth,

Concerning Population-Food crisis. Crisis of Natural resources. Environmental degradation due to overexploitation & waste of resources.

# World population curtailed due to increase indeath rate due to food shortage and

environmental pollution


15/29

THEORIES OF RESOURCE CONSTRAINT ONECONOMIC GROWTH

Malthusian Crisisproved

1973 World Food Crisis. (Due to world scalecrop failure)1974 Oil Crisis by OPEC Embargo

Result > High increase in food and energy price.

Public Awareness to the need and conservation ofthe environment and its natural resources.

It is evident that simple extrapolation from pasttrends will produce future prediction, but the willdeviate widely from actual outcome.

Extract


16/29


17/29

DAVID RICARDO (1772 1823)

He Clarified The Mechanism On How TheEconomic Growth Is Constrained By NaturalResources ,By Building The Genuine Theory OfEconomic Development.

His Main Economic Ideas Are Contained In

Principles Of Political Economy And Taxation(1817). This Set Out A Series Of TheoriesWhich Would Later Become TheoreticalUnderpinnings Of Both Marx's DasKapital AndMarshallian Economics.

His theory came into picture , towards thecomplication of industrial revolution inEngland, this was the time when thepopulation was highest.
http://en.wikipedia.org/wiki/Principles_of_Political_Economy_and_Taxationhttp://en.wikipedia.org/wiki/Das_Kapitalhttp://en.wikipedia.org/wiki/Das_Kapitalhttp://en.wikipedia.org/wiki/Das_Kapitalhttp://en.wikipedia.org/wiki/Das_Kapitalhttp://en.wikipedia.org/wiki/Principles_of_Political_Economy_and_Taxation


18/29

RICARDO MODEL Identified The Capital Accumulation In ModernIndustries, Emerged From Industrial RevolutionWhere Economic Growth Was Main Factor.

CAPITAL

Concept

WAGEFUND

(sum of payments to

labour in advance ofcommodities+

payments for the tools)

Demand of labour = wage rate

supply of labour = population

he termed this phenonemon as shortrun it is the period where populationis constant.


19/29

CONCEPT

C1C2

PRODUCT

PROFIT

C1

C2

PRODUCT

PROFIT

WAGERATE

C1 = LABOUR CAPITAL sumof payments to labour inadvance of sale of commodities

produced by the labour applied.

C2 = payments for thepurchase of tools andstructures complimentary tothe use of labour.

Assuming in the short runsupply of labour remainsconstant. As a result of increased

capital, labour demandincreases and wage rateincreases.This result in in-migration andthe supply of labour increases.

The increase in populationresults in the adjustment of thewage rate to the previouslevel.

PRODUCT MARKET FOR INDUSTRY


20/29

CONCEPTA1 - most fertile land

A2 - 2nd grade land.

A3 - 3rd grade land.

A4 - 4th grade land.

At first the food requirement ofthe settlement is fully servedby A1. As the population increases

corresponding to the increasein the industrial labour force ,the less fertile land i.e.A2,A3,A4 have to be graduallyput to use. This increases the cost ofcultivation and increases thefood price.

A1

A4 A3

Thus the subsistence wagerate increases .

A3 A4

A2A2

PRODUCT MARKET FOR

AGRICULTURE


21/29

THE RICARDO MODEL OF ECONOMIC DEVELOPME

PRODUCT MARKET FOR INDUSTRY

SS

AW

D

B C

D0

D1 D2

(K0)

(K1) (K2)

LS

(L0)

G

WS E

W

(L1) (L2)

EMPLOYMENT

WAGE

RATE

(L)

(W)

0

LS subsistence wage

SS Short run labour supply

DD labour demand curveW present wage rate

Totalwagesgiven

profit

WS modified wage rate

As the labour demandincreases with theaccumulation of capital,wage rate tends to reach ahigher level. This results in inmigration

and labour supply increasesto L1 & L2 .

As a result wage rate adjustsitself and reaches thesubsistence level.

If the subsistence wage rateincreases as a result of limitenatural resources to W then

the profit starts decreasing.


22/29

THE RICARDO MODEL OF ECONOMIC DEVELOPME

PRODUCT MARKET FORAGRICULTURE

CORN OUTPUT/CONSUMPTION

CORNPRICE

HS

WS

P2

P0

0 Q1 Q2

D0D1 D2(N0

)(N1)

(N2)

D0

D1D2

C

(Q)

(P)

D0D0represents the corndemand curvecorresponding to thelabour force L0(in theprevious graph), D1D1 to

that of L1 and so on.

HS is the supplyschedule of corndetermined by its

marginal cost.

As the populationincreases to L2 anddemand for cornincreases to D2D2, thesecond grade of land

needs to be utilised. Itincreases the marginalcost of production and inturn increases the cornprice.This effects in theincrease of subistence

wage rate in theindustrial sector.


23/29

This mechanism of fixed land resourceendowments that constrain economic growth inearly stage of industrialization is called asRicardian trap

SUMMARY

Landlords alone receive enlarged rentrevenue..

The theory predicts that , under given

natural resources endowments in terms offixed land areas by grade, food pricesincreases resulting from population growth.

This will drive the economy into stationarystate where the rate of profit is so low that it

provides no incentive for additionalinvestment and labourers real wage rates donot diverge from a subsistence minimum.


24/29

For rescuing the British economy from the

Ricardian trap , Ricardo proposedliberalization of grain imports.

repeal of corn laws . removes tariff barriers. cheap import of food grains. food prices become low.

CONSEQUENCES

Ricardo model sets out clearly the problem ofnatural resources constraints that low incomeeconomies will have to face when they undergoindustrial development when agriculture isstagnant.

In modern context ,for low income economies: Not possible to solve this problem by

liberalization of food imports alone. The option is to advance agricultural

technology concurrently withindustrialization..


25/29

THE DUAL ECONOMYMODEL

The Dual Sector model, or the Lewis model,is a model in Development economics thatexplains the growth of a developing economyin terms of a labour transition between two

sectors, a traditional agricultural sector and amodern industrial sector.

W. Arthur Lewis (1954) built upon the thrust

of the Ricardo model, a new 2-sector model .

It is a theory of development in whichsurplus labor from traditional

agricultural sectoris transferred to themodern industrial sectorwhosegrowth over time absorbs the surpluslabor, promotes industrialization.


26/29

CONCEPTThe traditional agricultural sector -- characterized by lowwages, an abundance of labour, and low productivity

through a labour intensive production process. In contrast, the modern manufacturing sector is defined byhigher wage rates than the agricultural sector, highermarginalproductivity, and a demandfor more workers initially.

The agricultural sector has a quantity of farm workers that are

not contributing to agricultural output . This group of farmers istermed surplus labour since they could be moved to anothersector with no effect on agricultural output.

Due to the wage differential between the 2 sectors, workers willtend to transition from the agricultural to the manufacturing

sector over time to reap the reward of higher wages. The end result of this transition process is that the agriculturalwage equals the manufacturing wage, the agriculturalmarginal product of labour equals the manufacturingmarginal product of labour, and no further manufacturingsector enlargement takes place as workers no longer have a

monetary incentive to transition..


27/29

O1

INDUST

RIALW

AGE

RATE

AGRICU

LTURAL

OUTPU

T

S T

D1

D0 G

H

SL

SL

O2

R

W

W

O1-O2 -- Industrial labourO2-O1 -- Agricultural labou

S -- Shortage pointAt S, the whole surpluslabour from agriculturehas been migrated toindustry.The agriculturaloutput decreases and

the subsistence wagelevel of industrial labourstarts increasing.

T Turning pointFrom T, the agriculturalwage rate starts

increasing from W.Before reaching point Tthe industrial profitbecomes so low that thecapital accumulationstops.


28/29

Contribution of agriculture has significant role in

developing industrialization.

CONCLUSION

The successful industrialization cannot be expectedwithout the efforts of increasing food production to avoidthe danger of being caught in the Ricardian trap..

Contribution of agriculture to industrialization is not onlysupply of labour or food product but also providingplatform for industrial commodities, earning of foreignexchange through export of agriculture product .

Industrialization & modern economic growth can hardlybe successful without healthy development in agriculturesector.


29/29

HELP ME !!!

popu_growth

Documents

Transcript of popu_growth