Effects of Population Growth on Latin American Economies
The problem of population growth in Latin America needs to be resolved and addressed in order to attain a desirable, significant and steady economic growth. The population growth must be controlled. With the advancement in technology and increased pressure on resources, it is necessary to ensure that the population is controlled. While some countries have begun using family planning methods programs, it is imperative for the region to come up with population regulation policies that can universally be applied to achieve a desirable economic growth (Miller, G. , & Babiarz, K. Relating the result of population growth to the per capita economic growth should be considered. The position is that population growth will have a negative impact on economic growth and the paper will use factual evidence to show that for certain, the negative effects on the economic growth in Latin America are due to this causality emerging from population growth to per capita economic growth.
However, a counterargument can arise that even if population growth is found to have negative economic impacts, trying to convince families to use family planning methods may not be an effective way of curbing economic growth problems. Bearing in mind that people choose large families for different prudent reasons, it might be effective to be able to understand these reasons and understand the society’s view and come up with an incentive that might change the decisions of families in terms of fertility patterns. Some research studies have found that population growth has negative impacts on economic growth as in the case of Dao (2013) in the study of forty-five African countries. But considering that the mortality rate is high, only 3 percent of the population is 65 years and older.
The implication is that only about 55% of the population is in economically productive age that is from 25-64 years. On the other hand in the developed countries, this percentage ranges from 60-65 percent. This results in most of the Latin American countries having only about one-third of the population is economically active in contrast to developed economies of the world where this proportion is between 40-45 percent. Therefore the dependency ratio (which refers to the number of people who depends on a thousand of the economically active population) remains high in Latin America. This relates to the perspective that the population pressure should be reduced through the use of family planning methods where the families will have to change their fertility decisions in order to ensure that in the future, the ‘demographic gift’ will be realized.
The methods to ensure high economic growth during this phase is through having a large number of share workers in the total population, higher rates of savings, and large investment on adult-population sensitive services (Bloom & Williamson, 1998; ADB, 1997). Population Growth and Poverty The association between population growth and poverty has received a lot of focus recently. Two studies by (Kremer & Chen, 2002) and (de la Croix & Doepke, 2003) explain the dynamics exhibited in high population growth and inherent huge fertility differences existing between the rich and the poor. The first study by Kremer and Chen demonstrates empirically and theoretically that countries that have high-income inequality between the poor and the rich are more likely to have large fertility differentials between the educated rich and uneducated poor.
The implications and relevance of these counterarguments in relation to Latin America are discussed below. Population and Technical Change: Demand-side Arguments One significant yet powerful counterargument to the discussion and position of this paper is a theory advocated by Easther Boserup (1965) suggesting that while the population increases pressure is put on efficient and effective utilization of the available resources in order for the population to be availed with food and other necessities. Although this argument can stand the test of different context in a longer period of time, it is unlikely to play a major role in Latin America. Unlike other regions, the Latin American Economies already is based on the export of commodities and thus is affected by global commodity prices and further disruption in the global prices will not hugely affect the region’s economic growth as most of the economies have policies to deal with global commodity prices disruptions.
Secondly, the technological advancements in the Latin American region are unlikely to materialize over a short period of time just because of the population growth particularly if the huge portion of this population is poor. Market Size Arguments As the Latin American Population will deliver high growth, it is controversial whether the resulting large market will benefit the Latin American region. Particularly, it should be understood that such a market will lead to enlargement in foreign investments which are required to service this markets. Moreover, the increased competition from import industries might increase if the market to be serviced is big. However, while many of these issues are relevant it is worth mentioning that market size is dependable majorly on the purchasing power of the population rather than their densities.
Thirdly, the Latin American region is a regionally integrated region and thus has a more enhanced market size. Based on the results above, it can be shown that reducing the population by 1 percent could spur economic growth by a region of 0. 8 annually. While there is a need to be careful in adopting the estimates originating from regression analysis, the results provide massive evidence that reducing population pressure raise the economic growth of the Latin American region to a larger extent. These estimates moreover show that if the Latin American region could successfully reduce the population from the present 3. 4% to 2. The implications of the Malthusian theory is that with high population growth and population pressure, available resources will drive down incomes and therefore leading to slow economic growth to a level that will only sustain the present population.
The arguments propagated by the Malthusian theory are supported by studies from another researcher Paul Ehrlich (1968). The primary concern of this researchers was that the population in the world will reach a level where it will overwhelm the resources available. These researchers felt that these two concepts; economic growth and population growth should either be scaled downwards or entirely eliminated. The neoclassical theory also shows how population and savings, which are introduced exogenously in Solow’s model affect economic growth (Durlauf, S. A comparative analysis of selected developing countries. In Latin American Meeting of the Econometric Society, Buenos Aires (July) (Mimeo). Bloom, D. E. , & Williamson, J. , & Minkin, A. The local Solow growth model. European Economic Review, 45(4-6), 928-940. Franko, P. The puzzle of Latin American economic development.
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