In today’s world, both over-population and under-population are used in a wide context of meanings. When a country is referred to as being overpopulated, the general implication is that the population has grown to such a large extent that there are now evident signs of environmental deterioration, an impaired standard of living, and an overall strain on the available economic resources (Webster, 2017). Some economists tend to separate the term over-population into two: absolute over–population and relative over-population. Absolute over-population occurs where the maximum level of production has been reached but the standard of living is still poor; whereas relative over-population is where current production levels cannot meet the needs of the population, but can be increased to do so (Hantal, n.d.). On the other hand, if a country were to be labelled as under-populated, the indication is that the population in this country is below that of a desirable level and is consequently unable to entirely maximise both its productive potential and available factor endowments (Dictionary, 2017).  A country with an optimum population has the ideal population, which combined with the other available resources or means of production of the country will yield the maximum returns or income per head (Kwat, 2016). This population size allows the full use of existing natural resources and gives the highest possible per capita output. Whilst both conditions for a population can be viewed as undesirable, they also possess their own upsides. In this essay, I will analyse both conditions of a population through their various theories and attempt to justify their existence through case studies before examining and evaluating the theory of optimum population and concluding.

When discussing over-population from an economic perspective, it is key to introduce an economist named Thomas Robert Malthus. Malthus was an English cleric and scholar having graduated from Cambridge university with a master’s degree in 1791 and was most noted for his works during the period 1798-1814 (BBC, 2014). Malthus’ most prominent piece of work was published in 1798: a book called ‘An Essay on the Principle of Population’ where he highlighted the problems associated with over-population. He is famously quoted as writing “the power of population is indefinitely greater than the power in the earth to produce subsistence for man” (Malthus, 1798). In his theory of population, Malthus begins by distinguishing between the growth rate of the human population and that of food production. He described the growth rate of the human population as being exponential, meaning it doubled at the start of every cycle, whilst the growth rate of food production was arithmetic, implying that it increased by a fixed accession each time. This is depicted in figure 1 where the curve representing population increases much more rapidly in comparison to the linear line representing resources/food production. He attempted to theorise how current situations of simultaneous geometric human population growth and arithmetic food production growth would eventually lead to a future scenario where the supply of food would not meet the demands of the human population. (CGGE, 2011). This scenario became known as the Malthusian catastrophe where mass starvation occurred (LumenLearning, n.d.).

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However, Malthus’ doctrine has been criticised for many reasons, with a significant reason being his negligence in respecting the increase in manpower occurring as a result of the growth in population. This was spotted by Edwin Cannan, a British economist born after the passing of Malthus, who wrote in his book “A baby comes to the world not only with a mouth and a stomach, but also with a pair of hands.” (V.C Sinha, 2002). He implied that with an increase in population you would also see a rise in the quantity of labour as people reached the working age. The expansion in the labour force need not solely be a contribution to the agricultural sector, but also an addition to the industrial sector of the economy. This may then lead to an increase in total output for the economy, bringing about a rise in total GDP and thus making the country richer through a more equitable distribution of wealth. As Martin Seligman, a former president of the American Psychological Association, indicated “The problem of population is not merely one of mere size but of efficient production and equitable distribution.” (Nipun, 2016). In this sense, the increase in population may be essential and goes against Malthus. A country may now not be labelled as over-populated as it has been able to increase its productive capacity and hence improve the standard of living for its citizens.

Of recent times, questions have surfaced of whether over-population is detrimental or beneficial to an economy. Today, China is an example of over-population in a country with its current population lying at 1.4 billion. China’s rapid population growth began after 1949, where the country quickly modernised, leading to its citizens becoming healthier and their life expectancy increasing dramatically. In the years to follow, the standard of living rose imperatively due to factors such as the introduction of contraception and better healthcare. This resulted in China’s life expectancy at birth rising from forty-four in 1949 to it being around sixty-six in 1979 (China-Profile, 2011). Consequently, the population of China increased from five hundred and forty-two million to nine hundred and seventy-five million during this period (China Today, 2010). This rapid growth in population concerned the Chinese government, causing them to implement their famous one child policy, which limited every new couple to one child each.  

 

One of the factors determining whether a country is overpopulated is the standard of living, which is determined by other factors such as income and availability of employment. Although it is difficult to measure the standard of living physically, a generally accepted figure is the Gross Domestic Product per capita (Real GDP per capita) for a country. Real GDP per capital is defined as the total economic output of a country divided by its population (Amadeo, 2017). Before the implementation of the one child policy in 1979, China was one of the poorest countries in the world. Figure 3 shows China’s GDP per capita (constant 2000 US$) compared to other Economic superpowers in the period 1978 to 2014. In 1978, we sense that China was indeed overpopulated with Figure 3 showing its GDP per capita to be so small in comparison to that of the other economic superpowers, that the Y axis cannot compensate to even show a clear value for it. The actual GDP per capital value for China in 1978 was $307.77, which, at the time, was extremely low. Showing figures of total population would not be enough to further cement the fact that before the implementation of the one child policy, China was extremely populated, as we would not have any idea of the total economic output produced by the country. Thus, we must also analyse GDP, the total economic output produced by a country, to confirm that China was indeed overpopulated.

Figure 4 shows a graph of the total GDPs for China, US, Japan and UK. From the graph, we can interpret that both the United States and Japan both had considerably higher GDPs than the other countries in 1978, with figures of $2.3566 trillion and $1.0084 trillion respectively. Therefore, one could explain the large differences in GDP per capita between China and the other countries as due to the phenomenal differences in total GDP between China, Japan and the United States. However, if we were to look closer at the UK’s figures we would see that the difference between the UK’s GDP and China’s GDP was not as big as the difference in their respective GDPs per capita. China’s GDP in 1978 was at $149.5407 billion whilst the UK’s GDP was not that much higher, at a figure of $335.883 billion. Yet, China’s average citizen only seemed to attain a sum of $307.77, which was almost $21,200 less than the sum an average British citizen seemed to enjoy at $21,493.32. As mentioned before, if we assume in this case that GDP per capita is the sole measure of standard of living and use current economic superpowers for comparison, then we can see that Chinese citizens were not benefitting from as much as they potentially could have from the country’s total output. This suggests a possible conclusion that this was all due to China’s extreme overpopulation. Furthermore, Figure 4 shows that by 2014, China’s GDP had actually exceeded that of Japan’s and the UK’s by a large extent. Despite this, Figure 3 shows China’s GDP per capita to still be much lower than the other countries. This can be put down as due to China’s population growth. Although not as high as the era prior to the one child policy and other population control methods, China’s population growth in 2014 was at a 0.5% annual change, which was still quite high for a country that was the most populated in the world. Many economists place China’s greater growth down due to its technological progress, which allowed it to better manage its large population growth of the past decades and improve its per capita income. Nonetheless, the improvement has not been large enough to drastically improve the lives of those living in China. As of the end of 2016, studies have found that there were still 43.35 million people still living below the nation’s poverty line of 2,300 Yuan (about 334 U.S. dollars) in annual income in 2010 constant prices (Xinhua, 2017). Although the Chinese government are actively trying to control the effects of their large population, it is clear to say that under current l conditions, China is still overpopulated.

On the other hand, we have the question of whether a country can ever be under-populated. Under-population occurs when a country cannot fully utilise its resources as to improve the quality of life significantly. When a country is under-populated it does not necessarily mean that its inhabitants are not enjoying a high quality of life. The country may still be performing well economically, with its citizens living prosperous lives.  Australia is a country that is considered worldwide as under-populated. Although Australia is of a similar geographical size to the United States of America, both countries differ significantly between their economic factors.

 

Firstly, Australia’s current total population lies at a figure of 24.12 million people, which is just under 300 million less than the US’ total population of 323.13 million. Secondly, Australia’s total GDP for 2016 was at $1.2046 trillion, which is significantly less than the United States figure of $18.5691 trillion. Nonetheless, Australia’s GDP per capita still rests higher than that of the United States as seen in figure 5, because its remarkably small population compensates for its lack of GDP. The problem with Australia is that they are not as economically developed as they could be with a larger population. Large areas of the country remain empty and could hold out in supporting a larger population. The lack of population means the overall labour force is smaller than it could be, resulting in lower productivity growth. Although productivity is growing again in Australia, they currently face the challenge of retaining the productivity growth rate that would take them back to the improvement in the standard of living they had many years back. To highlight the importance of this, a new Treasury research report (Simon Campbell, 2017) found that sudden mining booms bringing favourable trading terms for Australia were no longer able to act as an enhancer of national income growth. Over the last five years, Australia has seen an impressive rise in its productivity growth, with a current level of 1.8% per annum. This has predominantly occurred because of ”capital deepening” where there is an increase in the ratio of capital to labour. According to the treasury research report mentioned above, for Australia to achieve their long-run trend rate of growth in living standards of 2% a year, which is measured via GDP per capita, the country must raise their average annual productivity growth to 2.5% (Green, 2017). To achieve this productive growth, the best solution is increasing the population. Not only will this increase improve productivity, but it will also increase the division of labour and make it possible for Australia to provide improved mass transit infrastructure for which they currently do not have the capacity.  To add to the case of it being under-populated, Australia’s oil production currently lies at 4.82 billion barrels compared to America’s 9.02 billion barrels per day, truly emphasising on how much more Australia could be producing. With the fact that the countries are of the same size, one can only conclude that Australia is under-populated and not exploiting its resources to their maximum potential level.

Another key theory regarding population is that concerning an optimum population. Many economists raise the question that if countries can be over-populated or under-populated then surely countries that are optimally sized can also exist. One such economist to do this was Edwin Cannan, a British Economist who served as a professor at the London School of Economics from 1895 to 1926 (Donnelly, 2015).  In 1924, he published a book called ‘Wealth’ in which he put forward the optimum theory of population. Before we dwell deeper into the theory, we must refer to the definition of an optimum population: a country that is optimally sized has the ideal population, which combined with the other available resources or means of production of the country will yield the maximum returns or income per head (Kwat, 2016). The theory makes two assumptions: 1) The ratio of the working population to total population remains constant as the population of the country increases and 2) Natural resources, capital stock and state of technology all remain unchanged and fixed as the country’s population increases (Debasish, 2016). Given these two assumptions, the theory states that there is specific size of population at which per capita income is at its maximum.

 

As seen in Figure 6, any deviation away from the optimally sized population at point ‘N’ on the population axis will lead to a reduction in per capita income. If there was to be an increase in the population and subsequently a rise in per capita income occurred, then the country would be considered under-populated meaning it could continue increasing its population until the optimum size was reached. The ON size population in Figure six represents the optimum population at which per capita income is equal to MN and at its greatest. Moving from a population of ON to OD would see a fall in per capita income occur from point M to point C. This is because of the law of diminishing returns, which in this case applies to production, resulting in per capita production being lowered and per capita income decreasing consequently (Kwat, 2016). Nevertheless, the optimum point is highly flexible. Improvements in the methods of production will cause the curve to shift upwards, resulting in a greater per capita income and a higher optimum point.  An economist named Dalton, who played a key role in proposing the theory of optimum population, was able to derive a formula depicting how deviating from the optimum population brought about over-population and under-population. He referred to this deviation as ‘maladjustment’, which was shown through a simple formula utilising two variables: the optimum level of population (represented by ‘O’) and the actual level of population (represented by ‘A’). Put together, the formula for maladjustment reads ‘M = (A-O)/O ‘ (Debasish, 2016). Where M is positive the country is over-populated and where it is negative the country is under-populated.

 

One of the biggest criticisms of the optimum theory of population is its lack of evidence. There is little evidence pointing towards a country having a perfectly sized population where per capita income is maximised. Furthermore, the assumption that the stock of capital, natural resources and methods of production remain fixed at a certain point in time is illogical, especially in today’s economy where factors are constantly changing. Moreover, the theory seems to ignore how the increase in per capita income may have occurred. There is no guarantee that an increase in population alongside a rise in per capita income will help the majority of the population, as it is possible the increase only occurred through a rise in the concentration of income of the rich.

 

In conclusion, although it is difficult to find a country in the modern-day that fits the profile of an optimum population, we find that when we consider the economic impacts of over-population and under-population, it is theoretically possible to have an optimally sized population. The economic consequences of over-population are factors such as the shortage of food, minerals and fuel. Countries tend to see their natural resources being rapidly depleted and their level of sustainability reduced for the future. The standard of living tends to be deteriorating as the lack of resources to meet everyone’s needs becomes evident.

On the other hand, with under-population, the consequences are factors such as labour shortages and an unstable economy (the lack of population leads to a decline in demand causing deflation). By using the tools used to measure these effects, we can attempt to find a modern-day example of a country with the least of these consequences. For example, a country with a high real GDP per capita and a rate of long-run growth close to its long-run trend rate would indicate that it is neither over-populated or under-populated. To finish, the dynamic nature of the real world, where both economic growth and population growth occur simultaneously, points towards the fact that the optimal point for a country is forever changing. The optimum point, at any point in time, could become less or more optimum over time. Thus, it would be difficult to label a country as having an optimum population when we do not have a clear indication of an optimal size.

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