(c) Write five adverse effects of population growth on economic development.
Answers
Explanation:
Population reduces the Rate of Capital Formation: ...
Higher Rate of Population requires more Investment: ...
It reduces per Capita Availability of Capital: ...
Adverse Effect on per Capital Income: ...
Large Population creates the Problem of Unemployment: ...
Rapid Population Growth creates Food Problem: ...
Population and Farming:
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1. Population reduces the Rate of Capital Formation:
In underdeveloped countries, the composition of population is determined to increase capital formation. Due to higher birth rate and low expectation of life in these countries, the percentage of dependents is very high. Nearly 40 to 50 per cent of the population is in the non-productive age group which simply consumes and does not produce anything.
In under developed countries, rapid growth of population diminishes the availability of capital per head which reduces the productivity of its labour force. Their income, as a consequence, is reduced and their capacity to save is diminished which, in turn, adversely affects capital formation.
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2. Higher Rate of Population requires more Investment:
In economically backward countries, investment requirements are beyond its investing capacity. A rapidly growing population increases the requirements of demographic investment which at the same time reduces the capacity of the people to save.
This creates a serious imbalance between investment requirements and the availability of investible funds. Therefore, the volume of such investment is determined by the rate of population growth in an economy. Some economists have estimated that for maintaining the present level of per capita income, 2 per cent to 5 per cent of national income must be invested if population grows at 1 per cent per annum.
In these countries, population is increasing at the rate of about 2.5 per cent per annum and 5 per cent to 12.5 per cent of their national income and hence the entire investment is absorbed by demographic investment and nothing is left for economic development. These factors are mainly responsible for stagnation in such economies.
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3. It reduces per Capita Availability of Capital:
The large size of population also reduces per capita availability of capital in less developed countries. This is true in respect of underdeveloped countries where capital is scarce and its supply is inelastic. A rapidly growing population leads to a progressive decline in the availability of capital per worker. This further leads to lower productivity and diminishing returns.
4. Adverse Effect on per Capital Income:
Rapid growth of population directly effects per capita income in an economy. Up to ‘income optimizing level’, the growth of population increases per capita income but beyond that it necessarily lowers the same. In a sense, so long as the rate of population growth is lower than the per capita income, rate of economic growth will rise but if population growth exceeds the rate of economic growth, usually found in the case of less developed countries, per capita income must fall.
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5. Large Population creates the Problem of Unemployment:
A fast growth in population means a large number of persons coming to the labour market for whom it may not be possible to provide employment. In fact, in underdeveloped countries, the number of job seekers is expanding so fast that despite all efforts towards planned development, it has not been possible to provide employment to all. Unemployment, underemployment and disguised employment are common features in these countries. The rapidly rising population makes it almost impossible for economically backward countries to solve their problem of unemployment.