Sep

9

Population explosion

September 9, 2009 | 10 Comments | Mark Crosby

The more I look at population data and projections the more I think that demographics will be THE major driver of the global economy in the next 40 years. I was reminded of this as I finally got around to checking what I thought must be true about the increase in Australia’s population in 2008. As I suspected 2008 saw the largest absolute increase in Australia’s population in history. In 2008 the population rose by 406,100 to 21.6 million. The increase was due to a 153k natural increase and a record 253k increase due to net migration. The 1.9% increase in population was well below the 3.3% increase in population during the Korean War boom in 1951, but at that time the population was only 8.3 million. While the current rate of immigration creates challenges and opportunities for Australia, it is the demographic projections for many other countries that can’t help but make you wonder what shape the global economy and geopolitics will take in coming years. Bangladesh is roughly 60% the size of Victoria, with a current population of 142 million.

According to UN population projections the 2050 population will be 243 million. The Congo is a lot bigger (about 25% bigger than Queensland) but the population is projected to increase from 57.5 million currently to 177 million by 2050.  The obvious challenges of how to sustain per capita economic growth in these kinds of countries while avoiding environmental destruction, providing energy, housing, food etc are all questions that I think we economists spend too little time thinking (worrying) about. The Economist magazine had a recent piece detailing some evidence of demographic transition in Africa as a result of economic growth, but the evidence presented will just slow down the progression to these very high population levels. Malthusian predictions of catastrophe have become unpopular in economics, but I fail to see how current rates of global population increase cannot end very badly.


Comments

10 Responses to “Population explosion”

  1. M on September 9th, 2009 3:54 pm

    How the heck do they expect the Congo population to triple in the space of 40 years?  I thought it was a war zone?
    I have trouble reconciling the population forecasts with the land areas associated and the implied population densities.  However, I think the limiting factor on population is probably rainfall and fresh water.  At some point there simply isn’t enough fresh water to go around.

  2. Nick on September 9th, 2009 4:15 pm

    Desalination ….

  3. Mark Crosby on September 9th, 2009 4:52 pm

    Not sure that lack of rainfall is a problem in Congo. It’s worthwhile noting that Congo is about 2/3 the size of India, whose population is projected to rise to 1.6 billion by 2050. The UN projections are based on trends in fertility rates and death rates, but however you cut it population growth is going to be a huge challenge.

  4. hc on September 9th, 2009 5:35 pm

    Population growth is stabilising outside Africa isn’t it?

    Notice the ‘coincidence’ of the massive growth in the labour force in Australia with the strong recovery of the Australian economy from the GFC.

    I reckon it is an iron law. Lots of new people, lots of demand for durable goods and a strong economy….at least in the medium term.

  5. derrida derider on September 9th, 2009 5:35 pm

    I agree that demography has far more influnce on economics than people think. But I’m not as gloomy as you about the effects of population growth in Bangladesh and Africa for several reasons.

    Firstly, I’m old enough to remember precisely these sort of calculations and associated agonising about India, China and SE Asia at a time when they were all, unbeknown to the agonisers, just beginning their demographic transition.

    Secondly, Africa is indeed beginning its own demographic transition which will yield a very large, if temporary, economic dividend as their youth and age dependency ratios fall. This is precisely what happened in all the Asian tigers, including postwar Japan, and was an important part of their success.

    Thirdly, I expect very large amounts of voluntary migration as the gains from trading people get ever larger as the demographic profile of Africa and the (current) first World get ever larger. We baby-boomers will be looking to import young workers to look after us in our retirement. Cultural barriers soon give way when there is serious money to be made – I expect opposition to this migration to fade.

  6. Cameron Murray on September 9th, 2009 5:37 pm

    You say,
    “Malthusian predictions of catastrophe have become unpopular in economics, but I fail to see how current rates of global population increase cannot end very badly.”

    Doesn’t this suggest that the current rates of growth are not going to continue? Which leads us to ponder what factors may contribute to declining growth rates. Maybe some of these factors will contribute?

    1. Less births (due partly to urbanisation, government intervention)
    2. Earlier deaths (less resources devoted to health care, poor nutrition, war etc)

    I have always found population growth projections to be very odd. What makes us think we can just extrapolate past patterns of growth into the future? Especially without a good understanding how changes in the rate of growth occur.

    There must be a few natural experiments in population growth around that have been analysed to consider these issues.

    Anyway, that’s my two cents.

  7. greenman on September 9th, 2009 5:45 pm

    The world population is expected to max out at 10 billion.  In fact, the rate of growth has already slowed down.  So globally this is not a problem.
    Sure, some counties/regions will have very high pop density (like Singapore does now) but the solution is simple: free trade.
     

  8. M on September 10th, 2009 10:52 am

     
    Economic growth based on population growth (via migration) is pretty much the basis of the Florida economy.   Economy highly reliant on residential construction due to large migration inflows (sounds familiar).
    See the NY Times article.
    http://www.nytimes.com/2009/08/30/us/30florida.html
     
     

  9. Pete Murphy on September 10th, 2009 10:42 pm

    Mark, not only will population growth be the most dominant parameter of the global economy in the next 40 years, it has been for the past 40 years.  It is the driving force behind global trade imbalances and rising unemployment. 

    Visit my web site for more information about the relationship between population density and per capita consumption, and its implications for global trade and population management.

    Pete Murphy
    Author, “Five Short Blasts”

  10. Chris Lloyd on September 14th, 2009 3:22 pm

    Harry says: “Population growth is stabilising outside Africa isn’t it?” He has obviously never heard of India.

    And Australia has survived the GFC because of our high recent population growth? We also rode out the Asian crisis when our population grwoth was much lower. Let’s look at some other significant countries. US with high recent population growth – GFC central. China with one child policy – fared much better than expected. Recent population growth stimulates short term demand but there are way more important factors.