RELATIONSHIP BETWEEN POPULATION GROWTH AND GDP OF A REGION - CULTURE VOCABULARY - 2024

Many studies indicate that the relationship between population growth and a region's GDP is uncertain. GDP or gross domestic product is an important indicator of the economic performance of a country.

This measure represents the final value of goods and services produced within the geographical limits of a country during a given period of time. On the other hand, the expression demographic growth refers to the population change of a certain region.

GDP per capita Mexico 2010

Relationship between population growth and GDP in Europe

A report from the Institute of Demography in Vienna states that studies based on data from various countries found a negligible effect of population growth on empirical growth regressions.

However, the role of other demographic variables was verified. Fertility, population growth and mortality were shown to have a negative impact.

Instead, the size and density of the population were positively related to GDP growth.

Now, if the growth rate of the total population is taken as the only demographic variable, it is observed that population growth has no effect on economic growth.

On the other hand, the age structure proved to be a significant variable. Empirical growth regressions indicate the significant correlation between demographic change and economic growth when considering this data.

Relationship between population growth and GDP in the United States

The Martin Prosperity Institute at the University of Toronto compiled data on population and GDP growth rates in all metropolitan areas in the United States, between 2001 and 2011.

This institute highlights the popular belief that there is a direct relationship between population growth and successful development.

Thus, as the population grows, the economy and taxes will also grow. In addition, it is believed that the increase in GDP encourages the arrival of other settlers.

However, the study showed that there is no direct correlation between population growth and GDP in American metropolises.

Other factors of success are involved there, such as the quality of the place, the talent, the technology and the tolerance.

Relationship between population growth and GDP in developing countries

A study from Eastern Illinois University empirically analyzed the impact of various dimensions of the demographic transition on per capita GDP growth. For this, data from a sample of forty-three developing economies were used.

Among its results, it stands out that the effect of population growth on per capita GDP growth is linear and in all cases negative.

As a second conclusion, there is no significant statistical impact on economic growth when both the dependency rates of young people and older adults are included in the model.

The effect of the dependency ratio of older people on per capita GDP growth is always negative and stronger when the interaction terms are included in the model.

On the other hand, the study found that the level of urbanization and urban growth do not have a statistically significant impact on the growth of GDP per capita.

References

1. Ephraim C. (2002). International Finance. London: Thomson.
2. What is GDP? Definition of Gross Domestic Product
3. Amadeo, K. (2017, July 5). What is GDP? Definition of Gross Domestic Product. The Key to Understanding What a Country Is Good at Producing. The Balance. Recovered from thebalance.com
4. Prskawetz, A., Fent, T., and Barthel; W. (2007). The Relationship Between Demographic Change and Economic Growth in the EU. Research Report 32. Recovered from oeaw.ac.at.
5. Untangling Regional GDP and Population Growth. (s / f.). Martin Prosperity Institute. University of Toronto. Recovered from martinprosperity.org.
6. Quang, MD (2012). The effect of population growth on per capita GDP growth is negative in developing countries. International Journal of Academic Research in Business and Social Sciences January, Vol. 2, No. 1.