Population, GDP and poverty - I

An urgent revisit to population policy is indispensable

The link between population, GDP and poverty could occur in two directions. The first, which is widely accepted by social scientists is that, as GDP per capita improves and the poverty rate falls, the population growth diminishes as well. The reverse has been more arguable: As the rate of population growth is controlled, per capita GDP growth should improve; but does the poverty rate diminish pari passu with it? Malthus had predicted so, that high population growth would lead to pestilence, poverty and famine. The reality is that population growth, GDP growth and poverty are associated in both directions, reinforcing one another.
 
The issue has become crucial for India since, for nearly half a century, there has essentially been no population policy after the debacle of forced population control policies of the 1970s that had comprised bold advertising of Nirodh, the condom, open slogans such as do ya teen bas, which were in the right direction but vitiated by obligatory vasectomies. In its aftermath, political parties saw better than to touch population and, instead, converted population into vote banks. The outcome can be perceived through cross-country figures. What we will decipher is the direction of the association between population growth and GDP per capita, and link it to the poverty rate on a later occasion.
 

After a recent visit to select countries in Southeast Asia after almost two decades, and viewing the phenomenal growth of the economies, their standards of living and quality of life, and seeing hundreds — nay thousands — of Chinese visitors flocking there in packs reflecting their enablement to do so, it occurred to me to resuscitate the nature of the link between population, national income and poverty. Interesting observations emerge from a comparison of Brazil, China and India.
 
To begin, Figure 1 shows the total population from 1950 projected to 2100 (using polynomials to obtain the best fit). It can be seen that, in the 2020s, India will overtake China’s population (at a time when the latter’s population will crest) and remain so to the end of the century. Figure 2 shows what was behind this phenomenon. In the 1960s, from a higher rate of population growth than India’s, China began to reduce it stringently. From the beginning of the 1970s, China’s population growth rate fell below India’s and remained so thereafter. Thus, even though India was on a steadily declining trend throughout, China’s population growth rate was crashed to below that of India and that difference increased. Only in the last few years, China’s population growth rate has picked up again as a deliberate policy, nevertheless remaining below India’s.
 

As an illustration of the association of population growth with income growth, Figure 3 depicts the cross-country growth rates of per-capita GDP for 1968-69 to 2016-17. China’s per capita GDP growth remained significantly above that of India though, in the last couple of years, India has crossed China. This reflects China’s recent relaxation of its population policy after half-a-century of control while India abandoned it to a bellicose absence of policy. In sum, it emerges that population growth and per-capita GDP growth are closely associated. For example, as India’s GDP growth steadily increased, the rate crossed over the slowly declining population growth rate from the beginning of the 2000s (not graphed)1.
 
Fertility — the average number of live births per woman — differences explain the different population trends. Figure 4 reveals that, to 2020, India’s rate of decrease in fertility parallels that of Brazil but India’s base fertility levels have been much higher, implying higher population growth in India (see Figure 2). China kept down its fertility rate, which remained much lower than both Brazil and India. Interestingly, moving forward, all three countries will have much lower fertility rates compared to the world average (to no small extent the impact of Nigeria). Nevertheless, India’s base population being high, its population will crest at some 1.6 billion in the 2060s. Herein lies India’s fundamental challenge for, certainly, this could not represent a demographic dividend with good accompanying income distribution and control of poverty. 
 
1Note, however, that both India and China’s per capita GDP growth rates have been higher than the global trend while Brazil’s has oscillated considerably around the global trend reflecting its historical economic instability

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The second part of this column will appear next month