# **_2.2  Models indicating that rapid population growth constrains economic growth_**

Mid-twentieth century models of economic growth indicated that increases in population growth constrain growth in income per-capita. The Harrod-Domar model (Harrod 1939, Domar 1948), showed that in the absence of diminishing returns to capital, growth in income-per-capita is affected negatively by population growth and positively by savings as well by increases in the output-capital ratio. Solow (1956, 1957) assumed that both capital and labor had diminishing returns, and illustrated that an exogenous increase in the population growth rate would translate into a growth of labor supply that would outpace the growth of capital formation and ultimately lower per-capita income.

Coale and Hoover (1958) modeled the relationship between population growth and economic development for one low-income country ─ India in the 1950s ─ characterized at the time by low GDP growth, low industrialization, and heavy reliance on subsistence agriculture. They concluded that population growth might adversely affect the prospects for economic development because of the population‘s (1) increasing size, as well as (2) its structure, with high and rising child dependency ratios. They argued that the combined effect of these two factors divert national resources away from investment in expanding production and increasing the capital/labor ratio ― to meet the growing needs for schools, health, housing, and other infrastructure needed to avoid compromising the future population‘s wellbeing and productivity. Similarly at the household level, they divert resources away from saving for productive investment, to meet current consumption needs.

These models were deeply influential, developing a consensus in development policy circles on the need to reduce the high rates of population growth rates in developing countries.

# **_2.3  Early empirical challenges to these models_**

The first challenge to the Coale and Hoover model was the lack of any significant correlation between rates of population growth and per-capita output across a sample of developing countries (Kuznets, 1967, reprinted in Kuznets, 1973:43). A spate of studies followed with similar conclusions (Lee 1983).

What seems to have attracted little attention was the fact that Kuznets very explicitly and carefully qualified the conclusions he drew from his work. He was careful to specify that technological improvements can increase production and help avoid the Malthusian ―positive checks‖. He added that the technologically feasible may not be actualized, that there could be serious social and political problems involved in making the needed adjustments (Kuznets 1973:7, 45). He clarified that lower rates of population growth could enable more rapid growth in per capita output (Kuznets 1973:90).

Moreover, Kuznets did not know at the time of his writing that world population was growing much faster than indicated by the UN medium projections he used, which were published in 1966. These projected a doubling of the population in the less-developed areas of the world between 1965 and 2000 (Kuznets 1973:7). In fact, this projection tallies with recent UN estimates<sup>4</sup> ― but only because from the mid 1960s onwards the most populous developing countries undertook energetic and successful efforts to reduce fertility. This hindsight adds yet another qualification to Kuznets‘ careful qualifications of his conclusions, that: ―...purely technological and economic factors allow sufficient margins, in most underdeveloped countries, to permit substantial and sustained economic growth, even with a significant rise in population ― at least for the proximate future of two to three decades.‖ (Kuznets 1973:41) Those building on Kuznets‘ work sometimes seem to think that he did not believe that population growth can hinder economic growth. Easterlin<sup>5</sup> summarizes Kuznets‘ position more accurately : ―Kuznets saw 4