Size does matter (For economic growth)

Throughout history, various countries have been extremely rich and extremely poor. Rarely however, do these countries stay rich or stay poor. For example, Europe in the 15th century was very poor compared to China. However, after the industrial revolution and much of the 20th century they lead the world in both technological advancements and economic power. Klaus Desmet of Southern Methodist University hypothesizes that growth economically comes from technological advancement. For countries with larger populations, it is more likely for more innovation to occur that those with smaller populations. 

 In the past, this has pointed to the inevitable trend that large, populous, and poor nations will eventually pull themselves out of squalor, while isolated but rich countries slowly decline and stagnate. While this has always been the historical norm, in the present day it is slowly changing. The population of countries currently is much more fluid than it used to be because of the ease of migration. Before, people generally stayed where they were born. Because of this, the poor people in a certain country would remain there, and their innovations would benefit that specific country. 

 Now however, the poor in many countries will merely immigrate to a richer country. This creates a multi-faceted problem; the already rich countries will gain more and more population, which as seen earlier will boost the rate of innovation. The poor countries will have an even smaller population, leaving them further and further behind. 

 While these are important factors to consider when predicting the economic future of the world, there are myriad other factors that are difficult to account for. For example, certain political leaders can have a massive impact on the direction their country is heading towards, natural disasters can stunt growth, and the globalisation of countries everywhere will also help even the differences between various nations. 

 https://www.economist.com/finance-and-economics/2019/04/17/where-growth-is-concerned-is-population-destiny

Comments

  1. AnonymousApril 19, 2019 at 4:18 PM

    This is really interesting! I never really considered how the migration of citizens from poorer countries could potentially hurt them, since a majority of the third world countries are dealing with issues of overpopulation right now. It's also important to consider the Demographic Transition Model in this case (DTM) because developing countries like India and countries in sub-Saharan Africa have extremely high birth rates but relatively low death rates, which means their population will continue to grow. In fact, it's predicted that in the coming years, about 97% of population growth will be in developing countries. But these countries, being poor, are also seeing the issue of brain drain where all the qualified, educated doctors, engineers, etc. are moving to countries where they can make more money with their skills, which continues to greatly impact the economy of these developing countries.

    https://www.consultancy.uk/news/2191/97-percent-of-population-growth-to-be-in-developing-world

    ReplyDelete
  2. AnonymousApril 19, 2019 at 5:58 PM

    Great post! Immigration has heavily impacted the US economy as well, as many people from around the world, rich or poor, migrate to this land of opportunity. Although some may believe that the influx of immigrants reduces wage growth and steals job opportunities from natives, this is not the case. In fact, they are the reason why there is growth in the supply of labor and increased competition, leading to a more efficient economy. Additionally, these immigrants increase domestic demand for products, as they spend money on homes, TV, and other goods in the nation, which results in new jobs. Overall, immigration has had a huge benefit on our nation's economy.
    http://budgetmodel.wharton.upenn.edu/issues/2016/1/27/the-effects-of-immigration-on-the-united-states-economy

    ReplyDelete
  3. AnonymousApril 20, 2019 at 7:00 AM

    I do not think richer countries will grow bigger and that poorer countries will only grow smaller (and hence economies will stagnate). Rich countries have ready access to birth control and work often takes precedence over becoming parents. This is the reason why countries like Germany and Japan are actually shrinking, and why Germany has embraced immigration to the extent it has. However immigration to rich countries alone cannot outcompete the growth certain poorer nations are experiencing with or without their population emmigrating. In fact the top 20 countries with largest population growth are all countries typically considered "not rich".

    https://www.worldatlas.com/articles/the-20-countries-with-the-highest-population-growth.html

    ReplyDelete

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