There are some conflicting views on the role of population in economic development. Traditionally, it was argued that a small population size is better, and population growth should be controlled. For example, Aristotle and Plato argued that a larger population and its growth are harmful to economic development. Similarly, the Malthusian and neo-Malthusian economists argue that population growth should be controlled because population grows geometrically while the food supply grows arithmetically. So, there is food insecurity and poverty if the population is not controlled. Then nature itself controls the population through famine (extreme scarcity of food), war, diseases, etc.
However, Adam Smith in his Wealth of Nations argues that the quantity and quality of labor are the ultimate wealth of a nation. So, population size is not the problem if we can manage it. The recent experience and studies have also shown that the size of the population is not the problem. For example, China and India, which have the largest population in the world, have been growing rapidly economically in recent decades. So, the issue is how to manage the population in order to enable them to work productively. It means so long as the economy is able to provide healthy food, shelter, quality education, and quality health, then the population growth and its size are rewarding for the nation. However, if the population exceeds the capacity of the economy and is unmanaged, it adversely affects economic development.
Positive Role of Population Growth in the Economy
- Expands the size of the market and increases investment.
- Reduces labor costs due to increased labor supply.
- Encourages competition and innovation, which supports growth.
- Better utilization of available resources.
- Improves the productivity and efficiency of the economy.
- Attracts foreign investment, technology transfer, and development.
- Possible to maximize the benefits from the economies of scale and scope.
Disadvantages of Population Growth
- Increases pressure for the food or increases food insecurity.
- Threat to ecological balance.
- Increases poverty, inequality, and unemployment.
- Increases the social crimes such as robbery, cheating, forgery, etc.
- Increases the cost of government and public expenditure.
- Threats to political stability and social harmony.
- Increase informal and illegal activities.
Major Issues and Challenges of Population Growth
- Lower growth of productive and respectable employment opportunities.
- Inadequate investment in human capital results in lower productivity.
- Unplanned urbanization and increasing urban slums.
- Increasing pressure on the ecological balance.
- Increasing inequality, poverty, and unemployment.
- Unbalanced and inequitable growth and development.
- Expansion of the informal and black economy.
- Frustration and poor psychological well-being.
Population Growth and Population Size of Nepal: Opportunity or Threat?
The demographic characteristics related information show that the population size and its growth in Nepal are not at a challenging level unless Nepal can create productive employment opportunities. Nepal can enjoy a demographic dividend. As of the population census 2078 (2021), the total population of Nepal is around 30 million. The population growth is 0.92%, and the population density is 198/KM2. The working-age population is more than 66%. This shows that the population growth and its size are not a serious problem. The majority of the population is of an economically active age. It indicates the time for the demographics dividend. However, a large number of youths migrate abroad daily in search of employment, which has challenged the demographics dividend for the country. Similarly, due to rural-urban migration, most of the rural areas are facing the problem of population decline. This has created a serious challenge to revitalize the rural economy.
The development-related indicators are also improving over the period. For example, poverty is reduced, HDI is improving, and access-related indicators (such as access to finance, access to education, and access to ICT) are improved. This indicates the population growth has not been a serious concern for Nepal from the perspective of development. But the issue is the declining fertility rate, birth rate, population decline in remote rural areas, and the higher outmigration of youth with the expectation of permanent settlement abroad, which may pose a serious problem in the future if the recent trend continues.