Bellerbys Economics - Mr Stephenson

Monday, September 03, 2007


Have a quick look at the World Population Clock:

Scary, huh?

But why should economists care about that? Well, first of all, it affects the way in which we read Economic Growth figures. Most magazines, including the 'Economist' show economic growth as the change in GDP for the country as a whole - but a more useful figure is the change in GDP per person. The USA at the moment has economic growth of 1.9% a year - but its population is growing by 1% a year - so the growth per person is roughly 0.9% a year - almost in recession.

Similarly, the UK has economic growth of 3% a year but the population is growing by 0.75%, making it more like 2.25% per person. Russia, on the other hand, has economic growth 0f 7.9% but the population is falling by 0.5% a year - making it more like 8.4% growth per person.

Population growth is a good thing in many ways. If the growth is through young skilled immigrants entering the country, as it mostly is the USA and UK, it will bring productive workers into the economy, helping to support perhaps a naturally ageing workforce. However, if growth is too rapid, it may cause problems with housing and pressure on schools, healthcare and other resources - especially water in some parts of the world.

As individuals become wealthier, it has historically been the case that they have fewer children. If this trend continues, it's quite likely that world population will peak at 9 billion - sometime around 2050.


Post a Comment

Links to this post:

Create a Link

<< Home