Munich Personal RePEc Archive

Population Growth and Economic

Chowdhury, Md Niaz Murshed and Hossain, Md Mobarak

University of Nevada Reno, Reno, USA, University of Nevada Reno,

29 October 2018

Online at https://mpra.ub.uni-muenchen.de/91216/
MPRA Paper No. 91216, posted 04 Jan 2019 03:58 UTC
 Population Growth and Economic Development in Bangladesh: Revisited Malthus

Md Niaz Murshed Chowdhury

Abstract

Bangladesh is 2nd fastest growing country in the world in 2016 with 7.1% GDP growth. This study
undertakes an econometric analysis to examine the relationship between population growth and
economic development. This result indicates population growth adversely related to per capita GDP
growth, which means rapid population growth is a real problem for the development of Bangladesh.
Malthus’s prediction is that population increases so rapidly and outstrip the food supply due to the
operation of law of diminishing return, which is proven wrong because of technological improvement
and agricultural advancement program, human capital development and export skilled labor, promotes
labor intensive industries, encourage foreign investors, institution settings and political stability in
Bangladesh. Bangladesh has reduced its population growth about 67% between 1979 and 2017 using
different preventive checks suggested by Malthus and Mill. Bangladesh has been suffering from
environmental degradation, loss of arable land, loos of agricultural land biodiversity loss and
deforestation. Bangladesh Economy is growing with improving living standard at the cost of
environmental degradation.

Keywords: Population Growth, Economic Development, Environment, and Poverty

i
Introduction

Bangladesh is one of the most densely populated countries in the world with 3310 people per square

mile (1278 per Km2) where US is only 92.2 per square mile. Population density of Bangladesh is

three time higher than neighboring country India and 36 times higher than United Sates. According to

the report of United Nations Population Fund (UNFPA), Bangladesh population has reached 167.9

million in 2018. Thomas Malthus said unchecked population growth can causes danger in the

economy but Bangladesh demography tells different story. Most of the underdeveloped countries have

fallen into demographic trap due to a high birth rate where Bangladesh has achieved an extraordinary

success in that area. Bangladesh has been undergoing a population transition in the line with the

population transition model and Bangladesh is now at the beginning of the stage III of its population

transition. In recent decades dead rate decrease substantially where birth rate doesn’t fall enough to

maintain a sustainable growth of population. Population growth rate in Bangladesh is comparatively

higher than other developing countries in late 1970. Population growth plays a intricate, complex and

interesting role in the process of the development of any country, sometime it boost up the economic

development and sometimes it retards the economic development.

Robert Malthus is popular for his famous essay on “Principle of Population” and the most well known

theory of the population is the Malthusian theory. He wrote it in 1798 to warn his fellow countrymen

of impending disaster because of increasing population in England. According to Malthus “ By nature

human food increase in a slow arithmetical ration; man himself increase in a quick geometrical ratio

unless want and vice stop him. The increase in numbers is necessarily limited by the means of

subsistence Population invariably increase when the means of subsistence increase, unless prevented

by powerful and obvious checks.”

1
Malthus population theory is based on the two assumptions, diminishing returns to labor, and the rate

of population growth to which the means of subsistence is over the minimum level. Malthus said,

population increase faster than food production, population increase in a geometric rate unless

prevented by powerful check, and food production increase only in an arithmetic rate. It indicates per

head food tends to decrease as the population increases, which means the laws of decreasing returns to

labor. He talked about two types of check to keep the means of subsistence on a level, and these are

the preventive check and positive check. Malthus was different from the other classical economist for

his “Principle of Political Economy’ which deals with progressive of wealth. Malthus talked about

Economic development and he emphasized on the short-term development instead of long-term

development. In that book Malthus says “ There is scarcely any inquiry more curious or from its

importance more worthy of our attention, than that which traces the causes which practically check the

progress of wealth in different countries.” This paper tries to examine some of his thinking in the

perspective of Bangladesh. The key objectives of this paper are, explain the relationship between

population growth and per capita GDP growth rate, and summarize different problem that Thomas

Malthus’s addresses his published books in a sense of Economics Development and explain why some

of his dire predictions have not occurred in Bangladesh, and finally explain the concept of

demographic translations.

Population Growths and Economic Development

The process of population growth is exogenous in order to process income generation, accumulation,

technical progress and institutional change (Srinivasan, 1987). The relationship between population

growth and economic development has been main concern in recent decade. Thomas Malthus argued

that population growth would depress living standard in the long run. Excessive population growth

could reduce per headland, which pushed downward pressure to the fixed amount of land. Population

2
growth. Robert MacNamara, past president of word Bank, described this relationship as “this most

delicate and difficult issue in the era, it is controversial, subtle and immeasurably complex”. This

study tries to show the relationship between population growth and per capital GDP in this section.

y = -1.955x + 6.2483
10
R² = 0.11724
Annual rate of per capita GDP

5
growth(%), 1960-2017

0
0 0.5 1 1.5 2 2.5 3 3.5
-5
GDP per
-10 capita
Linear (GDP
per capita)
-15

-20
Annual rate of population growth (%), 1960-2017

Figure 1: A scatter chart of population growth rates versus GDP per capita growth rates for various developing countries
for the period 1960-2017. Source: World Bank Data Bank

Figure 1 demonstrates the simple cross sectional relationship between population growth and

economic growth, which shows a negative correlation when considered over the long run (1960-

2017). In the recent decade Bangladesh achieved great success to reducing it population growth rate,

from 3.00% in 1979 to 1% in 2017. It indicates Bangladesh has taken preventive check using

community-based approach, recruiting married village women trained in basic medicine and family

planning that consists of different birth control methods like contraceptive pills and condoms and

referring women for clinical contraception. Bangladesh government has taken steps to prioritized girls

education, continuing education delays marriage and educated women have opportunities to work

outside. In the process, women education and empowerment helps to reduce fertility rates in

3
Bangladesh subsequently halved from six children in period 1970 to three children in 2017. Every

highly developed countries has experienced a reduction in fertility of 50% or more, and a population

in which fertility was being reduced would be healthier, better fed, and better educated (Zaidan,

1969).

10.0%

5.0%

0.0%
1960
1963

1969
1972
1975

1981
1984
1987
1990
1993

1999
2002
2005

2011
2014
2017
1966

1978

1996

2008
population growth
-5.0%
GDP per capita

-10.0%

-15.0%

-20.0%

Figure 2: A line chart of population growth rates versus GDP per capita growth rates for Bangladesh for the period 1960 to
2017. Source: World Bank Data Bank

Above Figure 2 provide the graphical representation of per capita Gross domestic product and

population growth rate, which shows population growth decrease over time but GDP per capita

increases between these periods. We clearly have seen that rapid economic growth mitigates the

potential negative impact of rapid population growth. Above diagram shows that Bangladesh

Economy was fall about 16% in 1972 due the liberation war against West Pakistan. After that until

1990 GDP growth was lower than population growth that demonstrates Bangladesh went through

severe population problems. After 1990 Bangladesh economy has been flourishing, and Bangladesh

has taken control over population growth and reduced population growth substantially from 2.8% in

4
1990 to 1% in 2017. Even though Bangladesh has taken control over population growth, Bangladesh

still suffering from its increased population because they already damaged agricultural land,

forestland, and biodiversity.

This study used yearly times series data from the period of 1960 and 2017. For the simplicity of

model1 the study used only two series of data2, which are per capita GDP (%) and Population Growth

rate (%). A simple linear regression analysis has undertaken to determine the relationship between

population growth and economic development.

GDP = 6.25 - 1.95 PopulationGrowthRate ; R2=0.1172

This result indicates there is a clear negative and statistically significant relationship between per

capita GDP and population growth rate when we considered over the long run (1960-2017), which

indicates 1% increase in population growth leads to decease per capita GDP by 1.95%. The clear

indication from the output is that population growth adversely effects the economic development of

Bangladesh, which supports the Malthus prediction. Rapid population growth indeed a real problem

for Bangladesh, high population growth has become a great obstacle to achieving overall development

goal. Population growth causes huge problem in Bangladesh, which put pressure on investment

growth and diminishes the savings rate (Ali, Alam , Islam, & Hossain , 2015). Millions of

Bangladeshi is working abroad and remittances are the important source of foreign exchange earnings,

which is the important part of current account balances. In Bangladesh natural resources are diverted

to fulfill consumption needs that put the downward pressure to the national savings rate. Bangladesh

had to seek external financial assistance from abroad every year to fulfill the demand of food besides

1 Some of the previous studies used difference models, including real GDP, export, import, mortality rate and so on, but everyone

found a negative relationship between population growth and GDP growth rate.
2 Data was collected form World Bank data bank, world development indicator database
2 Data was collected form World Bank data bank, world development indicator database
3 Standard errors in parentheses, Significance at the 5% level indicates by ***

5
its tremendous success agriculture sector. For these reasons Bangladesh is one of the lowest domestic

savings countries in the Asia, 25.3% in Bangladesh compared to 41% in China. Every year

Bangladesh is importing huge volume of food from foreign countries, Brazil is the top on that list

(imported 57% of foods form Brazil). In order to protect domestic market high savings rate is

necessary for the developing countries because domestic savings in the key sources for domestic

investment to induce economic development, reduce dependency from foreign aid and save huge

interest payment4.

Demographic Transition, population growth and food production

“Essay on the Principle of Population” was one of most enduring work during the time of Malthus and

growth of population will inevitably collide with diminishing return was the root argument of

Malthus. His diminishing return concept doesn’t work in recent time in developing countries like

Bangladesh because of advanced technology, human capital development and agricultural revolution.

Recent statistics shows that increase in food production surpasses the increase in population growth in

Bangladesh. The new invention and advanced methods of production have disproved the forecast of

Malthus. Based on a report of World Bank, Bangladesh accounted 90% of the reduction in poverty

between the periods of 2005 and 2010. This reports indicates agriculture food increase substantially in

Bangladesh to protect the large number of population in Bangladesh. Agriculture is the key driving

force in Bangladesh, more the 70% population and 77% of its works force lives in rural areas, 87% of

rural household rely on agriculture for at least part of their income. Despite the frequent natural

disaster and population growth Bangladesh has made exemplary progress over the past 40 years in

achieving food security due to the public investment in agricultural technology, rural infrastructure

4 Most of the development countries like Bangladesh have to pay huge interest for the foreign debt and foreign assistance. If they

able to borrow from local market, they can save huge interest payment and can promote the local investors to invest in the
domestic market.

6
and human capital development. Bangladesh agriculture sector has gained tremendous success in

grain production, which triples between 1972 and 2014 (9.8 to 34.4 millions tons). Bangladesh is one

of the fastest rates of productivity growth in the world since 1995 averaging 2.7% per year (second

only to china) and 4.6% agricultural growth between 2010 and 2014. Bangladesh GDP for agriculture

increases 30% from 2008 to 2017 (7729 million to 10117 million), which indicates food production

doesn’t increase arithmetic progression rather geometric progression.

Malthus made a mistake when discussing the population question, he taking account only agricultural

land and food production alone. He should have considered all types of production like natural

resources, human capital development and export skilled labor, factories, industries, machinery, mines

and others specialized industries. For example ready made garments sectors in Bangladesh is one of

the most influential sector in Bangladesh, the textile and clothing industries playing key role to boost

the economy of Bangladesh. Export in Manpower, and textile and garments are the principle source of

foreign exchange earnings for Bangladesh. Bangladesh imported foodstuffs from foreign countries

using the foreign exchange reserve to reduce the food problem, and recent statistics shows that

Bangladesh has reduced the problem of food and increases per capita GDP (PPP) in recent times,

which clearly indicates the higher living standard even though the high volume of population pressure.

Population growth and environmental degradation

Malthus assumed that excess population causes disaster for the country if population is not checked.

This statement is true for the country like Bangladesh. There is a complex relationship between

population and environment. The excess population causes environmental degradation in many ways.

It puts the downward pressure to arable land, agricultural land and forestland that is needed to balance

the biodiversity. In Bangladesh Agricultural land decreases by 13.5% and arable land decrease by

10% between the period of 1989 and 2016, which demonstrate that excess population taking over

7
agricultural land rapidly. Forest areas are deceasing rapidly in Bangladesh that is accounted 4.5%

between the period of 1990 and 2016. Recent statistics shows that forest area as percent of land area is

10% in 2017 but according to global forest policy for a country it should be at least 25% of total land

area. Bangladesh is lying far below the standard level and this is one of the root causes of climate

change in Bangladesh. In addition, Bangladesh is one of the most disaster-prone countries in the world

like floods, cyclones and droughts and everyone these disaster made huge losses in the country.

Weather pattern has changed dramatically in Bangladesh, emission rate of CO2 and led in the air of

the Bangladesh is very high; consequently it causes different health problem like cancer, skin diseases

and so on. Bangladesh is suffering extreme temperature during summer and excessive rain in the rainy

reason due to deforestation. These types of climate change and natural disasters ruin the agricultural

productivity every year.

Benefit from population growth

An increasing population means an increase in labor force that can participate directly to the

development process and economic growth, and a growing population leads to increase in total output.

In addition, growing population can provide growing market for most good and services that stimulate

entrepreneurs to invest more and more in capital goods and machinery as a consequent business

activity will be increased and more income and employment will be generated in the process. In

addition increasing population can provide cheap labor for the industries and produce export goods in

low cost, which is needed for the economic development.

Bangladesh is getting several benefits from population growth, for instance Bangladesh exporting

skilled labor forces to the different countries especially oil based Middle East countries. These labors

send remittance to Bangladesh that increases foreign exchange reserve, which is needed for trade

balances. Bangladesh has taken several projects to train unskilled labor, and turn them to productive

8
labor by proving appropriate knowledge. Due to the availability of cheap labor foreign investors are

encouraged to invest in Bangladesh, in the way Bangladesh gained notable success in textile and

readymade garments industry. Bangladesh ranked 4th largest clothing industries in the world. It

creates huge employment in the root level of Bangladesh, which reduce unemployment rate and boost

up living standard and reduces poverty rate. In addition it induce capital inflow in Bangladesh through

foreign direct investment (FDI) that diminish the capital shortage in Bangladesh. Industries of

Bangladesh are enjoying economies of scale in the production process because of the availability of

the cheap labor. Trade openness has long-term positive effect on less developed courtiers (Kentor,

2000).

Malthus, Effective demand and Savings

Malthus pointed out that process of development is not automatic; increase in population cannot by

itself lead economic development without increasing effective demand. Malthus rejects the Says Law,

which says “supply create its own demand”. Malthus showed that excess savings in the sense of not

consuming create negative impact for economy and savings lead to decline in effective demand.

Malthus discouraged the excess savings because he feared that this tendency could reduce the

effective demand. This statement is true in some cases for Bangladesh, most of the families wants to

save in order to protect their future and some other expenses during the their retirement age. As more

than 70% people lives in rural area and 24.3% population lives under national poverty line. They don’t

have enough purchasing power to their subsistence. Foreign capital dependence has a positive effect

on income inequality, raises fertility rates, accelerates population growth, and retards economic

development (Kentor, 2000). We cannot totally avoid the necessity of domestic saving because it can

secure the domestic financial market, reduce the dependency of foreign debt and government can

borrow from domestic capital market to invest them into local project to boost the economy. In

9
addition savings is needed to fulfill the budget deficit and government can take comparatively low

interest rate than abroad.

Discussion

Theory of “Dualism” by Malthus is very true for the underdeveloped countries. Malthus suggested

land reform to expand agricultural output. Most of the recent developed countries were also went

through the process. Malthus explain the concept of economic development, he says economy consists

of two major sectors such as agricultural and industrial sector. Most of the underdeveloped countries

have the dual economy and agricultural sector are lagging behind than industrial sector in these

countries. Law of diminishing returns operated in the agricultural sector even though technological

progress in production process, where as the industrial sector was subject to the law of increasing

returns. The most important point is that when one of these sectors lags behinds, it held back the

development of another sector. In Bangladesh this straggle agricultural sector hinders the development

of industrial sector. 70% population of Bangladesh lives in rural areas and they are solely dependent

on agriculture and most of them live under poverty line. So, they don’t have enough purchasing power

to reflect the exact demand. Due to the lack of purchasing power, they can’t able to show the demand

that reduces effective demand in the economy and retards its growth.

Bangladesh has been facing serious environmental problems due to the population growth. In recent

time GDP is growing rapidly with the population growth, which puts downward pressure to the

country’s natural resources and increase the level pollution. Economy of Bangladesh is growing very

in recent times and annual GDP growth is 7.3% in 2017. This rapid economic growth causes damage

in environment and reduces ambient quality; rapid expansion in industrial production and urbanization

has caused water pollution, increased level of industrial waste that have resulted health problems.

10
Malthus’s Theory of development is kind of negative because he just focuses of the elements that

hinder the growth instead of the elements that promote the economic progress. However, he taking

account two most influential factors production and distribution as the elements of economic progress

in his Book Principle of Political Economy. In addition distribution of production is very important

for the less developed country like Bangladesh.

Malthus also emphasized on the non-economic factors, the most influential subjects are politics and

morality. Proper Property Rights can encourage to worker works more. In addition political stability,

and proper law and enforcement are also needed for the development of an economy. Malthus didn’t

mention the women empowerment, which is the most crucial factor for the economic development.

Another important thing should be considered for the growth of economics is development of

institutions and infrastructure. These two key elements can enhance the sustainable economic growth.

Conclusions

Malthus contribution to economic development consists of several elements that are very true for the

developing countries like Bangladesh, Pakistan, and so on. Findings of this study is similar to the

Malthus assumption of unchecked population growth can cause disaster for the economy. This study

found a highly significant negative correlation between population growth and economic

development. Excessive population growth can shrink the possibility of economic growth unless

government come forward and take proper steps to reduce the food problems using alternatives

methods like export skilled labor to abroad, promote local small industries, agricultural advancement

programs, promote labor intensive industries (because of availability of cheap labor), encourage

foreign investors, institution settings and political stability. In addition his emphasis on production,

distribution, accumulation of capital, methods of increasing effective demand and non-economic

factors are also true in some cases for Bangladesh.

11
Bangladesh is trying to improve its food security using different agricultural advancement programs,

government subsidy in agricultural sector and investment in research and development. Recent

statistics shows that Bangladesh achieved tremendous success in agricultural sector. Agriculture is a

key in reducing poverty in Bangladesh and agriculture is accounted 93% of reduction in poverty

between the periods of 2005-2015. Agricultural growth in Bangladesh stimulates non-farm income

and 10% increases in farm income generates a 6% increases in non-farm income. In addition

Bangladesh made huge progress in achieving food security ever before. This rapid increase in

agricultural productivity falsified the Malthus theory of population.

Malthus only accounted relationship between agricultural land and food production alone but he

didn’t consider all types of production like natural resource, export human capital, factories,

industries, machinery, mines and others specialized industries. Using the advantage of population

growth Bangladesh is exporting labor to the abroad and earning huge amount of remittance, and

makes labor-intensive industries like textile and readymade garments. These two key things enhance

the food security, solve the food problems and accelerate the economic development of Bangladesh.

Malthus was ignored these things when he talked about the economic growth.

According to recent statistics Bangladesh economy is growing at the cost of environmental

degradation. Malthus said unchecked population can cause damage and ended up misery and

starvation. Malthus didn’t consider the economic growth at the cost of environment degradation and

nature resource. In Bangladesh, recent GDP growth rate is 7.3% (2017), GDP per capita PPP is $3868

in 2017 (340% percent higher than year 1990), life expectancy increased 58 years to 71 years between

the period of 1990 and 2016, prenatal care for pregnant women increased 63.9 % from 25% from the

period of 1994 to 2015. Some others indicators like mortality rate, reduce child dead at birth,

reduction in poverty and so on indicates living standards is improving. On the other hand the cost of

12
economic growth is huge in terms of population growth, arable land, agricultural land and forestland

are decreasing faster rate, which is the alarming for the Bangladesh. If government of Bangladesh

doesn’t proper steps to solve the problems, near future she will loose most of cultivated land. Excess

Carbon emission enhances the climate change and reduces the ambient air quality. As a result sea

level rises and they have to suffer natural disasters, Bangladesh already has been going through these

problems.

Malthus pointed out two important checks to reduce the growth of populations; these are preventive

check and positive check. Bangladesh has taken steps to control population growth and they made

huge success to controlling population, population growth reduces to 1% form 3% between the

periods of 1979 to 2017. Bangladesh has taken plan to spend $615 million USD for he family

planning program over 2017-2021 to reduce population growth. The main reasons for success behind

the reduction of population growth are women empowerment and education. In Bangladesh, most of

women don’t work outside, which is the key obstacles for the economic development because women

are accounted half of the workforce of the country. Women participations in work force are very

important for the development of any country.

References
Ali, S., Alam , K. J., Islam, S., & Hossain , M. (2015). An Empirical Analysis of Population Growth
on Economic Development: The Case Study of Bangladesh. International Journal of Economics,
Finance and Management Sciences , 3 (3).
Kentor, J. (2000). The long term effect of globalization on incme inequality, population growth,and
economic developemnt. Social Probelms , 48 (4).
Srinivasan, N. T. (1987). Population growth and Economic Development. Yale University.
Zaidan, G. C. (1969). Population Growth and Economic Development. Studies in Family Planning , 1
(42), 1-6.

13