Economic development is the process of improving the standard of living and well-being of the population of developing countries by raising per capita income. Population has a complex role in this process, influencing, inducing and determining the behaviour of the demand and supply sides of the economy, which, in turn, interact, but the geographical aspects also require consideration.
By analysing the British experience of industrialisation over the early 18th to mid 19th century we will ascertain the nature of the roles played by population in economic development. Population has a major role in economic development: people are a factor of production and have varying types and sizes of influence on the production possibility frontier and national income, depending on their circumstances. Malthus, however, believed the growth in numbers would always limit the living standards of the population at subsistence level.
His argument, as put forth in his “Essay on the Principles of Population” (1798), was that, while food production could increase in an arithmetic ratio, the exponential growth of population would create increasing food prices, declining real wages and inevitably reach a point where the carrying capacity of the land would be outstripped by the number of people dependent on it. Here, “positive” checks would occur to reduce population such as famine, while “preventative” checks of voluntary constraint of early marriages would further alleviate the pressure, influenced by the relationship between living standards and real wages and nuptiality.
Using Wrigley and Schofield (1981) data, the English population grew from 5 million at the beginning of the 18th century, to 8. 6 million by 1800, and continued rising, reaching 16 million by the mid 19th century. According to Malthus’s theory, this should be reflected in increasingly negative circumstances for the population; however, there was a growth rate of 0. 6% per year during the 18th century in England, with real wages remaining constant through this period (Lee 1986).
It is fairly safe to say that Malthus’s argument was incorrect; he did not consider the ability of population to be able to simulate the supply-side of the economy. For example, important agricultural organisational changes were brought about, such as parliamentary enclosure; incited by rising food prices and desire for the application of the best available techniques and innovation, there was a new wave of enclosures, culminating in the government’s General Enclosure Act in 1801. Crop rotation was also introduced in 1730 by Charles Townshend, and new practices in selective breeding also occurred.
In this way, food growth was proved to be exponential, population managing to expand agricultural production to satisfy it’s needs. The changes in agrarian society had it’s own effect on population. For example the transition from the feudal i?? poque, where land-owners had legal rights over serfs in return for ownership of a plot of land which the serfs used for subsistence; the rise of merchant activity, however, led to commissioning of manufactured goods from the serfs at a lucrative price.
The serfs started to migrate to urban areas to escape the legal controls and exceed their subsistence living. Also, the process of enclosure had led to villagers losing their land and grazing rights; while some received compensation, it was minimal and the loss of rights for many of the rural population, combined with lack of labour demand on the increasingly mechanised enclosed farms forced many to relocate to the urban area to seek employment.
This increasing supply of labour in cities helped the industrialisation process by allowing great availability of cheap workers. However, industrialisation in turn influenced population growth through its effect on nuptuality: Hicks noted that the Industrial Revolution ‘created a new industrial working class.. different from the old urban proletariat-one of the main differences being that it was more regularly employed’.
These employment conditions were favourable to family formation, allowing the industrial worker to be sure of a stable income and ability to support his household. With the age of marriage decreasing, fertility rose with population following suit while the growth of demand for foodstuffs in new industrial centres led to more regular employment for the expanding agricultural proletariat; therefore nuptuality increased in both urban and rural areas.
Having discussed the effect of population growth on the labour supply, we shall turn to it’s effect on demand. The increase in population simultaneously increased aggregate income and demand, creating a healthy economy with reduced risk for investors and entrepreneurs, fuelling demand for investment goods. It can be shown that population growth alone led to a 14% increase in the demand for ‘manufactured’ or non-agricultural goods between 1751 and 1801, and by 29% between 1801 and 1851.
This triggered an influx of investment which, through the combination of the multiplier and accelerator effect, increased national income. Therefore it seems population growth can encourage economic growth more than might be expected from the growth in labour supply alone (Keynes 1937). In this way, population growth during the British industrialisation experience was the driving force behind the buoyant demand and through investing, allowed this positive effect on national income to be exacerbated in the long-term.
We can see from the british industrialisation experience that population plays many roles in economic development, both direct and indirect. However, one of the fundamental difficulties we have in addressing questions regarding population lies in the distinct lack of evidence surviving from the countries that made up Britain; for example, in none of the countries were collections made of the numbers of births, deaths or marriages before the Registrar General began to record these in the district registrar offices in 1837.
Nor were censuses made of the total number of people until 1801; this has created a situation where there is a drought of demographic information for the 18th century, while it is only for 1837 onwards that such knowledge becomes abundant. Therefore, this causes ambiguity over the reliability of the statistics that are being used, rendering the significance of our discussions and the ability to draw conclusions limited.