Population Pressures, Saving, and Investment in the Third World: Some Puzzles

Abstract

Two arguments are often made concerning the adverse impacts of rapid population growth on the rate of economic development.' The first is Malthusian in origin: a relatively "fixed" (or slow growing) resource (land, according to Malthus, or other renewable and nonrenewable resources, according to neo-Malthusians) coupled with rapid population growth causes a reduction in output per worker. The second is neoclassical in origin: rapid population growth leads to increasing scarcity of "productive capital" per worker and thereby to declining worker productivity. Overall the Malthusian argument has dominated the literature, but in the postwar period the neoclassical perspective has gained substantial attention. This is due to the prominent role economists have attributed to capital formation in economic growth as well as to the emergence of several important pieces of research, the most influential of which was the pioneering work of Ansley J. Coale and Edgar M. Hoover, who considered three adverse impacts of population growth on savings and capital formation........