Factor Affecting Economic Growth - Free Essay Example

The effect of population on economic growth, recent researcher by economist Allen Kelley and Robert Schmidt indicate that during the 1980 population growth on average acted as a break on economic growth as measured by the growth rate of per captain gross domestic product or GDP this is the standard measure of nation total output of goods and service by residents and domestic business, Result of this extensive analysis suggest that the relationship between population growth and depressed economic performance is strongest among the poorest nations of the developing world, and the effect of this group extend back thoroughly,1960s and 1970s. The growth of gross domestic product can be constrained by the high dependency ratio which results when rapid population growth produces large number of children and youth relative to labor force. the government and families spend for more on children than the children can quickly repaving economic production, especially a modern schooling and health care replace child labor, economist expect consumption related to children to retard household saving, increasing government expenditure ultimately cut into the growth GDP (Allen Kelly, Robert Schmidit) In many countries experience of a rapid growing population on thus growing dependency ratio the influence of young people in the job market exceeded the job creating during the 1980s, According to the UN development program in many cases (in the developing world) a lots of employment was being created, but not fast enough to match the rapid growth of labor force. According to the world bank living standard have risen dramatically over the last dictate: the proportion of the developing world, population living in extremely economic poverty defined as living on less than $1.25 US dollar per days at 2005 price adjust to account for the most recent difference in purchasing power across countries has fallen from 52% in 1981 to 26% in 2005(Steven W.Sinding ,2015). THE EFFECT OF EMPLOYMENT ON ECONOMIC GROWTH With some exception of controversial idea, majority of economist were convinced themselves there is the high link of fertility and population growth, also they argue that there is poverty and stagnation of economy in the developing countries and these made transmission of poverty from one generation to another ,simultaneously the widen gap of inequality of income and healthy among the lower and upper class, practically what we have seen the reality on the ground un balanced high fertility in the lower income of the developing countries .Increment in population decline wage rate at the lowest level and large number of people became low skill and low wage. Labor in the developing country made lower efficient in the production process. From the newly Asian countries we recognized that inequality of income the gap became narrow and the wage of the worker raised it created high probability for investment in education and technology lastly recognized sustained economic growth (Richard P Ci ncota and Robert Engeleman). THE EFFECT OF POPULATION ON SAVING AND INVESTMENT IN PHYSICAL ASSET In the highly industrialization economy kind, the saving of money that have been made by individual is the main source for investment. National research council review found little evidence to substantiate like between fertility and National saving rate , later studies confidentially stressed that lowering fertility indeed encourage investment ,now a day economist given credit significant role of economic growth highly progress in newly industrialize economy ,Asian countries is a good example . Saving money in the financial institution which is generated by the people always play a great role for expansion in the investment of the country; lastly there is high relationship between fertility and capability that the family saves and investment that financial institution made in the fiscal asset (Population Action International, October 1997). FACTOR AFFECTING POPULATION GROWTH Labor supply comes from population growth, but the population growth should be normal, a galloping rise in population retard economic progress, population growth is desirable. Only in under population country, It is how ever unwarranted in an over populated country like Ethiopia in fact a high population growth at the rate of 2.6% per annual is very much determinable to the economic growth of over country. According to the world standardized measurement of demographic factor its influence by changing the ratio at which employment to labor force and labor force participation and then in order to solve the problem of industrialization created demographic transition in which the number of birth rate fall and the average age of people increased and also women with limited number of child and high access of market employment and join to the labor force in higher number and next to this the dual demand for child labor became decreasing and child spend more year in the school. The increase in percentage of women in the labor force is contributed to economic growth. Throughout the developing world decline birth rate and rising living standard have gone hand to hand, the evidence suggest that the inter relationship between them represent a vicious circle. THE EFFECT OF HUMAN RESOURCE ON POPULATION GROWTH A highly trained professional human resource are play a great role for the development of economy of the country ,every nation now a day made large investment on human kind in the form of education ,medical and other service that have been made desirable for human being. According to Peter Drunker, The most important requirement of rapid industrialization growth is people. People ready to welcome to challenge of economic change and opportunities into, people, above all, who are dedicated to economic development of their country and to high standards of honesty, competency, knowledge and performance, what are needed beyond all else are leadership Some other factor affecting the size and growth of population Fertility, Mortality and International Migration are some of the important factor that affect the size and growth of population of the country, relevant figure are listed below to indicate the population growth, considering the 1984 and 1994