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Can rapid population growth be good for economic development?

Wolfgang Fengler's picture

Our generation is experiencing the most profound demographic transition ever and Africa is at the center of it.

Africa’s population is rising rapidly and will most likely double its population by 2050. Depending on the source of data, Africa will soon pass 1 billion people (and it may already have) and could reach up to 2 billion people by 2050 [ I am using the UN’s 2009 World Population Prospects, which projects Africa to exceed 1.7 billion by 2050 based on sharply declining fertility rates]. This makes it the fastest growing continent and Africa’s rapid growth will also shift the global population balance.

By 2050, Africa will be home to more than 20% of the world’s population.  When some of us were born in 1970, there were two Europeans for every African; by the time we may retire in 2030, there will be two Africans for every European.
 
Kenya mirrors Africa’s population growth. The population has doubled over the last 25 years, to about 40 million people, and rapid population growth is set to continue. Kenya’s population will grow by around 1 million per year – 3,000 people every day – over the next 40 years and will reach about 85 million by 2050.

Many think this is a big problem. There are three reasons why I am less certain that the rapid population growth in Africa, especially in Kenya, is the fundamental development challenge:

First, despite Africa’s rapid population growth and Europe’s stagnation (even decline in few countries) the old continent remains much more densely populated than Africa. If we look at Western Europe – where I come from – there are on average 170 people living on each square km. In Sub-Saharan Africa there are only 70 today. This gap will narrow in the next decades but even by 2050, Western Europe is expected to be more densely populated than Africa. I am following the population debates in Europe, especially in my (densely populated) home country Germany. I have never heard anyone argue that there are too many people in Europe.

Second, while the speed of population growth remains unchanged, its sources are different. In the past, population growth was driven by increasing numbers of children.  Today, and in the future, it is driven by longer life expectance and the “base effect” of the previous population boom. There are just many more young families which have children. However, they have fewer of them.  In Kenya, the number of children per family has fallen sharply, from 8.1 children in 1978 to 4.6 children in 2008, and by 2050 it may reach 2.4. As a result, the fastest growing group in Kenya’s population is not anymore young children – but adults which will almost triple in size from 21 million today to about 60 million in 2050. (see figure 1).

Figure 1 - Kenya today (2010) and tomorrow (2050) – Double the population but not many more children


 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Source: World Bank computations based on United Nations, 2009, World Population Prospects

Third, population growth and urbanization go together, and economic development is closely correlated with urbanization. Rich countries are urban countries.  No country has ever reached high income levels with low urbanization. Population growth increases density and, together with rural-urban migration, creates higher urban agglomeration.  And this is critical for achieving sustained growth because large urban centers allow for innovation and increase economies of scale. Companies can produce goods in larger numbers and more cheaply, serving a larger number of low-income customers. Kenya has companies which have been benefitting from increasing population growth and density in targeting the large numbers of lower and lower-middle income groups – the “bottom of the pyramid”. Their business model is viable because they can serve a multi-million customer base, which has increased by 25% over the last 10 years and which continues to grow rapidly.

Are we thus ahead of golden age of development in Africa? It is possible but there is no guarantee. This will depend on many other factors as well. As the last decades have shown larger population and increased population density are no guarantee of success. However, it seems that the current pattern of population growth is not the main constraint to Africa’s development anymore and can even be a positive force.

Any views?