Population Growth, Income Distribution, and Economic Development.

Abstract

How the interdependence of demographic and economic phenomena can affect population growth and income distribution in development countries is examined. Analysis is confined to Brazil but an attempt is made to reach conclusions applicable to Latin America as a whole wherever possible. Latin Americas population increases annually at a rate of 2.9%. Proponents of rapid growth maintain that it is desirable to enlarge the consumer market and to fill up the unpopulated areas of each country but these arguments are fallacious. Purchasing power and not size of consumer markets need to be considered. Settlement of territory depends primarily on the incentives to migration rather than on population increases. In Brazil experience shows that the important conditions for successful colonization are outlets for products credit facilities the techniques applied and the educational level of the colonists. Experts who believe that the present population explosion is holding up economic growth point out that in Latin America where birthrates have remained very high while death rates have dropped abruptly the population is now very young and thus includes a large proportion of children and adolescents below working age. If existing trends in the birthrates and death rates continue the age structure of Latin Americas population will not change significantly during the next few decades. According to economic theory the growth rate of any given countrys product is a function of the growth of capital and of the labor force and above all of improvement in the quality of the latter. Increasing the supply of capital depends essentially on savings. As to the influence of rapid population growth on the rate of savings certain recent studies suggest that variations in the dependency rate have little effect. The process of improving the quality of labor begins at home where decisions are made about the expenditure on food health and education for each child. In so far as quantity tends to detract from quality in Latin America unskilled labor will increase relative to skilled labor and also to capital. The division of the labor force into these 2 distinct categories is 1 of the most serious longterm obstacles to development in Latin America and to a fairer redistribution of income. Only economic growth can create employment opportunities and promote social mobility. Yet change is also necessary with regard to the labor supply. It is suggested that families be supplied with full information concerning the implicatios of choosing quantity rather than quality as regards children.