Question:
Why is it often argued that population growth (either endogenous or by immigration) is necessary for a country to be economically successful (e.g., have high per capita income) when some of the richest countries and most economically successful countries in the world (e.g., Norway, Sweden, Denmark, Finland, South Korea, Japan, Singapore) have low or even negative population growth, whereas the poorest countries in the world (many African and middle eastern countries) have high population growth? Setting aside the climate and environmental impacts of human population growth generally, does this not at least demonstrate that population growth is not a necessary condition for economic success? I ask as our current federal government in Canada strongly believes high immigration levels are a necessary condition for Canada to be economically successful in the future, and I have not seen any convincing argument that this is the case.Answer:
Thanks for asking. This is a good and long-lasting debated question in Economics. As reported, the recent fertility rate in Canada is around 1.4, which is relatively low because the subsistence level is 2.1. I believe the Canadian government should encourage immigration, esp. the immigration of high skilled or highly educated labors. Here are my reasons.
First, high population growth is not necessarily leading to economic growth. As you mentioned, the poorest countries in the world have high population growth but low economic growth. This reflects the history before the industrial revolution: high population growth rate and low or stagnant economic growth, known as Malthusian trap (Malthus, 1798). He argues that increased food production as a result of advanced agricultural techniques creates higher population levels, which dilutes or dissipates the output growth as a result of technology advancement. In the modern era, the fertility differential between the rich and the poor and the higher population growth might also retard the economic growth (De La Croix and Doepke, 2003). Therefore, high population growth might coexist with low economic growth.
Second, human capital growth is the key to economic growth of the modern era after the Industrial Revolution. In the pre-industrial revolution era, human beings are trapped in the Malthusian stagnation. After the industrial revolution, the economic treasure created within 200 years is more than the total that is created before the revolution. Accompanying this growth transition is the decline of fertility rate. We are entering the modern mode of economic growth and population growth. The key to the economic and demographic transition is the technology advancement generated by human capital growth, in turn triggered by the large size of population (Galor and Weil, 2000). Therefore, the key is not the size of the population, and it is the high-quality labor that matters the most.
Third, in practice countries like America is assimilating highly educated labors from the world into their economy, which leads to the sustained growth of the US. Borjas ( 2019) states that immigration has a more beneficial impact on the US growth when the immigrant flow is composed of high-skilled workers. Also, As reported by Citi Research (2018), from 1990 to 2014, US economic growth would have been 15 percentage points lower without the benefit of migration. As a country similar in history, territory size, the geographic location, and the stage of economic development, I believe, Canada might need to adopt similar policies as the US to attract high skilled and high educated labors all around the world.
References:
Borjas, G. J. (2019). Immigration and economic growth.
De La Croix, D., & Doepke, M. (2003). Inequality and growth: why differential fertility matters. American Economic Review, 93(4), 1091-1113.
Galor, O., & Weil, D. N. (2000). Population, technology, and growth: From Malthusian stagnation to the demographic transition and beyond. American economic review, 90(4), 806-828.
Malthus, T. R. (1872). An Essay on the Principle of Population..