Wednesday, August 15, 2007

An End to Malthus?

Remember Malthus? He is the economist that gave economics a bad name by positing that efforts to produce more food is for naught--we will quickly revert to a world of minimal survival thanks to population growth. Malthus was clearly right for the world that existed before 1700. In the industrialized world, we no longer live in a Malthusian world. To the contrary, we have benefited from increased prosperity--and reduced population growth.

Charles Kinney, a senior economist at the World Bank has a quite persuasive paper that supports the proposition that the Malthusian model id dead even in the developing world--including most of Africa. Here is the abstract of his unpublished paper:

The key features of the Malthusian model are that (i) income determines population growth, with rising wages increasing survival rates and (ii) there is a vital factor of production (land) which is fixed, implying decreased returns to scale for all other factors. The equilibrium state in such a model is a population living on subsistence incomes. The analysis in this paper suggests that (i) the link between income and population growth is (almost) everywhere broken and (ii) there is little evidence of declining returns to scale because of constraints imposed by land carrying capacity at the macro level anywhere. Population dynamics are being driven by non-income factors in a manner that is reducing population growth rates everywhere. At the same time, output is increasing everywhere, in a manner inconsistent with significantly declining returns to scale based on land being a vital factor of production.

The full paper can be found here.

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