Living Standards, Poverty and Population: Question 5

Worked solution

Part (a): Rate of natural increase

The rate of natural increase is found using: $\text{Rate of natural increase} = \text{birth rate} - \text{death rate}$

Doskovia: $32 - 9 = 23$ per 1000 of population.

Verantia: $10 - 9 = 1$ per 1000 of population.

Comparing the two, Doskovia has the much higher rate of natural increase (23 per 1000, compared with just 1 per 1000 in Verantia).

Part (b): Overall population growth rate

The overall population growth rate also takes net migration into account: $\text{Overall population growth rate} = \text{rate of natural increase} + \text{net migration rate}$

Doskovia: natural increase of 23 per 1000, plus net migration of $-2$ per 1000 (net emigration, since people are leaving): $23 + (-2) = 21 \text{ per 1000}$

Verantia: natural increase of 1 per 1000, plus net migration of $+3$ per 1000 (net immigration, since people are arriving): $1 + 3 = 4 \text{ per 1000}$

So Doskovia’s population is growing overall at 21 per 1000 each year, while Verantia’s is growing at only 4 per 1000. Net migration slightly slows Doskovia’s growth and boosts Verantia’s, but Doskovia’s overall growth remains far faster.

Part (c): Effects on differences in economic development

1. GDP per head grows more slowly in the faster-growing country. Even if Doskovia’s total GDP is rising, that output has to be divided among a population growing by roughly 21 per 1000 each year, compared with only 4 per 1000 in Verantia. Unless Doskovia’s total GDP grows correspondingly faster, its GDP per head, a key indicator of average living standards, will rise more slowly than Verantia’s, or could even fall, widening the income gap between the two countries.

2. A higher dependency ratio strains resources for investment. Because Doskovia’s fast growth is driven by a high birth rate rather than immigration of working-age adults, a large and rising share of its population will be children not yet of working age. This raises the youth dependency ratio (dependants relative to workers), meaning relatively more of the country’s resources must go towards education and healthcare for children. With fewer resources left over for saving and investment in capital and infrastructure, productivity growth can be slower, which (compared with Verantia, where a lower dependency ratio frees up more resources for investment) tends to widen the gap in economic development between the two countries.

Final answers

• (a) Natural increase: Doskovia $=\mathbf{23}$ per 1000; Verantia $=\mathbf{1}$ per 1000. Doskovia has the higher rate.
• (b) Overall growth rate: Doskovia $=\mathbf{21}$ per 1000; Verantia $=\mathbf{4}$ per 1000.
• (c) Doskovia’s faster growth is likely to mean slower-growing GDP per head and a higher dependency ratio straining spending on education/healthcare at the expense of investment, both widening the development gap with Verantia.