Grace Gill ~ Link Between Fertility and Economic Growth?

Link Between Fertility and Economic Growth?

Scatterplot displaying the relationships between GDP and Fertility Rate for all countries in 2011.Its evident that the lower the fertility rate, the higher the GDP. This snapshot though, doesn't display the actual trend or projected number. 

Now relating a Confounding variable.....

In order to further my study on the relationship between GDP per capita and fertility rate, I included a confounding variable - Mean years in school (women of reproductive age 15-44)

GDP Per Capita vs. Mean Years in School

After adding a confounding variable, it is evident that over the last 45 years, women have begun to attend school for longer periods of time, which in turn has positively impacted the GDP per capita. You can observe that the higher the number of years that women spend in school, the higher the GDP of of the country.

GDP Per Capita vs. Mean Years in School

After adding the confounding variable to the scatterplot, it is evident that there is a positive correlation between Mean years in school and Fertility Rate. As the fertility rate decreases, more women spend time in school. It can be observed that the higher the number of years in school for women, the lower the fertility rate.

In the long run, this decrease in population will have a negative impact on India. I do agree that fertility rates are causally linked to the economy, however short term, India is a unique situation. Since there are fewer people due to the drop in fertility, there is a lower demand for employment and therefore the wealth is spread out over less people. I believe the GDP will soon begin to plummet. Historically speaking, before 1950 Britain colonized India. This means that India was essentially used as a farm where the British were harvesting raw materials; the Indian economy was completely stunted. As it was set loose, and the economy was free again, India boomed because it was no longer a place where raw goods were taken and sold elsewhere. Ultimately, regardless of almost any condition  the effects of a newly free economy will overpower it and the economy will grow despite fertility rates. 

I decided to take a look at China to compare India, in an effort to better predict what would happen with the economy. After the one child law was put into place, the GDP increased astronomically. Now however, there is a smaller population of people and those who are still working must take on the debt and pension of the much elder group. This problem is even beginning to worry Americans because the baby boom generation is all at a retirement age and the generation below is inheriting the debt. The Chinese economy has already begun to slow and economists are predicting that it will plummet soon, because the one child law will cut the future population in half and as I said before, whenever a population decreases, GDP will decrease soon after. 

Jonathan Last

Essentially, Jonathan Last's article America's Baby Bust says that a declining fertility rate will ultimately lead to a declining economic growth rate for the economy. He backs up his argument with the point that a decrease in babies will eventually lead to an increase in older people, which in turn means fewer workers in the labor force. As people begin to focus their attention on caring for the old, there will be a decrease in innovation. I agree with Last that the decrease in fertility will ultimately lead to a decrease in GDP, DESPITE the initial increase. 

Grace Gill ~ Fertility and Economic Growth in India

Economy in India 

The economy of India is the 10th largest in the world by nominal GDP and the 3rd largest by Purchasing Power Parity (PPP). According to the IMF, India ranked 140th by nominal GDP and 129th by GPD on a per capita basis. As of 2011, India's public debt stood at 68.05% of GDP which is highest among the emerging countries. However, their inflation remains stubbornly high with 7.55% in August 2012, the highest among its BRICS counterparts. BRICS is the title of an association of emerging national economies: Brazil, Russia, India, China and South Africa. 

India's current GDP for 2011 is $837.75

 

Since 1960, India has been on a complete upwards slope concerning GDP. Beginning with a GDP of $180.96 in 1960, in fifty years India has already risen to a GDP of $837.75. 

 India's current fertility rate for 2011 is 2.59

 

Since 1960, Indias fertility rate has decreased from 5.81 to 2.59. There is a significant decrease in child birth, which as you will see, has greatly impacted the economy. 

 Correlation between India's Fertility Rate and GDP

After looking at the historical trends in India, the country's future economic growth looks positive. As the fertility decreases, the GDP rises consistently. There is a clear correlation between fertility rates and the economy in India.

Age Distribution in India

The age group of 65+ stays consistent while the youngest, 0-14, slowly decreases. The middle age, 15-64, slowly increases as well. This is important for the economy because there are more people in the work force, which impacts the economy. With less children to care for, there is more time spent working. 

Pie Chart Breakdown of Population by Ages

This graph shows the trend over the last ten years

It's evident in the trend line that there is a negative correlation between fertility and GDP in India

In my opinion, there will be an increase in GDP per capita in India for a few more years and then will begin to plummet. The trend line shows that as the fertility rate decreases, so does the GDP - significantly, however I think there is more to it than just fertility. Though there is correlation, I think it depends on the population. As the population begins to deplete, the elderly population will rise and there will be fewer people to replace them in the work force, which will in turn create a decrease in the GDP.