Question
What is the connection between population growth and the wealth of a nation?
Answer
I interviewed Rob Salkowitz (author of a few relevant books on this broad theme) a while back and we touched upon this, in relation to his latest book "Young World Rising" where he explicitly considers the value to certain emerging countries of having a young and fertile population as opposed to an aging one.
http://blog.trailmeme.com/2010/0...
Relevant Q&A:
VR's question: Let’s start with your basic demographics-is-destiny idea and the “demographic dividend” which a society enjoys when it has a younger population than its neighbors. How big is that effect compared to other macro factors like, say the “Protestant Ethic” or natural environment factors? Did it play a role in the historical rise of, say, Britain in the 17th century, or Japan in the 19th? Or is the demographic dividend primarily a 20th century dynamic?
RS's answer: Wow, that’s a very complicated question posing as merely an ordinarily complicated question! I’d say that the value of the demographic dividend is intimately tied in with the spread of information and communication technologies. ICTs amplify the value of human knowledge and human insight: that’s their purpose and their measured effect. With ICTs, people become exponentially more productive and creative, on a quantitative and qualitative scale, individually and even more so through collaboration and networks. So the math is fairly simple: when per-capita productivity is growing, the marginal value of each additional person is higher, and demographics become more important relative to other factors such as policy, natural esources, etc.
Both Britain in the 17th and 18th centuries and Japan in the 19th century experienced huge economic growth by transitioning from less productive agrarian economies to more productive industrial and mercantile economies – which is exactly how China is growing so fast today. But it’s aggregate productivity growth, based on higher returns from capital (equipment, manufacturing plants, regimentation of the workforce) rather than from developing human talent. In my opinion, that is a very inefficient way of cashing in on demographics: yes, you have a lot of people, but you are merely gaining the benefits of moving them from field to factory, which are one-time and linear. The benefits of empowering people with knowledge are ongoing and exponential – at least if you are willing to tolerate some potential disruption. And that’s what’s starting to happen as ICT penetration in Young World markets reaches critical mass. When you let a million people into the process, you increase the chances of finding the one-in-a-million idea that might be worth more than a thousand factories. In that case, having a million people, or a billion, is a great advantage.
http://blog.trailmeme.com/2010/0...
Relevant Q&A:
VR's question: Let’s start with your basic demographics-is-destiny idea and the “demographic dividend” which a society enjoys when it has a younger population than its neighbors. How big is that effect compared to other macro factors like, say the “Protestant Ethic” or natural environment factors? Did it play a role in the historical rise of, say, Britain in the 17th century, or Japan in the 19th? Or is the demographic dividend primarily a 20th century dynamic?
RS's answer: Wow, that’s a very complicated question posing as merely an ordinarily complicated question! I’d say that the value of the demographic dividend is intimately tied in with the spread of information and communication technologies. ICTs amplify the value of human knowledge and human insight: that’s their purpose and their measured effect. With ICTs, people become exponentially more productive and creative, on a quantitative and qualitative scale, individually and even more so through collaboration and networks. So the math is fairly simple: when per-capita productivity is growing, the marginal value of each additional person is higher, and demographics become more important relative to other factors such as policy, natural esources, etc.
Both Britain in the 17th and 18th centuries and Japan in the 19th century experienced huge economic growth by transitioning from less productive agrarian economies to more productive industrial and mercantile economies – which is exactly how China is growing so fast today. But it’s aggregate productivity growth, based on higher returns from capital (equipment, manufacturing plants, regimentation of the workforce) rather than from developing human talent. In my opinion, that is a very inefficient way of cashing in on demographics: yes, you have a lot of people, but you are merely gaining the benefits of moving them from field to factory, which are one-time and linear. The benefits of empowering people with knowledge are ongoing and exponential – at least if you are willing to tolerate some potential disruption. And that’s what’s starting to happen as ICT penetration in Young World markets reaches critical mass. When you let a million people into the process, you increase the chances of finding the one-in-a-million idea that might be worth more than a thousand factories. In that case, having a million people, or a billion, is a great advantage.