CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

 There have been several debates over the past decade over the contribution of population changes on the economic performance of countries. However, the debate on the link between population and economic growth has been raging since Malthus (1798, 1970), who expressed concern about the inability of the earth and its fixed resources to accommodate a rapidly rising population. Moreover, several researchers in their quest to identify the determinants of economic growth have heavily dwelt on non-demographic factors hence the true contribution to growth by demographic transition especially population growth have not been truly appreciated. One of the distinguishing features of low and high income countries depends on how much income is spent on each child in a family relative to what is invested in the human capital development of the child. Increases in family size put financial constraint on the family, which could prevent children from getting access to quality education, good health care which retards human development for economic growth. 

Population growth basically determined by mortality rate, birth rate and migration is a force of its own in the process of economic growth, sometimes seeming to promote growth, at other times impeding it. While countries are the principal level at which such relationships are identified, effects at the local level are often sharper. Population growth can directly affect the global economy through migration and disease transmission or indirectly through effects on geopolitics and major environmental system.

Economists advocating the positive side to population growth, say that the population growth creates problems in the short run that include poverty, famine and unemployment. Yet, they also state that in the long run, it leads to new developments through advancement in technology that leave countries better off than if the problems never occurred. On the positive side, there is a chain reaction of events caused by population growth. According to the neo-classical growth model, population is beneficial to an economy due to the fact that population growth is correlated to technological advancement. Rising population promotes the need for some sort of technological change in order to meet the rising demands for certain goods and services. With the increased populace, economies are blessed with a large labor force, making it cheaper as well, due to its immense availability. An increase in labor availability and a low cost for labor results in a huge rise in employment as businesses are more inclined to the cheap labor. Low labor costs results in a shift of money usage from wages into advancement through technology (Coale and Hoover, 1958).

 According to Friedberg and Hunt (1995) population growth and urbanization go together, and economic development is closely correlated with urbanization. Rich countries are urban countries.  Population growth increases density and, together with rural-urban migration, creates higher urban agglomeration.  And this is critical for achieving sustained growth because large urban centers allow for innovation and increase economies of scale. Companies can produce goods in larger numbers and more cheaply, serving a larger number of lowincome customers. Many countries have companies which have been benefitting from increasing population growth and density in targeting the large numbers of lower and lower-middle income. Their business model is viable because they can serve a multi-million customer base.

The Communist government established strong central control and sealed China’s borders.  Government initiatives rapidly reduced the death rate, China’s population began to grow rapidly, and the age structure became even younger in the 1950s and 1960s. Concerned about the difficulties of keeping the food supply growing at least as fast as the population, the government instituted a forceful family planning program in the 1970s in both urban and rural areas.  The fertility level dropped in half in less than a decade, population growth was reduced to a more manageable level, and the process of the aging of China’s population structure began. Now, nearly four decades later, children constitute a much smaller share of the population, comparatively smaller birth cohorts have entered the working ages, the population has a bulge in the middle and older working ages, and the elderly population is growing in absolute size and as a proportion of the population. Judith, David. Bloom, and Larry (2010)

Current government efforts to spur economic development in the non-coastal provinces may also be important in avoiding any economic problems stemming from population aging. If the working population of the interior provinces is mobilized to be more productive, the Chinese economy as a whole will benefit, and regional economies will be better situated to provide care to the elderly. China’s economic growth rate is expected to gradually slow down in the future, in comparison to the breakneck pace of economic development from 1978 to today. But population aging will not be the only, or even the major, cause. One of the most important reasons for this expectation is that nearly all countries, as they develop, experience a significant slowing in economic growth; other things equal, rapid growth is typically fastest at lower levels of income. China has made considerable gains, and its economic growth is likely to moderate as the country moves toward a higher level of income. Judith, David. Bloom, and Larry (2010)

The bottom line is that population aging is unlikely to cause significant economic problems for China. Its highly productive economy is awash with skilled workers and with those seeking to join the labor force. There is little prospect of a lack of workers leading to a marked slowing of growth in GDP or GDP per capita. To the extent that older workers are retiring, there are more than enough working-age people to fill their shoes and to support the daily needs of China’s elderly population. Nevertheless, policy reforms – in education, health, pensions, labor policy, and internal migration – could make China’s economic future all the more secure. Judith, David. Bloom, and Larry (2010)

Since attaining political independence, the government has prioritized the improvement of the health status of Kenyans. The government recognizes that good health is a prerequisite to socio-economic development. A number of government policy documents and successive national development plans have stated that the provision of health services should meet the basic needs of the population, place health services within easy reach of Kenyans, and emphasize preventive, promotive, and rehabilitative services without ignoring curative services. Perhaps as a result of these policies, both infant mortality and life expectancy at birth, which are basic indicators of health status, have improved significantly (Ngigi and Macharia, 2006).

Kenya was the first Sub-Saharan African country to have a population policy by forming of the National Family Planning Programmed to reduce population growth in 1967. However, the implementation of the population policy did not yield the desired results and led to the revision of the 1967 policy to form the Sessional Paper No. 4, of 1984 on Population Policy (Muia et.al 2003). The 1984 policy incorporated demographic and socioeconomic goals and diversified implementing ministries and nongovernmental and religious organizations.   The demographic intentions in the Sessional paper were to reduce the population growth rate, reduction of fertility, Reduction of mortality particularly infant and child mortality and also the reduction of rural–urban and rural– rural migration.

The population of Cameroon is nation’s most valuable resource. It is both the instrument and the objectives of national development. The protection of its growth rate and enhancement of its welfare is the government’s first responsibility and when that welfare is threatened government must act” However, Cameroon like most sub- Saharan African country has been experiencing a rapid rise in its population since the early 1950‟s.

From a population of a little over ten million in 1980, Cameroon’s population now stands at about 24457447 as of Sunday February 25,2018, based on the latest  united nation estimates, Cameroon population is equivalent to 0.32, which her population have been increasing rapidly over the years; indicating a steep increase in the size. The current growth rate of the population stands at 3.7 %. (Word bank, 2017. Cameroon is a lower-middle income country with the nominal GDP per capita is forecasted to be 1328.60 USD in December 2018 as reported by international monetary fund it records an increase from the last report of December 2017 which the Nominal GDP per capita was1262.56 USD.

There is a growing concern in Cameroon that while population growth may not prevent economic growth, economic improvements may occur more rapidly without this obstacle. A slower rate of population growth will ensure that more people will have better access to healthcare, education, social amenities and thus take advantage over the few job opportunities available to better their living conditions, (Gage and Njogu, 1994). Cameroon has an annual population growth rate of between (3.1 to 5.5 %) and a GDP growth rate of between 4.9 to 5.9% (World bank 2017). It must be emphasized that concerns about population issues in Cameroon has to do with the high annual average growth rates of about 3.7 % and not about the number of people. With Cameroon population growing averagely at 3.7 % per annum, it is expected that the current population of 24457447 will double in 26 years, whilst for an advanced country like UK with a near stationary population size of about 69.1 million and growth rate of about 0.57 % (World Fact Book), her population will double in 230 years. Germany has an almost 0 % growth rate. By 2035 Cameroon is expected to emerged with a high growth rate. Cameroon have been having a rapid population growth since 1960 and a slow economic growth and development. This situation persisted until 1969 when the issue of population was recognized as a critical factor in development by the intellectuals as well as political leaders of the country. Cameroon then developed a balance development plan, like other country in the Sub-Saharan Africa to come out with a comprehensive population policy after the Republic of Mauritius and Kenya in 1958 and 1967 respectively which was meant to affect the growth, structure and distribution of the country’s growing population. In comparative terms, Cameroon has a land area of 472710 KM square.

1.2 Statement of the Problem

Population and Economic growth generally refers to the study of the consequences of population trends on socioeconomic growth and development, human welfare, and the natural environment (Hirschman, 2004). The size of a population determines many factors such as its potential supply of cheap skilled and unskilled labor, its market demand, its ability to consume and cause an increase in aggregate demand and the growth of GDP, its geopolitical importance, its tax revenue potential among others. It also has the potential to generate competition, efficiency and innovation. However, irrespective of the potential gains that is associated with high population, there is the need to ensure that the rate of growth matches the pace of economic growth otherwise it may create the problem of high youth unemployment rates, balance of payment problems as a result of increased net imports, corruption, inflation, food insecurity, deforestation, pollution, social vices and other environmental problems such as global warming and dwindling of natural resources. Meanwhile, Dyson (2013) claims that mortality decline aids economic growth and hence leads to an increase in the standard of living. This means that decline in population may have negative effect on growth. In as much as population growth also provides a pool of labor force to be used in the production process with the potential to promote economic growth; it however poses some challenges which may equally impede the effort of countries in achieving desired economic growth and development. Available data on population trends in Cameroon indicates that the population of Cameroon has been increasing since the 1960’s. With a population of about 2.2 million in 1960 the country’s population triples over the years. The country’s population kept on increasing at a very fast rate and almost doubled between 1975 and 1984 to 12.3 million. It again rises and more than doubled within 27 years to 19 million in 2010. Currently Cameroon’s population is estimated to be 24457447 (World Bank estimate). Cameroon’s annual population growth rate is therefore among the highest in the world. It has floated around 3.5% to 2.6% since 1983 to 2003 and 2.09 % in 2013 compared with the average rate of round about 1% for the Developed world, Afzal (2009) for the entire population about 60% for the youths because job opportunities are fewer than the number of people seeking for them, and stagnating economic performance because a large proportion of available resources is consumed instead of being invested to generate growth.

Cameroon’s population is also unevenly distributed. It is estimated as per the 2005 Cameroon population census reports that almost 97% of the localities in Cameroon have populations of less than 1000 each. There is therefore high population concentration in few urban cities particularly in Douala, Yaoundé, Bamenda, and Limbe and most rural areas are sparsely populated. This has implications for the country’s economic growth and development because those settlements lack the basic threshold population to justify the provision of certain social amenities and so are numerous settlements which have been denied basic infrastructure. Currently the Rural population growth of Cameroon is estimated to be (0.7%) as compared to the urban annual growth rate of 3.37% (national statistics).

The fast growing population further put a lot of pressure on the environment arising from increased demands for goods and services as well as energy demands; and this has been the result of human induced activities such as the use of fire for land clearing, clearing of land for agriculture purposes, the cutting of trees and shrubs for fuel wood and so on. This has resulted in the rapid depletion of our natural resources. For instance, in the western region in Cameroon is estimates that about 21,699 hectares of forest in the western region alone are deforested a year (through farming activities and indiscriminate logging). The impact of population growth on C02 and deforestation is motivated not only by land use changing but also by poverty which compels most households in Cameroon to depend on firewood and charcoal (fossil fuels) as their source of alternative forms of energy. The cause of carbon dioxide and deforestation problem is intricately likened to both current and future energy demand which arose due to population explosion. However, the application of modern farming techniques and fertilizer could mitigate this problem, but unfortunately as a capital deficient country, the traditional methods of farming dominate agricultural practices in Cameroon. Overall, Cameroon’s population and its characteristics (high dependency rate between 41 to 45%) pose serious challenges for her growth and development, and not until Cameroon achieve considerable decline in fertility rate and success in economic development, the nation’s development efforts will be frustrated with high population growth rate which is an open challenge for management and policy makers. Establishing relationship between population growth and economic growth has therefore been fundamental to the policy makers in different countries. However, there has been no agreement on whether population growth is beneficial or detrimental to the economic growth in the developing countries. (Given this scenario, there was thus a need to establish the relationship between population growth and economic growth in Cameroon). This study therefore attempts to examine the effect of population growth on economic growth in Cameroon. Past studies such as Afzal (2009) and Boadu (2000) revealed that population growth negatively affects economic growth. Nonetheless, other studies (such as Kuznets, 1967; Kelley ,1988; Kelley and McGreevy ,1994; Thuku et al., 2013) also revealed that population growth have positive effect on economic growth in long run due to increase in productivity as a result of learning-by-doing by means of increase in production volume, and sharing of new ideas.

1.3 Research Questions

Arising from the statement of the research problem, the study attempts to answer the following research questions.

1.3.1Main Research Question

The main research question is; what are the effects of population growth on economic growth in Cameroon?

1.3.2 Specific Research Questions.

There are two specific research questions of the study as follows;

• What is the effect of urban population on economic growth Cameroon?
• What is the effect of rural population on economic growth in Cameroon?

1.4 Research Objective        

This study has the following objectives which is divided into main and specific objectives

1.4.1 The Main Objective;

The main objective is to investigate the effect of population growth on economic growth in Cameroon.

1.4.2 Specific Objectives.

There are three specific objectives of the study as follows

• To determine the effect of urban population on economic growth in Cameroon.
• To examine the effect of rural population on economic growth in Cameroon.