Population-Control-Policies and their Implications for Economic Growth in China
Bachelor’s Thesis supervised by the Department of Economics at the University of Zurich Prof. Dr. Fabrizio Zilibotti
to obtain the degree of Bachelor of Arts in Economics
Author: Noemi Schramm Course of Studies: Economics Closing date: August 17, 2011
Abstract This bachelor thesis is giving an overview on previously performed research how family-planning-policies in China (explicitly the so-called One-Child-Policy) have affected economic growth since 1979 and tries to give possible predictions and forecasts on how it could affect economic growth until 2050 through critical model analysis. The Solow model gives theoretical answers but also yields
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. . . . . . . . . . . . . . . . 2.2.2 Development of the Dependency Ratio . . . . . . . . . 2.2.3 Influence on Economic Growth . . . . . . . . . . . . . 3 Population-Control-Policy in the Solow Model 3.1 Theoretical Analysis of the Solow Model . . . . . . 3.1.1 Solow Model with Constant Capital Stock . 3.1.2 Solow Model with Dynamic Capital Stock . 3.2 Combining Data and Neo-Classical Growth Theory 5
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4 Upcoming Challenges for China linked with the One-ChildPolicy 33 5 Conclusion A Appendix 35 37
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List of Figures
1 2 3 4 5 6 7 8 9 10 11 12 Population Growth, Crude Birth and Death Rates of China 1949 - 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . Population and GDP per capita of China 1978 - 2005 . . . . Crude Birth Rate per 1000 Women 1978 - 2009 . . . . . . . Total Fertility Rate in % 1978 - 2009 . . . . . . . . . . . . . Population Age Structure 1960 - 2009. . . . . . . . . . . . . GDP annual growth rate 1978 - 2009 . . . . . . . . . . . . . Female Labour Participation 1980 - 2009 . . . . . . . . . . . Total Dependency Ratio 1960 - 2050 . . . . . . . . . . . . . Change of Working Population 2005 - 2050 . . . . . . . . . . Correlation of GDP Growth Rate and ∆ . . . . . . . . . . . Forecast of total GDP 2009 - 2050. . . . . . . . . . . . . . . Population Age Structure 2005 - 2050. . . . . . . . . . . . . . . . . . . . . . . . . 10 11 13 13 15
By introducing China’s One-Child Policy (Family Planning Policy) in 1979, China hopes to decrease its country’s annual population growth. China has implemented the policy by many different
China is the world's most populous nation and its population has, on average, increased by over 25 people every minute, every day for the past 40 years. (Richards 5) For a developing country such as China, with 22 percent of the world's population and only 7 percent of the world's arable land, rapid and persistent population growth can contribute significantly to the nation's poverty levels and restrain its potential for economic growth. (Gu 42) China's one-child family policy was first announced in 1979. In a 1979 speech, Deng Xiaoping drew the first outlines of a policy to limit population growth, "Use whatever means you must to control China's population. Just do it." (Mosher 50)
Since 1980, China has made its people the subject of an intrusive and unfair, One Child Policy. This policy was the result of Chinese officials becoming worried of the countries jump in population from 1960 to 1980 causing a widespread lack of resources, so they decided to induct a law that would make force Chinese citizens to be limited to one child. Because of this controversial policy the question has been raised, did the one child policy positively or negatively effect China? The one child policy did negatively effect China and its people, because it resulted in gender discrimination, unjust punishments and was unnecessary due to the already declining fertility rate.
Since the reform and opening up, the economy of China grows significantly, as an emerging economy, China's economy has made tremendous contributions to the global economy, and Renminbi has become one of the most important currency in the world. According to the survey conducted by China National Bureau of Statistics found that from 1979 to 2012, China has attained an annual average growth rate of 9.8% for its national economy, while the annual average growth of the world economy is only 2.8 % during the same period. In past 30 years, China's GDP surpassed Japan’s, China became the world 's second largest economy, in addition, the huge total volume of trade makes China become the world 's largest trading nation. The contribution of China’s
The United States economy currently faces several problems affecting people throughout the country. These problems are ultimately affecting the growth of the United States. The growth of federal debt and deficit is seen as a major problem by the people of the United States especially when many people do not see the next president doing much more to improve it. The unbalanced labor market and immigration’s possible role in that has also been a discussion for many American citizens. It is important to also address the inequality regarding income. The deep-rooted trend of the rich getting richer and everyone else declining or remaining the same has created a lot of anger throughout the country. Lastly, the housing market has a huge affect on the economy considering housing is the biggest asset and one of the biggest drivers of wealth. Federal debt and deficit, immigration and the labor market, income inequality, and housing have all had negative effects on the United States economy today, while also affecting each other.
The one child policy only hurt China more due to its lowering fertility rate prior to the policy. “China had already achieved a remarkable fertility reduction, halving the number of children per women from 5.8 in 1970 to 2.7 in 1979.” (Document B) The facts shown here show that the policy was not necessary. In addition, since the population was already going
“China Will Have another Major Demographic Problem,” is an article on About.com written by Matt Rosernberg. It explains the great imbalance between man and women due to China’s One Child Policy, and how this situation will disturb the stability and development of China because the high numbers of bachelors tend to damage community by doing crimes and violence. The policy says that a couple could only have a child. This was created as a temporary solution since China was overpopulated by 972 million people in 1979 (Rosenberg). Through years this policy is proven to reduce the population growth. However, there have been some unintended side effects. Not only did this policy create the gender imbalance, but also many other issues, such as: the high population of unmarried men, human trafficking, and the high rate of suicide.
The earth’s growing population is a global concern. Both developed and third-world countries, are experiencing shortages of food, water and access to adequate healthcare. Although the poorest are hardest hit, even powerful countries like the United States and Great Brittan have been affected. Recent shortages of medication and fuel are contributing to speculation and concern. Governments the world over are turning to alternative energy and sustainable living, as a means of supporting the increased populace. The People’s Republic of China, however, has taken a drastically different approach with the implementation and enforcement of the One-Child per family policy.
Economics growth is, it the short run an increase in real GDP and in the long run an increase in the productive capacity of an economy (the maximum output that the economy can produce). GDP stands for Gross Domestic Product which is the country’s production of goods and services valued at market price in a given time period. Real GDP is when these figures are corrected for inflation using a base year (The UK uses 2003 as its base year). It can be measured in three different ways; the output measure is the value of the goods and services produced by all sectors of the economy; agriculture, manufacturing, energy, construction, the service sector and government. The
The Solow model indicates that countries with high population growth (with no change in capital) will have lower levels of output per person. In the model therefore, population growth capital per worker and output per worker are constant. Correspondingly, the aim of the Solow Model becomes clear: it is to show that an economy will incline towards a long-run equilibrium K/L (k) ratio at which Y/L (y) is also in equilibrium, so that Y, K and L all grow at the same rate, that is n. Ultimately the model predicts long run equilibrium at the natural
China is a land that contains an overpopulation crisis. With a current estimated 1.4billion people living in China, something needed to be done in order to lower the birth rates and control the fast growing population. The solution the Chinese government came up with was the one child policy. They set up a number penalties and benefits in order to encourage the Chinese people to cooperate with this policy. The predicted outcome was to reduce the birth rates and reduce their population, which was ultimately affecting the Chinese economy. However, the one child policy created an unexpected crisis of its own, the creation of unequal demographics of gender and the start of a new cultural and economic trend. This paper is going to study the
China’s booming economic growth over the past forty or so years is one of the most impressive events to happen in the global economy. The economic transformation of this country is unlike any other transformation. China was by far the most economically and technologically advanced nation almost a millennium ago. However, it started to fall behind in economic growth compare to Western Europe during the time of 1500 and 1800. This paper will examine China’s economic development through the stages of the demographic transition model and its post-transition conditions. In addition, some of the implication of the ageing population has on the continuing development of the country’s economy will be addressed.
China has been experiencing a dramatic demographic transition since 1979 when the one-child policy was implemented. Due to the concern that population growth can pose a threat to China’s economic development not only in the short-term but over the long-term as well, the Chinese government adopted the strict birth control program that every Chinese family can only have one child, though some exceptions were made. Regulations for ethnic minority families were more flexible that they were allowed to have their second child. Furthermore, the policy was unevenly enforced. The birth control program was found more effectively in urban China, where supervision systems are more complete and people are more willing to limit their family sizes, than in rural areas, which were characterized by strong traditional agrarian needs. In general, the one-child policy hit the goal that China’s both fertility rate and birth rate were found decreasing year by year. However, alongside the declining fertility rate, new problems emerge, especially the increased share of the aged population relative to the total population.
Economic growth is a necessary but not sufficient condition of economic development. There is no single definition that encompasses all the aspects of economic development. The most comprehensive definition perhaps of economic development is the one given by Todaro: ‘Development is not purely an economic phenomenon but rather a multi – dimensional process involving reorganization and re orientation of the entire economic and social system. Development is a process of improving the quality of all human lives with three equally important aspects. These are: 1.
This can be measured by the following formula; Per capita nominal GDP = Nominal GDP / Population, Per capita real GDP = Real GDP / Population. Seven factors determine economic growth. Natural resources such as land, mineral deposits, waterways; climatic conditions provide an essential foundation to economic growth. Combined with the other resources of capital, labor and enterprises, natural resources can be developed and organized to increase the productive capacity if the nation. Consequently the quality and size of the labor force is a major determinant of economic growth. Education and vocational training are essential the growth potential of a nation. The promotion of education and job training schemes increase the knowledge, skills and flexibility of the workforce that contributes to potentially higher levels of productivity and efficiency. Whether from natural increase or immigration population growth can cause a higher level of economic growth. An increasing population requires increased public spending on housing, education and other social needs while businesses expectations of