1. Population determines Capital formation:
A growing population may enable a country to divert a larger portion of its labour force towards the capital creating projects.
A large number of workers in labour surplus economies are employed in rural sector (disguised unemployment).
These persons can easily be transferred to capital creating projects without adversely affecting the agricultural production. In this way, surplus manpower can go a long way to help in raising the rate of capital formation.
2. Supply of Manpower as an Essential Factor for Economic Development:
The size and quality of manpower is a major determinant of the pace of economic development in a economy. Economic development is a function of natural resources, manpower, capital and technology. Manpower is the most important and dynamic factor in the process of growth. Thus, as a source of manpower supply, population growth is an essential factor for economic development.
3. Population as an Incentive for Development:
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It is argued that population is a both means as well as an end of economic activity. People are not only the producers of wealth but they also consume wealth. As consumers, they provide demand for commodities and create for further expansion. Furthermore, larger domestic market will permit greater economies of scale and diversified productive structure providing more varied employment opportunities to the growing population. Thus, a growing population provides a necessary incentive for economic development of a country.
4. Population as a Source of Economic Growth in Industrially Advanced Countries:
A technical trained and skilled labour force is regarded as human capital. Improvement in the quality of manpower can be a major contributor to economic growth in a country. It is true that the growth of tangible capital stock depends to a considerable extent on human capital formation in an economy. The quality of manpower can be improved through a process of increasing knowledge, the skills and the capacities of the people. This process of human capital formation can lead to greater productivity per worker and higher rate of growth for the economy.
5. Improvement in Techniques and Productivity:
It is felt that population growth leads to improvement in techniques and productivity. Trained and efficient labour force is regarded as human capital. Improvement in the quality of manpower can be major contribution to economic growth in a country.
The trained and skilled labour force is a valuable assets which is responsible for improving techniques and productivity. It helps to promote human skill. According to Kendrick, “A substantial part of the rise in growth rate of America is the result of the increase in labour productivity there.” Thus the improvement in techniques and labour productivity can be a key source of economic development.
6. Adds to the Number of Producers etc.:
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It is also argued that increased population adds to the number of producers, entrepreneurs, scientists, engineers, educationists, doctors and technologists etc. They can prove a boon to the economic development of a country. According to Simon Kuznets, “Growth of economic output is a function of growth of stock of tested knowledge.”
7. Population leads to Greater Production:
As long as the size of population is small in relation to the availability of capital and land resources, an increase in the number of people will bring about greater output. With the availability of greater manpower, it will become possible to have greater and more intensive division of labour which will further result in raising the production.
It also results in the greater specialisation. All this will result in external and internal economies of production. Therefore, growth of population would lead to division of labour, specialisation and would also bring faster technological progress.
8. Population as a Creator of New Knowledge:
According to Simon Kuznets, “Growth of economic output is a function of the growth of the stock of tested knowledge.” A larger population would mean an increase in the number of these creative minds, stock of new knowledge will increase and the society will be able to produce larger output.