Economic growth in China and India: The potential role of population

Abstract

From 1980 through 2020, the rate of population growth declined in both China and India, but the decline was far more pronounced in China. During the same period, per capita income increased substantially in both China and India, but the increase was far more pronounced in China. The fact that China and India are similar in many important respects (ancient cultures, large populations, etc.), but implemented substantially different population control policies during the 1980–2020 interval, suggests an equivalence to a quasi-controlled experiment, of the sort that very rarely occurs in the real world. The control would be India, with a relatively conventional population control policy, and the experiment would be China, with its relatively drastic population control policy. This research investigates the possibility of a causal relation between differential population growth and differential economic growth in China and India. It is shown that the simulation of a basic economic growth model in which population growth is a key exogenous determinant, and which utilizes the same economic relationships and numerical parameter values for both China and India, produces time paths of growth in per capita income that closely resemble the empirical Chinese and Indian time paths. This finding supports the hypothesis that a significant factor in China's remarkable economic growth over the last four decades has been its equally remarkable population control policy.