Demographic Transition and Its Impact on Economic Growth in Developing Nations

DEMOGRAPHIC TRANSITION
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The demographic transition represents a shift in population from high to low birth and death occurrences. This procedure happens for a long time and is followed by population movement from rural to urban places. The circumstance is determined by multiple factors that comprise increased urbanization and improved healthcare (Carvalho et al., 2017). During the transition, the population development rate slows as the birth rate drops and the death rate stabilizes (Stolnitz, 2017). This aspect has enormously impacted the world's population, leading to a population explosion in many countries. This discussion evaluates demographic transition and highlights its impact on economic growth in developing nations.
The basic Romer model can be used to define demographic transition in developing nations by showing how economic growth affects population growth. According to the framework, economic growth reduces fertility and lowers mortality rates, leading to slow population growth (Etro, 2019). This process is known as the demographic transition and is widely accepted as the main pattern of population change in developing nations. In addition, the model may explain how economic growth can lead to a shift in population structure, with the proportion of the working-age population increasing relative to the share of young and elderly people.
Mortality decline is an essential factor in the demographic transition. It is the single most crucial aspect in reducing birth and population growth rates. As mortality rates decline, individuals will likely live longer, healthier lives and have fewer children. This situation contributes to a slower population growth rate and a more sustainable population size. The mortality decline is linked to the growth of public health services. Improved healthcare and access to medical care can minimize disease strain and reduce mortality rates. Enhanced nutrition, sanitation, and clean water also reduce the burden of diseases and help reduce mortality rates. In addition, mortality decline is associated with improved economic growth. As mortality rates decline, people have more disposable income to invest in businesses and other investments, leading to a more robust economy. This situation leads to improved living standards and better access to healthcare and other services, leading to further mortality decline.
Fertility decline and demographic transition are two closely related demographic phenomena. The former refers to a decrease in the number of live births in a given population over time, while the latter is a scenario where a population changes from an event of high to low fertility and mortality. The relationship between fertility declines and demographic transition is dynamic and may be seen in many countries worldwide (Hu et al., 2021). When fertility rates decline, populations begin to transition from an occurrence of high to one of low mortality and fertility. In addition, the population experiences fewer births and deaths, resulting in a slower rate of population development.
The slower rate of population increase can be seen in the form of a decrease and increase in birth death rates, respectively, or a combination of the two aspects. Besides, the two concepts relate to social and economic changes. As fertility declines, the population size decreases, and its age structure shifts towards an older population. This transformation can result in an increased reliance ratio, as the number of dependents (children and elderly) increases relative to the number of economically productive adults. This rise in the dependency ratio can have far-reaching consequences for the economy, as fewer resources are available to support the population (Cole, 2019). At the same time, people can invest more resources in each individual as fertility declines. For example, parents can invest more in their children's health and education with fewer children to support, resulting in improved outcomes. This enhanced education and health can lead to increased economic productivity. The population is able to take advantage of the opportunities afforded by new technologies and global markets.
The link between urbanization and demographic transition is complex. The former can affect the latter in multiple ways. One of the most significant effects is the shift in birth and death rates. In commercial places, birth rates tend to be low due to access to family planning services, better education, and high economic opportunities. On the other hand, death rates tend to be low due to access to better healthcare services, sanitation, and improved living conditions. As a result, urban populations tend to have low fertility and mortality rates, leading to a decrease in population growth (Ram and Ram, 2021). Urbanization also affects demographic transition in terms of people's age structure. The population tends to be younger in urban areas due to high fertility and birth rates. This is because younger people are more likely to migrate to urban places for economic chances, education, and other services than their older counterparts.
Comparatively, urban areas tend to have an older population due to high death rates and the migration of more senior people back to rural areas. This shift in the age structure can affect the rate of population increase and the overall fertility and mortality rates. Urbanization affects demographic transition in terms of gender. In urban areas, women tend to have higher educational attainment, increased access to healthcare services, and more excellent economic opportunities. This leads to low fertility rates and increased life expectancy. On the other hand, in rural areas, females tend to have low educational attainment, limited access to healthcare services, and low economic opportunities.
As countries move through the demographic transition, fertility rates are typically reduced, and mortality rates rise due to improved health care and increased access to healthcare services. As a result, the situation leads to an increase in persons aged 65 and older, contributing to an aging population. In addition, the aging population may be seen due to demographic transition. As a country or region moves through this transformation, individuals aged 65 and older increase due to improved health care and increased access to health care services.
Those who reach 65 years of age are more likely to live longer than those younger than 65. Thus, the situation contributes to an aging population. Besides, the aging population and demographic transition relate to their impact on a country or region's economy. As an aging population increases, a nation or region's economy is likely to experience a decrease in productivity and an increase in the cost of health care and social services. This may result from the decline in the number of young individuals available to work and the increased demand for health care and various services for the elderly.
In developing nations, demographic transition has a direct impact on economic growth. The situation is because the shift leads to an increase in working-age people, contributing to high labor productivity and an increase in economic output. The reason is that a more significant labor force allows for an efficient division of labor, increasing each worker's productivity. This increased productivity leads to more economic output and higher economic growth. The demographic transition can also lead to increased consumption (Rostiana and Rodesbi, 2020). As the population shifts from having a high birth rate and mortality rate to a lower one, the share of the working-age population increases while the percentage of the non-working-age population decreases. This situation contributes to an increased number of people who can consume goods and services. This can further lead to increased demand and, in turn, increased economic growth. The occurrence is significant in developing countries, where consumer demand is often limited.
In addition, demographic transition leads to a decrease in the dependency ratio, which is the number of people who depend on the working-age population for their subsistence. This is because as the population ages, the proportion of dependents decreases. This decrease in the dependency ratio positively affects economic growth. It allows for more resources to be devoted to productive activities, resulting in a higher rate of investment and, thus, higher economic growth. Furthermore, demographic transition impacts a country's savings rate. As the population ages, the savings rate increases because people save more for retirement (Ahmad and Khan, 2019). This high savings rate positively affects economic growth, as it allows for more investment and, thus, economic output. When a country undergoes a demographic transition, its population grows more rapidly than before. This means more people enter the workforce, increasing the nation's GDP.
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