How Does Overpopulation Affect the Economy?

By Editor | 17 November 2022
Population Media Center


Population growth affects many aspects of society, including the overall quality of life. One of the key ways it does this is by causing prices of important goods and services to rise, thus causing hardship for the poorest sections of the population. This occurs even in highly developed and wealthy countries like Japan.

Population Growth, Supply, and Demand

The more people there are, the more demand there is for just about everything, but especially for vital goods and services. At first glance, it might seem that more people would lead to more production and thus the supply would rise to meet demand, but this is not so. One trend that has gone hand in hand with population growth is urbanization. As more people are born and grow up in rural areas, they reach a point where they cannot make a living if they stay put. This pushes them to migrate to the cities to look for better work opportunities.

The cities cannot absorb the influx of people from rural areas and become overpopulated. This trend can be observed in many places around the world, but especially in the developing world. For example, Dhaka, the capital of the nation of Bangladesh, has grown so large over the decades that it now has a population density of over 110,000 people per square mile. About a third of that population lives in poverty, with many lacking access to clean water and even shelter. There is simply not enough land to house these people. The demand for housing becomes so great that housing prices and rents skyrocket, leaving basic shelter beyond the means of the most vulnerable portion of the population.

The exodus of people from rural areas also reduces the amount of food produced. Farming is an exceedingly difficult profession, and in many developing countries the techniques are centuries old and less than efficient. Lacking modern methods and technologies, farmers are unable to produce enough food for themselves and for sale, forcing nations to import increasingly larger percentages of their food product needs. Imported food raises costs, particularly in situations like the post-COVID-19 pandemic, where supply chains have become backed up and demand for shipping and transportation is so great.

Increasing Burden on the Working Class

The rapid growth in population has been driven, in part, by the advances in medical technology that are allowing people to live longer. Life expectancy has risen all over the globe, and the infant death rate has fallen. Some deadly diseases, like smallpox, have been all but eradicated, saving untold lives across the planet.

The bulk of the working classes around the world live in the ever-growing urban areas. As the cities absorb more people, the demand for housing, food, and water grows. Public services need to be expanded to meet rising demand, which leads to a higher tax burden being placed on working people. The alternative is a lack of safe water, unsanitary living conditions, and malnutrition. Unfortunately, this is the case in many cities in the developing world.

Without adequate savings, many people are a single major expense away from serious financial difficulties. Major medical expenses or a series of needed repairs can quickly drive people into poverty. A major problem like the recent pandemic can put so much pressure on people living on the edge that a general economic collapse is possible.

Overpopulation adversely impacts the economy. Rising prices cause less savings and make the working and middle classes more vulnerable to economic distress. In developing countries, people are forced to go without clean water or adequate food and live in squalid conditions.

Reprinted with permission.

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