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On Demographic Transition, Structural Change, and Economic Growth and Stagnation

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  • Holger Strulik

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Abstract

The paper analyzes an economy with an agrarian and an industrial sector. Demand is determined by Engel's Law. Population growth follows a non--linear income dependent path according to the theory of demographic transition. In case of decreasing returns to scale in the agrarian sector the existence of a stable low--income equilibrium with high population growth can be shown. If this equilibrium is globally unstable, the system evolves towards a steady--state of perpetual economic growth and low population growth. The path of demographic transition coincides with a path of structural change from an economy specialized in agriculture to a fully industrialized economy. The introduction of an income dependent savings rate allows the interpretation of the low--income equilibrium as a limit cycle and, therefore, the explanation of high fluctuations in population growth and per capita income in least developed economies.

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Bibliographic Info

Paper provided by Hamburg University, Department of Economics in its series Quantitative Macroeconomics Working Papers with number 19803.

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Date of creation: Mar 1998
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Handle: RePEc:ham:qmwops:19803

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Keywords: Demographic Transition; Economic Growth; Structural Change; Limit Cycles;

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