A comparison of the effects of constant and declining rates of population growth on the economy of the Dominican Republic

Abstract

This study presents an economic-demographic model of the Dominican Republic. The model can be useful to anticipate the behavior of key economic variables as an anticipated government program results in a slowing of the population rate of growth from 3.4 to 1.8 per cent over a 30 year period. The model centers on an aggregate production function where gross national product (GNP) is a function of the employed labor force, the capital stock and technological change. Changes in the rate of population growth affect GNP through changes in the size of the labor force, and the size of the capital stock. To illustrate the economic effects of the population program in the Dominican Republic, two projections of GNP from 1967-1997 were made with Dominican data or reasonable surrogates. One projection was made assuming that the rate of population growth would remain constant at 3.4 per cent, and another assuming that the rate of growth would decline to 1.8 per cent in thirty years. When compared with the constant rate of population growth projection, declining rate of population growth projection demonstrated relatively little change in absolute GNP, but sharply increasing GNP per capita and capital per worker, along with a substantial decrease in the rate of unemployment. Within the rather limiting framework of the assumptions, this study concluded that the population program could contribute significantly to the economic progress of the Dominican Republic.