Question

Many poor countries have high rates of population growth. What does this imply about the long-run growth rates of overall output that they must achieve in order to generate a higher standard of living per person?

Short answer

The emerging countries should aim to achieve a sustainable upward trend of long-run per capita output growth rate.

Step-by-step solution

Reason for emerging countries with high population growth rates

Many developing countries face the issue of a high population growth rate. In countries with a high population, the total output is spread across a larger group of people. Thus, the output per capita becomes very small.

Also, in practice, a larger share of the total output is with wealthy and big business houses. The majority of the population holds a 50% or lesser proportion of income. Thus, the countries with high population growth rates remain poor.

Measure to improve the standard of living per person

Poor economies should focus on achieving sustained increasing long-run growth rates of overall output to generate a higher long standard of living per person. As the overall output increases, output per head will also rise, ultimately improving the standard of living per person.