Analyzing the Developing Country Growth Collapse of the 1970s and 1980s: Demographic Influences and Regional Differences

Brant Liddle, Max Planck Institute for Demographic Research

This paper bridges two highly related, but, up to now, rather unconnected literatures: the economic growth stability literature and the population and economic growth literature. The paper seeks to shed light on two puzzles: (1) why did some countries’ growth collapse during the 1970’s, and others’ did not; and (2) why did population growth have a negligible-to-no effect on economic growth during the 1960s and 1970s, but have a negative impact in the 1980s. This paper is different from previous population-economic growth analyses by focusing on explaining the instability of economic growth in developing countries. Also, the paper suggests a new theory on how population may matter to economic growth, i.e., countries with large working populations relative to dependent ones may have more resiliency to external shocks. This study contributes to a previous paper on the developing country growth collapse by adding important demographic variables.