What Is the Classical Growth Theory?

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  • Written By: Esther Ejim
  • Edited By: Kaci Lane Hindman
  • Last Modified Date: 25 October 2019
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The classical growth theory in economics is presented by its proponents as one that identifies a parallel between economic growth and population growth. Basically, this theory states that economic growth is tied to increases and decreases in population growth due to the fact that any uncontrolled movement in either way could have a detrimental effect on the economic growth of the nation under consideration. The main reason for this assertion or belief is the position of the proponents of the classical growth theory that economic growth can only continue for the period that the available resources still form a sustainable balance with the population. When the population growth becomes so much that it starts to put a strain on the resources, the economic growth will stall and eventually start to regress backward in response.


Classical growth theory is derived from an analysis of the fact that the resources that exist in nature to satisfy the factors that promote economic growth are so limited that they cannot continue to function at the optimum forever if the demand on them continues to grow. At a point, the demand will eventually supersede the available resources, and the factors that fueled the economic growth will suddenly become overdrawn, causing an incremental reduction in the production capabilities of any nation that is affected. As such, the main thrust of the classical growth theory is that the population growth must be at a reasonably comparative level with the level of production in the economy in order for that economy to continue to thrive.

One of the ways of illustrating the views expressed in the classical growth theory is by using the example of land, a natural resource that is finite by its very definition. Assuming the population growth in an identified economy is steady at a rate where the demand on the available land will be easily met, such an economy will be sustained for a longer time than one where the economy continues to grow due to the benefits derived from the land. In the latter economy, the land will eventually run out, and the benefits fueling the economic growth will consequently start to drop. The demand on the land within such an economy will be for agriculture, commercial and industrial development as well as recreational purposes. This available land will not increase, even if the human population does, meaning that the land will eventually fail to support a rapidly expanding human population, including providing the materials for production and manufacture.


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