### Generating the Wealth of Nations 36: Population Density and Economic Growth

For a couple of the things we did during the course, and that I looked at because I was interested, I was looking at data that seemed to suggest that countries with larger initial population densities had higher subsequent growth rates. There are a number of good reasons to suspect that this might be true; in countries with higher densities, the costs of providing some publich services (like education and health care) and the costs of building and maintaining a transportation system, and the costs of recruiting workers, will all probably be lower. So I decided to look at it systemattically. I took all the countries in the Madison Project for which I had both 1950 and 2007 (I stopped before the Great Global Recession) real GDP per captia data and for which I could find both 1950 and 2007 population data and area data. I then calculated the population density in 1950 and the total percentage growth in real GDP per capita from 1950 to 2007. The I plotted the data, and I got this:

(Click to enlarge.)

The red line is a linear trend line (as calculated by Excel), which suggests that countries with higher population densities in 1950 also grew faster. (The correlation coefficient between density and growth is 30.5%, and it's significant at the 1% level, for those of you deeply into statistics.) Now this does not

**that density causes growth, but it's surely suggestive that it**

__prove__**.**

__might__(This is probably my last post related to the Generating the Wealth of Nations course; I hope some of this has been of interest.)

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