What is the Low Level Equilibrium Trap theory put forward by R.R. Nelson?

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Low Level Equilibrium Trap theory put forward by R.R. Nelson

The Theory of the 'Low-level Equilibrium Trap' (or what has also been called the Malthusian Trap) has been developed by R.R. Nelson in the mid- 1950s.

Basically, the theory that as per capita income remains below a critical level, a population growth rate that exceeds the income growth rate will always bring the economy back to a 'Low-level Equilibrium Trap'.

Subsequently, when point B is crossed, that is at income level beyond OF, the rate of growth of income exceeds that of population, largely due to a decline in fertility rates, and until point C representing a stable equilibrium is reached. Nelson mentions four social and technological conditions which may bring about the trap they are:

A high correlation between the level of per capita income and the rate of population growth,

A low propensity to direct additional per capita income to increasing per capita investment,

Scarcity of uncultivable arable land,

Inefficient methods of production.

Nelson also points towards two other factors, viz. (i) cultural inertia, and (ii) economic inertia. These two are caught in a vicious circle, and faced on each other. The strength of the trap depends on the degree of the force of the factors that act to trap an economy.

Escape from the low-level equilibrium trap is possible either by increasing the rate of growth of income, or by lowering the rate of growth of population, or by both, so that the diagram of economic-demographic development. Nelson suggests several ways of escaping the low- level equilibrium trap and many of there are to be used simultaneously. Among these, the more important are as followed:

There should be a favourable socio-economic environment in the country.

The social structure should be changed by laying a greater emphasis on thrift and entrepreneurship. Greater produce more and to limit the size of the family.

Measures should be adopted to change that distribution of income, at the same time enabling accumulation of wealth by investors.

There should be an all-perverting government investment programme.

Income and capital should be used to utilise existing resources more fully so that income is increased from the given inputs.

Getting out of the trap required increasing the rate of growth of income to levels higher than the rate of increase in population. A jump must be made to the point which is above a certain minimum per capita income so that a sustained growth may take place, without further government action until a high level of per capita income is reached.

The theory has been criticised on the following grounds:

One, the Theory assumes that an increase in per capita income up to a point leads to an increase in rate of population growth via decline in death date. But decline in death rate in underdeveloped countries is more due to improvements in public health and medical facilities then due to increase in per capita income levels.

Two, the functional relation between level of per capita income and the rate of total income growth is not as simple as is assumed in the Theory.

Three, the theory assumes a set of timeless functional relationships. The timeless approach fails to make any distinction between short-run economic activities of the developed countries and long-run economic activities of underdeveloped countries.

Four, theory has ignored the rate of state in controlling the population growth. It is believed that an increase in per capita income above subsistence level is bound to increase the rate of growth of population till the latter reaches 3 per cent and so it is very difficult to break the trap. But the empirical evidence is contrary to it.

Many governments have taken well-directed steps to force down the growth rates of population. All the same, the basis truth of the theory cannot be contested that persistent efforts are required to control the population on one hand and raise the national income on the other. This is the way to escape time the low equilibrium trap.


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