Ashley S - Fertility and Economic Growth in Estonia

With a population of 1,274,709 (July 2012), Estonia has seen an increase in GDP per capita. In addition to the increase in GDP, the country has also experienced a rise in fertility rates. According to Jonathan Last, a country's economic growth is dependent on the nation's fertility rate. Last states that when there is a lower fertility rate, "a country does not innovate and tends to spend more money on healthcare"and eventually causes a "decrease in the labor force." Keeping this in mind, if a country wants to sustain economic growth, they must first have a steady increase in fertility rates. But is this theory true? To test Jonathan Last's theory, I will look at Estonia's numbers, which will hopefully help to prove this theory true or false.

Estonia is a Baltic Nation that was once part of the Soviet Union until it declared its freedom on 20 August 1991. Once Estonia left the USSR, the country was free to experience economic growth as an independent nation for the first time since 1939. According to data gathered by the World Bank, in 1995, Estonia's GDP per capita was $6,314.84 and in 2012, the GDP per capita was $21,200. In only seventeen years, their GDP per capita has declined once, in 2009, where the GDP per capita experienced a $2,594.94 decline. Despite the decline, they have continued to always have an increase, even after 2009.

GDP Per Capita, PPP (Current International $, 1995-2010)

For the past seventeen years, the fertility rate in Estonia has constantly fluctuated  between 1.2 children and 1.7 children. Historically, Estonia's all time high since 1960 was 1987 and 1988 where there were 2.26 children per family, while Estonia was still part of the Soviet Union. But since then, the fertility rate experienced by Estonia has been on the decline since then, where they experience their lowest fertility rate in country history in 1997 at 1.24. Despite their period of decline from 1988 until 1997, Estonia has bounced back significantly since then. Currently, the fertility rate has been slowly rising, where in 2010, the fertility rate was 1.63.

Fertility Rate (1995-2010)

By looking at the data, it is hard to imagine whether or not the fertility rate has an affect of the GDP per capita of Estonia, especially with the fluctuations in numbers. To determine if GDP per capita growth is dependent on an increasing fertility rate, using a scatter plot will help to show the correlation between the two variables.

As shown by the linear trendline, an fertility rate does usually translate into an increasing GDP per capita. The correlation coefficient of the data shows that there is a 0.9808 correlation between Estonia's fertility rate and their GDP per capita. This is a very strong association between the two variables, so this could prove Last's thesis right. Taking into account this trend, I think that Estonia's fertility rate will continue to slowly increase and its GDP per capita will continue to increase as well.