If population is criteria then countries like Pakistan, India and Bangladesh will be winner in every sporting event they compete. There performance in Olympics is miserable, in recent summer Olympics these three countries were able to win only one gold medal while Uzbekistan with population of only 36 million was able to grab 8 gold medals. A country can excel in sports and other departments of life only if there is proper planning and decisions are made on merit not on nepotism.
New Zealand with population of 5 million is doing good only because of facts you highlighted. If they follow pattern of sub-continent then due to there small population they might down to level of an associate team.
I didn't said that population is the only criteria. But it is one of the factors that need to be considered. Look at the difference between England and New Zealand. The former has a population that is 12 times that of New Zealand. As a result, there are more cricket players at club, first-class and international level. So the player pool is much bigger. The problem with New Zealand is that they have such a small player pool, and in case any of their players get injured, then it gets really difficult to replace them.