COURSE LEARNING MODULE

ECON 1023 (Economic Development)

AY 2024-2025

Lesson 14: Population

Topic: Basic concepts

Theory of Demographic Transition
Determinants of Fertility and Birth rates
Population growth and Economic Development

Learning Outcomes: At the end of this module, you are expected to:

- Understand the basic concepts and theory of demographic transition;

- Describe the determinants of fertility and birth rates;
- Explain the relationship of population growth and economic development;
- Discuss the policies to reduce population growth.

LEARNING CONTENT

Introduction:

World population has followed an S-shaped pattern of growth over time. In antiquity, the rate of
population growth was very slow. Birth and death rates were both very high. As death rates fell with the
development of modern medicine, population growth accelerated in the eighteenth and nineteenth centuries
and continued into the twentieth and now, the twenty-first century. Asia’s population grew very slowly in the
nineteenth century-less than 0.5 percent-but began to accelerate in the twentieth century-to 1 percent per year
between 1900 and 1950, and 2 percent during the second half of the twentieth century (Asian Development
Bank, 2002). The rate of population growth in developed countries fell from 1.3 percent per year in early 1960
to about 0.7 percent per annum by 2000, while that for the developing countries decreased slightly, from 2.3
percent to about 1.8 percent over a similar period. This suggests that, compared with the immediate post-
World War II period, developed countries now contribute very little to population growth.

In Asia, on the other hand, population growth rates were among the highest in the world during the period
since World War II. Between 1950 and 1990, the total population of Asia (18 countries) increased by 125
percent, compared with only 112 percent growth for the world population (Sanderson and Tan, 1995, p. 4).

Population is always a subject of interest to analysts of economic growth. In the early days, many economists,
led by Thomas Malthus (1798), warned of the gloomy consequences of an ever-increasing Population. These
included hunger, famine, and poverty as population growth consumed any addition in income and wealth. This
kept income and standards of living at subsistence levels and in a low-level poverty trap.

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Lesson Proper:

SOME BASIC CONCEPTS

To be able to embark on a meaningful discussion of population and its role in economic development, it is
necessary to understand a number of basic concepts and terms. The concepts discussed here are common
tools to help us undertake useful analysis of population issues.

1. Birth and Death Rates

Birth and death rates are two fundamental concepts necessary to understand rates refer to the number of
births per thousand people, while death rate deaths per thousand people. A birth rate of 26 for Bangladesh in
2005 means that there were 26 new born babies per thousand people during that year. In the same way, a
death rate of 8 implies that an average of 8 deaths occurred per thousand people in Bangladesh for that year

The population growth rate is the net addition to the population over a certain time period. This measure is
likewise expressed as the number of additional individuals per thousand people and can be derived simply as
the birth rate minus the death rate. In our example, the population growth rate is therefore 18 per thousand
people. It is, however, customary to give this statistic in percentage, and thus the population growth rate for
Bangladesh is often presented as 1.8 percent.

Table 9.1 shows birth, death and population growth rates for a diverse set of countries. It presents this
information alongside the per-capita gross national income (GNI) and the countries are grouped according to
their regional location. It is immediately obvious that poorer countries tend to have higher population growth
rates. In the case of the African countries, all have relatively high birth and death rates. The highest population
growth rate is registered for Uganda, and this is because it has the highest birth rate in the group, while its
death rate is relatively lower than those of the other countries in the region. Zambia, on the other hand,
registered the lowest population growth rate in the set because its birth rate is on the low end of the scale,
while its death rate is the second-highest in the group. It is thus clear that both birth and death rates jointly
determine the growth rate of the population.

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 Table 9.1

Source: Data from World Bank, World Development Indicators Online (2008)

2. Population Age Distribution

Singular measures of population change, such as birth and death rates, mask a lot of other useful
information that are of significant interest and relevance to those who study population dynamics. To make

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meaningful analysis, it is also important to know the age distribution of the population. This is provided when
the population shares of each age group is given. Such information can help us distinguish between two
countries with high population growth rates, but where one is a young population that has a large proportion of
their members in the childbearing ages and thus has a high birth rate, while the other is a very mature
population where high death rates are registered for the older age groups.

The age distribution of the population in the various regions of the world is given in Table 9.2. We can see from
here that about 2 in every 5 persons in Africa are under 15 years old, while only 6 in every 100 persons there
are aged 60 or over. In Europe, meanwhile, there are less than 2 children for every 10 people, while 1 in every
4 persons is aged 60 or older. The proportions in North America are a little less extreme than those in Europe,
but the pattern is clear. More developed economies tend to have both a lower proportion of the population
under 15 years old, and a greater proportion of those in the 60 and older age group. Less developed
economies, on the other hand, tend to have significantly younger populations and. thus higher dependency
ratios. The young populations in Africa, Asia, and Latin America will push population growth rates further up in
the near future when this generation of kids reaches childbearing age, and this can be a problem. A low
dependency ratio is perceived as more desirable for economic growth. Having a larger proportion of workers in
the population implies greater ability to support those not working (children in particular) and therefore less
drag on the economy. Additionally, national investments in education and health can have greater impact per
person if the dependent population is relatively small.
Table 9.2

Source: United Nations Population Reference Bureau, World Population Data Sheet (2007)

As it happens, the working-age population moves into retirement over time and eventually puts an additional
burden on the rest of society. The size of this burden will depend to a large extent on whether they have saved
enough during their working years to support themselves, or whether the state will have to provide a subsidy.
Aging populations are receiving greater attention in policy forums in Japan and generally, within the
Organization for Economic Cooperation and Development (OECD). The challenge is reinforced by continued
declines in birth rates and extension of life expectancy in these developed countries.

On a more micro scale, the age structure within populations also provide important insights into growth,
employment, and other welfare issues affecting particular economies. Table 9.3 presents an international
comparison of individual country population distribution broken down by age. Differences in the age structure
have mixed effects on the percentage of the labor force to be employed. Growth in an economy would be more
likely to occur if a vast majority of the population are in the working-age group (15-64 years old) and are
actually employed. This means that the dependency ratio is low, and that a significant proportion of the
population is contributing to economic production. In this case, national income can be used more effectively to

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support children in education and health until they get to working age; dependent retirees can also be provided
with more generous pensions and other allowances as they advance in ages.

A rapidly growing population is normally characterized by having a high proportion of persons under 15 years
old. In the table, this is exemplified by India, Pakistan, and the Philippines-countries where those aged under
15 years take up more than a third of the population share. This youth effect, as it is normally called, creates a
large supply of people too young to work and is typical of developing economies. On the other hand, a slowly
growing population is characterized by a large proportion of people who have reached retirement (usually 65
years old). This retirement effect is typical of developed countries where there are high life expectancy rates. In
the table, this effect is largest in Germany, Italy, and Japan, with more than 25 percent of their populations
aged 60 or older. It is nonetheless possible for countries to experience both youth and retirement effects
simultaneously as better public-health policies reduce death rates while birth rates remain high. Which effect
dominates?

Rapid population growth also affects the percentage available to be employed through the female availability
effect. With a slower growth rate and fewer children to care for, more women are available to join the labor
force; Both the dominance of the youth effect (over the retirement effect) and the female availability effect
suggest that rapid population growth reduces the percentage of the population in the labor force which, in turn,
has a depressing effect on economic growth per capita.

3. Other Demographic Measures

The total fertility rate (TFR) is the total number of children a woman is expected to have over her lifetime if
she bears children at the current age specific birth rates. It is calculated from the age-specific fertility rate,
which is the average number of children per year born to women of a particular age group in a particular
country. Life expectancy rate is another useful measure to characterize a population. It refers to the average
number of years a person is expected to live. Life expectancy rates are generally lower in less developed
economies as a result of high infant mortality rates (IMR). These indicators more or less reflect the state of the
medical facilities in an economy. Low life expectancies and high IMRs tend to be the same in economies with
low access to medicines, medical facilities, or assistance.

In Table 9.4, we can see that the total fertility rate in Africa is a high 5.0, a rate that is about twice that of any
other region in the world. Africa also has the lowest life expectancy rate at 53, while people tend to live longest
in North America, Europe, and Oceania (mostly Australia and New Zealand). Furthermore, we see that the
survival rates of new born babies and young children are very low in the poorer regions of the world-as can be
seen by the very high infant mortality rates.
Table 9.4

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 Source: United Nations Population Division, World Population prospects, Highlights (New York: United Nations 2007)

Life expectancy in developing countries has risen rapidly as a result of improvements in public health. For
example, 25 percent of the mortality decrease in post war Sri Lanka was due to the eradication of malaria
(Birdsall, 1988, p. 481). Generally, these advances in the area of public health have been more important than
rising incomes in increasing life expectancy. These increases in life expectancy were more rapid than those
achieved by the industrial Countries when they were at the same level of development in the nineteenth
century. On the other hand, fertility has declined faster than it did in Europe in the nineteenth century. This is
because of better education, growth in income, and the rapid movement of the population from rural to urban
areas, as well as the availability of contraception. Furthermore, fertility declines started at lower levels of per-
capita income although from higher initial levels.

Fertility and income levels are inversely related, although the relationship is loose. Figure 9.3 shows the
decline in the fertility rates (if selected Asian countries from the 1970s onwards as their income per capita rose.
Figure 9.3

Source: Data From World Bank, World Development Indicators, 2003

THE THEORY OF DEMOGRAPHIC TRANSITION

Most of the industrialized countries have passed through three stages of population growth. The
conceptual framework that summarizes this evidence is called the demographic transition (see Figure 9.4). In
the first stage, when the economy is primarily agrarian, birth and death rates are both high, with birth rates
slightly higher than death rates to ensure that the population is growing over time. In the second stage, which
commences when the economy begins to industrialize, advances in medical technology causes a dramatic
drop in death rates. However, birth rates continue to be high. In the third stage, when the economy is fully
industrialized, birth rates begin to fall and catch up with the declining death rate.

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 Figure 9.4

The experience of the now industrialized economies of the world suggests that the various phases of
demographic transition took place over a long period, with noticeable changes occurring over hundreds of
years or so. Stages 1 and 3 imply a very slow growth of the population, while Stage 2 implies a relatively rapid
rise in population numbers. This creates a bulge in the age distribution of the population that can continue for
many years. When the population group within the bulge reaches working age, and until they hit retirement, the
dependency rate-the ratio of those not working to those working-falls to a lower level. Before and after the
bulge, the dependency ratio is much higher.

This depiction of demographic transition is supported by evidence from a wide variety of economies. However,
the relationship is more dramatic when time series for individual countries is analyzed compared to a simple
evaluation of cross-section data for a panel of countries. This is because demographic transition takes place at
different times for different countries and the slope of the curves may be slightly different. Nevertheless, both
time-series and cross-section studies generally support the demographic transition paradigm.

DETERMINANTS OF FERTILITY AND BIRTH RATES

There are two approaches to the discussion of fertility and birth rates. The first is an economic
approach that analyses these issues within a demand-and-supply framework. The second approach is more
eclectic and brings other factors into the fertility equation.

The Economics of Fertility

The economic approach attempts to explain determinants of childbearing using what is called the
microeconomic theory of fertility. In this theory, children are treated just like any other consumer good for which
there are costs and benefits to their “consumption.” Accordingly, the childbearing decision of a household can
be represented within a traditional demand-and-supply framework (see Figure 9.6). The demand curve for
children is assumed to be downward sloping, implying that the more expensive children are, the less of them
will be demanded. This is captured by the line D1. For simplicity, we assume a uniform marginal cost curve MC
though there is no reason why this curve cannot be downward sloping as well because of the economies of
scale associated with increasing numbers. Given the D1 and MC1 lines, the desired number of children is
determined by the point where D1 = MC which corresponds to the point q]. In this framework, the desired
number of children can be reduced by an inward shift in the DI line and/or an upward shift of the MC curve.
The new equilibrium points associated with the new demand and marginal cost curves result in having either
q2, q3, or q4 children, all of which are less than the originally desired number of q1. This cost-benefit approach
to fertility choices is associated with Gary Becker ( 1981).

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 Figure 9.6

We can extend the analysis a little further to understand the effect of changing family situations on fertility
choices. In Figure 9.7, the number of children is represented on the horizontal axis, and consumption of
commodities is represented on the vertical axis. The budget line A’ B’ says that with fixed income, parents
Figure 9.7

have to choose between having more children, or consuming more of other goods. More children imply having
less material goods to enjoy, and having less children enables one to devote more resources to material
goods. The steeper the budget line, the higher is the price of children, relative to goods. The slope of this
budget line is therefore a measure of the cost of having children. An increase in income implies a parallel
outward shift of the budget line AB to the line A’ B’. Reduced income moves this line below AB and closer to
the origin. There are three indifference curves in the diagram showing three levels of satisfaction that may be
derived for all the possible combinations of goods and children that the parents could choose from. According
to the demand-based theory of fertility, the household chooses the combination of goods and children which
maximizes family satisfaction on the basis of its subjectively determined preferences. In the diagram, this is
represented by the point e, corresponding to c1 (children) and g1 (goods).

If family income increases, the household’s budget line would shift upward to line A’B’. As a result, the family
would adjust its satisfaction levels accordingly and hence choose c2 (children) and g2 (goods).

An increase in the value or “price” of raising children can come not just through the increase in the price of
direct “children” expenditures. Sending women to college and increasing women’s wage incomes increase the
opportunity costs of raising children as well. Such implied or indirect costs that may be incurred if good job
opportunities or more wage income has to be given up to have the mother stay home to care for children

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instead. An increase in the price of children relative to other goods can cause households to substitute
commodities for children. In this case, the budget line will pivot towards the origin around the point A’, to the
line A’B' and cause the household maximizing utility consumption combination to occur at a lower indifference
curve, at point f.

In summary, Becker’s (1981) model of household fertility says that the demand for children is positively related
to the household’s income and wealth and negatively related to the price of children (including the opportunity
costs involved). Furthermore, the demand for children is also influenced by the price of substitutes (negatively
related), complements (positively related), and parents’ taste for other goods vis-a-vis children (negatively
related if taste for other goods changes positively). Evidence suggests that the theory, as far as it goes, is
reasonably accurate.

The Demand for Children in Developing Countries

Why is there a high demand for children in the developing countries? To answer this question, we first
look at the costs and then the benefits associated with children, as well as the factors that influence the fertility
choices of parents in developing countries. '

THE COSTS There are at least two kinds of costs associated with children. One is the direct costs
children have to be fed, clothed, kept healthy, and schooled. Direct expenditures on children vary widely
across the spectrum of economic development. More importantly, the composition of the expenditure basket of
households with children varies markedly from country to country. Households in the developing countries
devote almost all costs for child maintenance on food and other necessities, while those in developed countries
expend a greater proportion of child expenditures on education, sports, and music activities, as well as other
forms of human capital investments. In agrarian societies, there is less emphasis on formal schooling.
Therefore, the cost of raising a child in an agrarian society is lower than in an industrialized economy where
children need to go to school and parents have to pay for school uniforms, shoes, bus fares, pocket money,
sports and music tuition fees, as well as child-minding fees. Since the cost of land and buildings is also lower in
the rural areas, the cost of housing additional children is also less.

Direct costs are, however, not the main reason that families in developing countries are much larger in size
than those in developed economies. The more important element impacting on household fertility decisions is
the indirect or opportunity cost associated with having children in the family. Indirect or opportunity cost is
measured in terms of the time, effort and resources foregone in the process of bringing up children. Most
commonly, this includes income given up by a parent who stays home to look after the child. In this case, the
opportunity cost is roughly equivalent to the wage rate multiplied by the number of hours spent in parenting. In
rural communities, the opportunity cost of raising children is low because women have few opportunities to
earn money outside the home. Once employment opportunities for women start to open up (with
industrialization and more education perhaps), the opportunity cost of raising children will rise, thus dampening
the demand for children in these communities.

In this connection, having more children in agrarian societies is not a hindrance to women’s participation in the
production of services in the rural household. A common picture that comes to mind is that of women tending
the farm with their babies tied behind their backs in a cloth bag. Besides, there are grandparents to help them
out in case they choose to leave the children at home. In contrast, the working environment for women in
industrialized societies is not as supportive of such arrangements-normally, women cannot bring their children
to work and have to pay for child-minding services to enable them to work. In addition, as mentioned above,
housing costs may be higher in an urban setting. Clearly, the opportunity cost of having children is higher in
more advanced societies simply because of the logistics.
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 THE BENEFITS Apart from the joys and pleasures of being a parent, children do bring in a number of
economic benefits to the household, and these tend to increase demand. In developing countries children
begin to assist in a range of farm and household production activities at a very early age. Children in the rural
economies are often given such responsibilities as feeding the pigs, cows, and chicken, cleaning the animal
houses, selling home-grown vegetables in the nearby market, and looking after their younger siblings while
their parents work in the farm-all of which add up to the economic production of the household. Children thus
have a very high economic value to the agrarian household. In an urban setting, in contrast, such roles for
children are limited as they do not just go to school, but also stay in school for many more years than children
in the rural areas. This raises the costs of bringing up children in cities and other urban areas.

Another important reason for the high demand for children in developing countries is that they are considered
the principal providers of old-age security for the parents. Why is this so? Unlike the situation in developed
countries where social security institutions for the elderly are well established, in many developing countries,
retirement funds, pension and such other systems to support the elderly outside the family are not well
developed, if at all children fill this role. One result is the common family arrangement of having parents live
with their children in their old age. Contrast this with the abundance of retirement villages in more advanced
societies. Will this role differ between rural and urban sectors? Perhaps only when the chance of getting a
government pension is higher in an urban setting.

Other Factors

In addition to the standard microeconomic approach of Becker, there are several other factors that have
either direct or indirect effects on the family’s fertility decision. These effects require a more general equilibrium
approach which provides underlying reasons why some of the standard variables might change. In this sense,
they are included as second stage variables that have behavioral ramifications for fertility.

Better education for women lowers fertility rates and this important factor works through a number of different
channels. Higher education enhances job opportunities that raise the opportunity cost of having children. For
educated women, the opportunity to have higher income, to pursue a career, and/ or enjoy a certain lifestyle is
weighed heavily against having children. If they have a different preference function for children than their
partners or husbands, educated women are better able to assert themselves and have greater input in the
decision to have children-when and how many. More educated women have greater bargaining power at
home. Furthermore, the higher levels of self-awareness that educated women have given them greater control
over their destiny and their bodies. Educated women also tend to marry later.

The intergenerational impact of education on fertility levels needs emphasizing too. Empirical evidence shows
a ripple effect. Better-educated mothers have better-educated children-particularly better-educated daughters-
and this has important implications for the fertility decisions of the next generation of mothers. .

The trade-off between the quality and quantity of children, as noted earlier, is another important consideration
in having children. In an expanded version of the Becker model, these two variables are determined together
as the household undertakes its utility maximization decision. As incomes rise, there is a substitution effect of
quality for quantity that works to lower fertility. This impact on fertility becomes stronger when compounded by
the effect of having more educated women in the household, which leads to having more educated daughters,
which in turn can lead to further substitution of quality for quantity in the next generation.

Some analysts believe that lower infant mortality rates serve to lower fertility levels. Olsen (1983) argues this
particularly-for the case of developing economies where the old-age insurance system is not well developed.
Ray (1998) provides a simple model linking the demand for children, old-age insurance motive, and infant
mortality rates. His model neatly associates low infant mortality rates with low fertility rates, though this is still a
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strong point of contention in the literature. Whether this is true or not depends upon the price elasticity of
demand for the surviving children. If the demand is inelastic, then mortality declines should reduce fertility. The
empirical evidence suggests that families do not completely replace a lost child. More than likely, cultural and
other factors compound the true association of infant mortality on fertility level. In some societies, for example,
the status of the father or mother is associated with the number of children-that is, the more children
(sometimes, the more male children) one has, the more prestige and respect one gets from the villagers or
community. Such cultural factors will tend to influence family decisions to “replace” or not replace an infant who
died. The widespread desire of traditional families to have sons is continuing to make an impact on fertility
levels in developing countries. In addition, if this preference remains strong, as it still is in China, India and
Korea, social norms and expectations can raise the probability of having another child to “replace” a lost son,
more than a lost daughter.

POPULATION GROWTH AND ECONOMIC DEVELOPMENT

Does population enhance or inhibit economic development? How? Consider the following definition of
output:

O=LxX
where O is the output level, X is the output per worker, and L is the number of workers. In per capita terms, this
is equivalent to

O/P = L/P x X
This equation states that output per worker is a product of two factors: the share of the population that
is in the labor force and the output per worker (productivity). Each of these factors provides a channel through
which population growth affects economic growth. In this section, we address one specific question of this
population growth puzzle and then look at the population growth experience of countries in Asia. Here, we
draw on both economic theory and empirical evidence to come to a clearer understanding of this issue.

1. Is Rapid Population Growth Undesirable?

If markets work and individuals are making informed choices in the society, then it could be that rapid
population growth is socially optimal. The right answer, however, is not so easily obtained, if at all. What do
growth models predict? The growth models studied in Chapter 3 clearly showed the impact of population
growth on income. In the Solow (1956) model, there are constant returns to scale and this ensures that a faster
rate of population growth and the labor force will reduce the capital-to-labor ratio, and therefore, the
productivity of labor. Furthermore, in the Lewis-Fei-Ranis (1954, 1964) model, labor is absorbed into the
manufacturing sector only insofar as the manufacturing sector is able to absorb it as a result of technical
progress or capital accumulation. Other things being equal, population growth will lower the wage rate and the
level of income. Coale and Hoover (1958) also suggest that a higher population growth rate will reduce income
growth because children consume and do not produce. Overall, these theories conclude that rapid population
growth is indeed undesirable. On the other end of the scale IS another group of economic and political analysts
who argue that a rapid rate of population growth brings many benefits for the economy and society as a whole.
Under this viewpoint, a rapidly growing population increases consumer demand, which allows the
manufacturing sector and infrastructure to take advantage of economies of scale in production, to lower costs,

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and provide a sufficient and low-cost labor supply necessary to achieve higher levels of output. A large growing
population also provides a rich source of labor resources, particularly for labor-intensive agricultural activities.

There are, therefore, many opposing Views to this question. In this book, no single answer will exists. If we
take a closer look at the inner workings of developing and relatively poorer countries, we will realize that there
are external diseconomies that result from having young, highly dependent populations. The following sections
will discuss each in turn.

POPULATION GROWTH AND NATURAL RESOURCES Rapid population growth exerts greater
dependence on land, forest, and water resources for consumption and subsistence. For non-renewable
resources, population growth reduces the time horizon of usage but not necessarily the per-capita
consumption since the price of the resources will rise to reflect growing scarcity. For renewable resources, on
the other hand, common property resources may be overused and could even result in the extinction of
Species. The argument here is that better property rights are needed to define and circumscribe the use of
these resources rather than to arbitrarily reduce the rate of population growth. Furthermore, the burden on the
environment must be factored in as one of the costs of more rapid population growth because the larger the
population, the greater the adverse environmental impact on the economy as a whole. In other words, the
larger the population; the larger are the negative externalities.

POPULATION GROWTH AND ADDITIONSTO HUMAN CAPITAL At the family level, large families
tend to spend less on health and education per family member than smaller families. However, there are risks
to controlling fertility to address this issue. It could reduce overall welfare if parents are altruistic and include
children in their utility functions. It is probably true that elimination of unwanted births would raise average
education levels, and this may be the way to address this issue (see below). Large family size reduces the
educational opportunities for the children of such families, and also the rate of saving by raising the
dependency rate.

High fertility harms the health of both mother and children. While this may be recognized and accounted for by
many families in decision making, it is highly unlikely in families where women have little or no bargaining
power, as may be the case in rural villages, or where the literacy rate is low. Family members in large families
are likely to go hungry more than small families. Again, this may be in the utility function of the family but there
may be a case of moral hazard, particularly if there are some feeding programs in place.

POPULATION GROWTH AND INEQUALITY In developing countries, large families tend to cluster among
the poor. This perpetuates poverty and exacerbates inequality by lowering the rate of return to labor and
increasing the returns to capital. In addition, if the poor have more children, they will be worse off because per-
capita income within the family will be lowered. Large families are also most likely to spend less on health and
education per capita and this will tend to have a negative impact on income distribution. If society does not
want this to happen for social reasons, then it is an external diseconomy and justifies market intervention.

2. Policies to Reduce Population Growth in Asia

Apart from rapid economic growth as an explanation for the demographic transition, it is possible that the
same institutional developments in health and education that allowed these countries to reduce mortality rates
after World War II were also brought to bear on fertility and family planning (Sanderson and Tan, 1995),

FAMILY PLANNING AND CONTRACEPTIVE USE The relationship between contraceptive use and fertility
rates needs to be negative for any family planning program to be successful. Various forms of such programs
have been implemented in many developing countries around the world, but the strength of that relationship
remains unclear in practice. The wide range of outcomes observed in Southeast Asia during the 1980s has
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largely been inconclusive, particularly when comparing the experiences of Malaysia, Thailand, and the
Philippines. There has been very little achievement in the Philippines while significant success has been noted
in the use of contraceptives in Thailand and Malaysia. In the Philippines, for example, contraceptive use was
reported to be 44 percent; yet total fertility rate was 4.3 births per woman. This compares with 3.5 births per
woman in Malaysia, which reported a similar rate of contraceptive use. Most likely, there are other factors
besides contraceptive .use to explain these differences in fertility outcomes.

In the Philippines, on the other hand, the important role of the Catholic Church and the extremely low budget
for resources devoted to population control are believed to be largely responsible for the lag in response to
fertility rate declines during the past several decades. Compared with its neighbours at similar levels of
development, fertility rates in the Philippines are much higher (4.3 versus 2.6 and 3,3 births per woman in
Thailand and Indonesia, respectively, in the late 1980s). Domestic spending was estimated to be 0.02 percent
of GDP in 1988, much lower than other countries. Furthermore, programs for fertility control have been
primarily the result of foreign-funded assistance. The government itself does not have a well-funded
comprehensive program for population control, perhaps because of pressure from the Catholic Church
hierarchy.

In general, the linkage between family planning and the use of contraceptives is loose since there are
numerous other methods for controlling family size. At the same time, there have been many studies on the
effect of contraceptives on fertility in developing countries, yielding a range of conclusions? What can be safely
concluded from all these is that government initiatives are well in place in many economies, yet their net effect
on family formation continue to be small.

IMPROVEMENT IN WOMEN'S EDUCATION Experience has shown that in many developing countries,
women’s education has been instrumental in changing the perception of family size. This operates through a
number of channels, all of which tend to raise the opportunity cost of having children, substitute quality of
children for quantity, and provide greater opportunity to women in determining the 3126 of the family.
Improvement in women’s education has also had a beneficial effect on other variables, such as overall family
health and decline in infant mortality.

ECONOMIC INCENTIVES AND DISINCENTIVES In the late 19705, when population growth was seen
as very high in Singapore, the government imposed tax penalties and social pressure on those families that
had more than two children. Health and education subsidies for the first two children “ere generous but the
same were severely reduced for subsequent children. Housing entitlements, in government housing estates
openly favored smaller families. This two-child policy proved so highly successful in pushing birth rates down in
just a few years that the problem has now been reversed. More recently, the Singapore government resorted
to the same economic incentive and disincentive schemes, but this time to encourage couples to have more
children; Tax benefits increased with larger family size. In addition, health, education, and housing benefits to
families increased with more children in the family.

Similarly, in an effort to increase the natural growth rate of its population, the Australian government provides a
one-off payment of A$5,000 to families with the birth of every child. This was started in 2005 solely for the
purpose of increasing fertility rates and works alongside other cash allowances and family benefits already in
place for many years. Generally, a progressive tax system and reorientation of the subsidy system could be
introduced if a strong population policy is deemed desirable. Surprisingly, very few countries in Asia have used
this approach.

COERCION AND QUOTAS In India, there was a time under Indira Gandhi when sterilization for men
was encouraged. Sometimes coercion was even used. In China, the government instituted a one-child policy in

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1982 to curb the growth of its already large population. This approach put a clear break on the nation’s
accelerating fertility rates, but it also brought with it a number of unintended consequences. The policy appears
to have resulted in more rampant corruption in certain localities, as well as a significant increase in infanticide,
particularly of baby girls, since many families preferred having sons to daughters. The one-child policy in China
has thus had its share of harsh critics from around the world. More generally, such coercive policies do not
leave the fertility decision to the individuals themselves. They effectively impose a relatively more severe
welfare burden on poorer and rural-based households, as they would be the ones who would prefer and
benefit from having more children in the family.

The Empirical Argument: Seven Negative Consequences of Population Growth

According to the latest empirical research, the potential negative consequences of population growth
for economic development can be divided into seven categories: its impact on economic growth, poverty and
inequality, education, health, food, the environment, and international migration.

Economic Growth Evidence shows that rapid population growth lowers pet capita income growth in most
LDCs, especially those that are already poor, dependent on agriculture, and experiencing pressures on land
and natural resources.

Poverty and Inequality Even though aggregate statistical correlations between measures of poverty and
population growth at the national level are often inconclusive, at the household level the evidence is strong and
compelling 11m negative consequences of rapid population growth fall most heavily on the poor because they
are the ones who are made landless, suffer first from cuts in government health and education programs, bear
the brunt of environmental damage, and are the main victims of job cuts due to the slower growth of the
economy. Poor women once again bear the greatest burden of government austerity programs, and another
vicious cycle is set in motion. To the extent that large families perpetuate poverty, they also exacerbate
inequality.

Education Although the data are sometimes ambiguous on this point. it is generally agreed that large family
size and low incomes restrict the opportunities of parents to educate all their children. At the national level,
rapid population growth muses given educational expenditures to be spread more thinly, lowering quality for
the sake of quantity. This in turn feeds back on economic growth because the stock of human capital is
reduced by rapid population growth.

Health High fertility herms the health of mothers and children. It increases the health risks of pregnancy and
closely spaced births have been shown to reduce A birth weight and increase child mortality rates.

Food Feeding the world's population is made more difficult by rapid population growth-over 90% of additional
LDC food requirements are caused by population increases New technologies of production must be
introduced more rapidly, as the best lands have already been cultivated International food relief programs
become more widespread.

Environment Rapid population growth contributes to environmental degradation in the form of forest
encroachment, deforestation, fuel-wood depletion, soil erosion, declining fish and animal stocks, inadequate
and unsafe water, air pollution, and urban congestion.

International Migration Many observers consider the rapid increase in international migration, both legal and
illegal, to be one of the major consequences of developing countries’ population growth. Though many factors
cause migration, an excess of job seekers (caused by rapid population growth) over job opportunities in the
LDC economy is surely one of them. However, unlike the first six consequences listed here, some of the

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economic and social costs of international migration falls on recipient countries-increasingly in the developed
world. It is not surprising, therefore, that this issue has recently taken on political importance in North America
and Europe.

*** END of LESSON ***

REFERENCE

Textbooks

Dowling, J.Malcolm, Valenzuela, Ma.R.,Brux, J. (2019) Economic Development Philippine Edition. Cengage
learning Asia Pte Ltd.

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