ECONOMIC DEVELOPMENT AND POPULATION
GROWTH
Rapid population growth adversely affects every aspect of
economic and social progress in developing countries. It absorbs
large amounts of resources needed for more productive investment in
development. It requires greater expenditures for health, education
and other social services, particularly in urban areas. It increases
the dependency load per worker so that a high fraction of the output
of the productive age group is needed to support dependents. It
reduces family savings and domestic investment. It increases
existing severe pressures on limited agricultural land in countries
where the world's "poverty problem" is concentrated. It creates a
need for use of large amounts of scarce foreign exchange for food
imports (or the loss of food surpluses for export). Finally, it
intensifies the already severe unemployment and underemployment
problems of many developing countries where not enough productive
jobs are created to absorb the annual increments to the labor
force.
Even in countries with good resource/population ratios, rapid
population growth causes problems for several reasons: First, large
capital investments generally are required to exploit unused
resources. Second, some countries already have high and growing
unemployment and lack the means to train new entrants to their labor
force. Third, there are long delays between starting effective
family planning programs and reducing fertility, and even longer
delays between reductions in fertility and population stabilization.
Hence there is substantial danger of vastly overshooting population
targets if population growth is not moderated in the near
future.
During the past decade, the developing countries have raised
their GNP at a rate of 5 percent per annum as against 4.8 percent in
developed countries. But at the same time the LDCs experienced an
average annual population growth rate of 2.5 percent. Thus their per
capita income growth rate was only 2.5 percent and in some of the
more highly populated areas the increase in per capita incomes was
less than 2 percent. This stands in stark contrast to 3.6 percent in
the rich countries. Moreover, the low rate means that there' very
little change in those countries whose per capita incomes $200 or
less per annum. The problem has been further exacerbated in recent
months by the dramatic increases in oil and fertilizer prices. The
World Bank has estimated that the incomes of the million inhabitants
of the countries hardest hit by the oil crisis will grow at less
than 1% per capita per year of the remainder of the 1970s. Taking
account of inequalities in income distribution, there will be well
over 500 million people, with average incomes of less than $100 per
capita, who will experience either no growth or negative growth in
that period.
Moderation of population growth offers benefits in terms of
resources saved for investment and/or higher per capita consumption.
If resource requirements to support fewer children are reduced and
the funds now allocated for construction of schools, houses,
hospitals and other essential facilities are invested in productive
activities, the impact on the growth of GNP and per capita income
may be significant. In addition, economic and social progress
resulting from population control will further contribute to the
decline in fertility rates. The relationship is reciprocal, and can
take the form of either a vicious or a virtuous circle.
This raises the question of how much more efficient expenditures
for population control might be than in raising production through
direct investments in additional irrigation and power projects and
factories. While most economists today do not agree with the
assumptions that went into early overly optimistic estimates of
returns to population expenditures, there is general agreement that
up to the point when cost per acceptor rises rapidly, family
planning expenditures are generally considered the best investment a
country can make in its own future.
II. Impact of Population Growth on Economic
Development
In most, if not all, developing countries high fertility
rates impose substantial economic costs and restrain economic
growth. The main adverse macroeconomic effects may be analyzed in
three general categories: (1) the saving effect, (2) "child quality"
versus "child quantity", and (3) "capital deepening" versus "capital
widening." These three categories are not mutually exclusive, but
they highlight different familial and social perspectives. In
addition, there are often longer-run adverse effects on agricultural
output and the balance of payments.
(1) The saving effect. A high fertility economy has perforce a
larger "burden of dependency" than a low fertility economy, because
a larger proportion of the population consists of children too young
to work. There are more non-working people to feed, house and rear,
and there is a smaller surplus above minimum consumption available
for savings and investment. It follows that a lower fertility rate
can free resources from consumption; if saved and invested, these
resources could contribute to economic growth. (There is much
controversy on this; empirical studies of the savings effect have
produced varying results.)
(2) Child quality versus quantity. Parents make investment
decisions, in a sense, about their children. Healthier and
better-educated children tend to be economically more productive,
both as children and later as adults. In addition to the
more-or-less conscious trade- offs parents can make about more
education and better health per child, there are certain biologic
adverse effects suffered by high birth order children such as higher
mortality and limited brain growth due to higher incidence of
malnutrition. It must be emphasized, however, that discussion of
trade-offs between child quality and child quantity will probably
remain academic with regard to countries where child mortality
remains high. When parents cannot expect most children to survive to
old age, they probably will continue to "over-compensate", using
high fertility as a form of hedge to insure that they will have some
living offspring able to support the parents in the distant
future.
(3) Capital deepening versus widening. From the family's
viewpoint high fertility is likely to reduce welfare per child; for
the economy one may view high fertility as too rapid a growth in
labor force relative to capital stock. Society's capital stock
includes facilities such as schools and other educational inputs in
addition to capital investments that raise workers' outputs in
agriculture and manufacturing. For any given rate of capital
accumulation, a lower population growth rate can help increase the
amount of capital and education per worker, helping thereby to
increase output and income per capita. The problem of migration to
cities and the derived demand for urban infrastructure can also be
analyzed as problems of capital widening, which draw resources away
from growth-generating investments.
In a number of the more populous countries a fourth aspect rapid
growth in numbers has emerged in recent years which 1: profound
long-run consequences. Agricultural output was able keep pace or
exceed population growth over the many decades population rise prior
to the middle of this century, primer through steady expansion of
acreage under cultivation. More recently, only marginal unused land
has been available in India, Thailand, Java, Bangladesh, and other
areas. As a result (a) la holdings have declined in size, and (b)
land shortage has led deforestation and overgrazing, with consequent
soil erosion and severe water pollution and increased urban
migration. Areas that once earned foreign exchange through the
export of food surpluses are now in deficit or face early transition
to dependence on food imports. Although the scope for raising
agricultural productivity is very great in many of these areas, the
available technologies for doing so require much higher capital
costs per acre and much larger foreign exchange outlays for "modern"
inputs (chemical fertilizer, pesticides, petroleum fuels, etc.) than
was the case with the traditional technologies. Thus the population
growth problem can seen as an important long-run, or structural,
contributor to current LDC balance of payments problems and to
deterioration of the basic ecological infrastructure.
Finally, high fertility appears to exacerbate the maldistribution
of income which is a fundamental economic and social problem in much
of the developing world. Higher income families tend to have fewer
children, spend more on the health and education of the children,
have more wealth to pass on to these children in contrast to the
several disadvantages that face the children of the poor. The latter
tend to be more numerous, receiving less of an investment per child
in their "human capital", leaving the children with economic,
educational and social constraints similar to those which restrict
the opportunities of the parents. In short, high fertility
contributes to the intergenerational continuity of maldistributions
of income an related social and political problems.
III. The Effect of Development on Population
Growth
The determinants of population growth are not well understood,
especially for low income societies. Historical data show that
declining fertility in Europe and North America has been associated
with declining mortality and increasing urbanization, and generally
with "modernization". Fertility declined substantially in the West
without the benefit of sophisticated contraceptives. This movement
from high fertility and high mortality to low fertility and low
mortality is known as the "demographic transition". In many low
income countries mortality has declined markedly since World War II
(in large part form reduction in epidemic illness and famine), but
fertility has remained high. Apart from a few pockets of low
fertility in East Asia and the Caribbean, a significant demographic
transition has not occurred in the third world. (The Chinese,
however, make remarkable claims about their success in reducing
birth rates, and qualified observers are persuaded that they have
had unusual success even though specific demographic information is
lacking.)
There is considerable, incontestable evidence in many developing
countries that a larger (though not fully known) number of couples
would like to have fewer children than possible generally here and
that there is a large unsatisfied demand by these couples for family
planning services. [** It is also now widely believed that something
more that family planning services will be needed to motivate other
couples to want smaller families and all couples to want replacement
levels essential to the progress and growth of their
countries.**]
There is also evidence, although it is not conclusive, that
certain aspects of economic development and modernization are more
directly related to lowered birth rates than others, and that
selective developmental policies may bring about a demographic
transition at substantially lower per capita income levels than in
Europe, North America, and Japan [See James E. Kocher, Rural
Development, Income Distribution, and Fertility Decline (Population
Council, New York, 1973), and William Rich, smaller Families through
Social and Economic Progress (Overseas Development Council, Wash.,
1973)]. Such selective policies would focus on improved health care
and nutrition directed toward reduced infant and child mortality;
universal schooling and adult literacy, especially for women;
increasing the legal age of marriage; greater opportunities for
female employment in the money economy; improved old-age social
security arrangements; and agricultural modernization focused on
small farmers. It is important that this focus be made in
development programs because, given today's high population
densities, high birth rates, and low income levels in much of Asia,
Africa, and Latin America, if the demographic transition has to
await overall development and modernization, the vicious circle of
poverty, people, and unemployment may never be broken.
The causes of high birth rates in low income societies are
generally explained in terms of three factors.
a. Inadequacy of information and means. Actual family size in
many societies is higher than desired family size owing to ignorance
of acceptable birth control methods or unavailability of birth
control devices and services. The importance of this factor is
evidenced by many sociological investigations on "desired family
size" versus actual size, by the substantial rates of acceptance for
contraceptives when systematic family planning services are
introduced. This factor has been a basic assumption in the family
planning programs of official bilateral and multilateral programs in
many countries over the past decade. Whatever the actual weight of
this factor, which clearly varies from country to country and which
shifts with changes in economic and social conditions, there remains
without question a significant demand for family planning
services.
b. Inadequacy of motivation for reduced numbers of children.
Especially in the rural areas of underdeveloped countries, which
account for the major share of today's population growth, parents
often want large numbers of children (especially boys) (i) to ensure
that some will survive against the odds of high child mortality,
(ii) to provide support for the parents in their old age, and (iii)
to provide low cost farm labor. While these elements are present
among rural populace, continued urbanization may reduce the need for
sons in the longer term. The absence of educational and employment
opportunities for young women intensifies these same motivations by
encouraging early marriage and early and frequent maternity. This
factor suggests the crucial importance of selective development
policies as a means of accelerating the reduction of fertility.
c. The "time lag". Family preferences and social institutions
that favor high fertility change slowly. Even though mortality and
economic conditions have improved significantly since World War II
in LDCs, family expectations, social norms, and parental practice
are slow to respond to these altered conditions. This factor leads
to the need for large scale programs of information, education, and
persuasion directed at lower fertility.
The three elements are undoubtedly intermixed in varying
proportions in all underdeveloped countries with high birth rates.
In most LDCs, many couples would reduce their completed family size
if appropriate birth control methods were more easily available. The
extent of this reduction, however, may still leave their completed
family size at higher than mere replacement levels i.e., at levels
implying continued but less rapid population growth. Many other
couples would not reduce their desired family size merely if better
contraceptives were available, either because they see large
families as economically beneficial, or because of cultural factors,
or because they misread their own economic interests.
Therefore, family planning supply (contraceptive technology and
delivery systems) and demand (the motivation for reduced fertility)
would not be viewed as mutually exclusive alternatives; they are
complementary and may be mutually reinforcing. The selected point of
focus mentioned earlier old age security pro-grams, maternal and
child health programs, increased female education, increasing the
legal age of marriage, financial incentives to "acceptors",
personnel, are important, yet better information is required as to
which measures are most cost-effective and feasible in a given
situation and how their cost-effectiveness compares to supply
programs.
One additional interesting area is receiving increasing
attention: the distribution of the benefits of development.
Experience in several countries suggests that the extent to which
the poor, with the highest fertility rates, reduce their fertility
will depend on the extent to which they participate in development.
In this view the average level of economic development and the
average amount of modernization are less important determinants of
population growth than is the specific structure of development.
This line of investigation suggests that social development
activities need to be more precisely targeted than in the past to
reach the lowest income people, to counteract their desire for high
fertility as a means of alleviating certain adverse conditions.
IV. Employment and Social Problems
Employment, aside from its role in production of goods and
services, is an important source of income and of status or
recognition to workers and their families. The inability of large
segments of the economically active population in developing
countries to find jobs offering a minimum acceptable standard of
living is reflected in a widening of income disparities and a
deepening sense of economic, political and social frustration.
The most economically significant employment problems in LDCs
contributed to by excessive population growth are low worker
productivity in production of traditional goods and services
produced, the changing aspirations of the work force, the existing
distribution of income, wealth and power, and the natural resource
endowment of a country.
The political and social problems of urban overcrowding are
directly related to population growth. In addition to the still-high
fertility in urban areas of many LDC's, population pressures on the
land, which increases migration to the cities, adds to the pressures
on urban job markets and political stability, and strains, the
capacity l to provide schools, health facilities, and water
supplies.
It should be recognized that lower fertility will relieve only a
portion of these strains and that its most beneficial effects will
be felt only over a period of decades. Most of the potential
migrants from countryside to city over the coming 15 to 20 years
have already been born. Lower birth rates do provide some immediate
relief to health and sanitation and welfare services, and medium-
term relief to pressures on educational systems. The largest effects
on employment, migration, and living standards, however, will be
felt only after 25 or 30 years. The time lags inherent in all
aspects of population dynamics only reinforce the urgency of
adopting effective policies in the years immediately ahead if the
formidable problems of the present decade are not to become utterly
unmanageable in the 1990s and beyond the year
2000. |