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OCR for page 1
Introduction
BACKGROUND
In 1984 there were approximately 3.6 billion people living in the developing
regions of the world, conventionally defined as comprising Africa, Latin
America, and Asia except Japan. This number was growing annually at
a rate of about 2.0 percent (United Nations, 1984:101~. For every 1,000
persons, there were 31.2 births and 11.0 deaths. Under estimated rates of
childbearing in 1980-1985, each woman in developing countries would bear
an average of 4.1 children if she survived to the end of her reproductive
years. Based on age-specific mortality rates in 198~1985, a newborn could
expect to live 56.6 years (United Nations, 1985:144~.
These numbers represent a substantial change in demographic conditions
during Me postwar period. In 1950 there were only 1.7 billion people living
in the developing counties. Under 1950-1955 rates, women were Bering
an average of 6.2 children, and newborns could expect to live only 41.0
years (United Nations, 1985:144~. There were 45.4 births and 24.4 deaths
annually per 1,000 persons.
The only important similarity to the situation three decades later was
the rate of population growth: 2.1 percent annually in 195~1955, and 2.0
percent in 1980-1985. However, there was a rise to an annual rate of 2.55
percent in 1965-1970 and a subsequent decline. This hill-shaped pattern of
population growth rates is not so pronounced if China is excluded from
the calculations: without China, annual grown rates for the less-developed
counties were 2.1 percent in 1950-1955, 2.5 percent in 1965-1970, and 2.4
OCR for page 2
2
POPUI~rlON GROWTH AND ECONOMIC DEVELOPMENT
percent in 1980-1984. Recent demographic estimates for major areas of the
developing world are presented in Table 1.
Sustained population grown rates of this magnitude are unprecedented
in history and reflect above all human success in reducing the burden of
premature and avoidable death in developing countries. The growth rates are
nearly twice those in industrialized areas of Europe during the nineteenth
century. Despite being indicators of success, the high rates of population
growth in developing countries during He postwar period have caused concem,
and the focus of attention has been on the social and economic costs of
high levels of fertility.
To many observers, these costs have appeared obvious. The earls resources
are finite, and more people by definition means fewer natural resources per
person. Of course, die most important resources are not natural, but artificial
(plants and equipment used in production, openings in school systems, jobs,
social institutions, and economic infrastructures and so are expandable. But
human beings begin life with an extended period of dependency during
which they contribute nothing to the production of these resources, while
calling on them for sustenance and development. In the short term, at least,
it appears obvious Hat all resources will be spread more thinly if there are
more children. In the era of rapid population grown, the stage of childhood
dependency came to be perceived as a burden with which families and
societies must cope. Thus, population growth (i.e., high fertility) took its
place alongside other self-evident problems such as crime, disease, illiteracy,
hunger, and poverty, to be dealt with by informed social policy.
Because the costs of population growth seemed self-evident, following
directly from the fixity of nature and He long period required for a newly
born child to become fully productive, the issue was notable subject of
a gem deal of research. National policies were based on commonsense
impressions; in 1952, India became the first country to initiate a family
planning program.
Among early studies that took a more systematic approach to population
matters was a 1958 book by Ansley Coale and Edgar Hoover, Population
Growth and Economic Development in Lo~v-lncome Countries, and a report
and series of papers commissioned by the National Academy of Sciences
(1971), Rapid Population Growth: Consequences and Policy Implications.
The former focused on the effects of population growth and associated high
burdens of dependency on rates of physical capital formation, using Mexico
and India for illustrative purposes. The latter was perhaps most noteworthy
for introducing issues relating to the effect of population growth on human
capital formation, which research subsequent to Coale and Hoover's book had
shown to be a major element in economic grown. Both studies concluded
Hat rapid population grown had seriously negative economic consequences.
OCR for page 3
INIPtODUC17ON
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OCR for page 4
4
POPUl^77ON GROWTH AND ECONOMIC DEVELOPMENT
At one point, the Academy report argued (National Academy of Sciences,
1971, Vol. 1:29~:
If the less developed regions could raise their current per capita income growth
rates by one-third, it would reduce their per cotta income doubling time from
somewhat over 25 yeam to 18 years. Under current circumstances this could be
accomplished entirely through a fall of the average birth rate in the less developed
region from their roughly 40 per 1,000 level to 30 per 1,000, a 25 percent shift,
which, in addition to its income effects, could have perhaps equally large family-
welfare effects not captured by conventional income measures.
Elaborate but essentially mechanical modeling exercises, such as Limits
to Growth (Meadows et al., 1972), which incorporated fixed factors of
production and Fred absorptive capacity of Me environment in combination
with projected rises in population, seemed to confirm that there was much
to fear about population growth. This pessimistic view was vividly presented
in the widely publicized Global ~)000 Report to the President (Council on
Environmental Quality and U.S. Depan~ent of State, 1980~.
But it is clear that despite rapid population grown, developing countries
have achieved unprecedented levels of income per capita, literacy, and life
expectancy over the past 25 years (see Table 2~. Furthermore, as recognized
in the earlier Academy report, there is no statistical association between
national rates of population growth and grown rates of income per capita.
These observations point toward the key mediating role that human behavior
and human institutions play in the relation between population grown and
economic processes, a role that has been acknowledged for some time by
economists and demographers (National Academy of Sciences, 1971, Vol.
1:65; Berelson, 1975:3~.
For example, as easily accessible reserves of important natural resources
are exhausted, the real cost of extraction, and hence the resource pnce,
nses. In tum, this tends to stimulate the search for new processes that use
the resource more efficiently, for improved extraction techniques, for new
sources, and for less expensive substitutes. In this manner, the response of the
economic system to scarcity tends to weaken the direct effect of population
growth on resources. Perhaps more important, it is obvious that most parents
are willing to make many of the sacrifices required to raise a child through its
dependency period, so that some of the most important economic adjustments
to population grown are not only automatic but even considered part of
a desirable process by those who ~snder~ke them. Recognition that human
inshtudons, especially the fancily, play an important role in adaptations
to population grown led to considerable attention being focused on the
microeconomics of household decisions regarding world, childbearing, and
investments in children (e.g., Easterlin, 1980~.
OCR for page 5
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OCR for page 6
6
POPUl~7ON GROWTH AND ECONOMIC DEVELOPMENT
A more provocative challenge to conventional wisdom was posed by Julian
Si~non's 1981 book, The Ultimate Resource, which argued that population
is an important long-term stimulus to economic advance through its effects
on productive technology, the pace of innovation, Me fonnation of markets,
and governmental infrastructural investments. Simon's book received a good
deal of both scholarly and popular attention and has been influential in
U.S. policy. The pace of research on consequences of population grown
accelerated with the approach of the 1984 World Population Conference in
Mexico City, held under the auspices of the United Nations. In addition,
several papers on the economic consequences of population growth, including
an important one by McNicoll (1984), were commissioned by the World
Bank in preparation for its World Development Report special 1984 issue
on population.
FOCUS ON FERTILITY DECLINE AND ECONOMIC WELFARE
Against this background, the National Research Council undertook an
extensive effort to synthesize knowledge on the economic consequences of
population grown. This volume represents a summary of much recent research
on the economic consequences of population grown in developing countries,
including He 17 papers commissioned by the working group on important
aspects of economic-demographic relations. The report is organized in teens
of the major questions around which discussion has focused. The questions
are not mutually exclusive and are perhaps best evaluated in toto rather Man
individually. But the subject is large, and some organizing framework is
necessary.
One important finding of Me report is that the evidence regarding the
consequences of a change in the rate of population growth is extremely
varied, some arguments coming Tom theory and some from empirical studies.
Furthermore, those studies differ widely in quality and scope. Drawing fun
conclusions about the overall impact of slower population growth is difficult
because the research completed to date is fiequendy based on limited samples
and inadequate data as well as on partial and occasionally inappropriate
conceptual models and statistical techniques. Ibe scientific literature contains
few adequate studies of the effects of slower population grown in developed
counties and fewer still on the effects in developing countries. Consequently,
Were is much less certainty than we would like about Me specific quantifiable
effects of different rates of population grown on human capital fonnation, on
physical capital formation in liens, on technical progress and its diffusion,
and on Me numerous other questions Cat are amused in We following
chapters.
As in the 1971 Academy volumes, we focus on We effects of a slowing
OCR for page 7
INTRODUC17ON
7
of a population's growth due to a policy-driven fertility decline. Although
population growth depends on migration and mortality as well as fertility, for
most developing countries-and surely for the developing world as a whole-
there is little potential for major changes in population grown rates or sizes
as a result of international migration. And certainly, reganlless of economic
consequences, public policies will continue to strive for improvements in public
health and access to medical care, which will result in continuing modality
decreases and longer life expectancy. Hence, the greatest discretionary scope
for altering population growth rates to achieve economic aims rests with
fertility policy, and so we have focused on fertility in establishing a framework
for considering population policy.
In considering the consequences of fertility decline, we focus on measures
of economic well-being or welfare. In particular, we emphasize vanaUes
that are closely related to levels of per capita income, which is a widely
recognized indicator of economic welfare. Such variables as capital per
worker and land per person concern us mainly because they are directly
linked to per capita income. However, we recognize that per capita income
is not identical to well-being; individuals can often improve Heir well-being
by sacrificing per capita family income for other goods such as leisure or
children. While we also give some consideration to other major objects of
social and economic policy-namely, the distribution of income and levels of
heals and education-we were not able to consider broader measures of well-
being, and we male only passing references to such development concerns
as interest rates, foreign exchange regimes, or industrial structure.
UNDERSTANDING THE: CONSEQUENCES
OF EE:RTILIrY DECLINE
Population grown and economic development are complex, interlinked
processes. Each affects the other in many ways, and both are interrelated to
the broad away of social and political changes that constitute modernization.
Consequently, simple correlations between population grown and per capita
income, although intriguing, ultimately provide little insight into the causal
impact of a policy~iven decline in fertility. A scientific assessment of Hat
impact requires that one identify the major mechanisms by which population
grown is hypothesized to affect economic development; assess the evidence
for each hypothesis; and, finally, synthesize the net effect of He simultaneous
operation of these mechanisms.
A starting point in this assessment is to recognize several demographic
changes that follow automatically from a permanent reduction in the number
of children born per woman of childbearing age if Here is no change in
mortality:
OCR for page 8
8
POP Ul'ION GROWl~l AND ECONOMIC DEVELOPMENT
· The population will grow more slowly than it would otherwise have
grown.
· At every time subsequent to the fertility reduction, the population will
be smaller than it would have been.
· At every subsequent time, the population will be less dense than it
would have been (having fewer persons per square mile).
· At every subsequent time, the population will have an age structure
that is older than it would have been. It will have a smaller proportion of
children, a larger proportion of the elderly, and an older mean age.
All of these short- and long-run demographic changes are in the same
direction; however, the short- and long-run responses may differ in the rate
of change of population growth and the age distribution.
In a population with constant age-specific mortality and constant age-
specific fertility that undergoes a sudden and permanent change to a lower
level of age-specific fertility, all the above-mentioned effects will be observed.
But eventually, after a transitional period of two to three generations (or
roughly 70 years) the population will settle down to a new demographic
equilibrium. The rate of growth, while lower than it would have been,
will no longer be declining, and the average age of He population will
have stabilized at an older mean age. Certain economic responses that may
be observed during this transitional period will not continue once the new
population grown pattern has been attained. But even though many economic
effects occur only during this transitional period, they can result in higher
or lower endowments of technology, capital, and natural resources for future
generations. (If the effect of a policy-induced fertility reduction is to hasten
a decline that would in any case have occurred later, the first and last effects
noted above are transitory, while the second and third are still generally
tine.)
These demographic changes, both short and long term, are hypothesized
to affect economic welfare through a variety of mechanisms, as noted above.
We have identified the most important of these hypotheses and organized
them as a set of questions that refer to bow transitory and permanent effects:
1. Will slower population grown increase the grown rate of per capita
income through increasing per capita availability of exhaustible resources?
2. Will slower population growth increase the grown rate of per capita
income through increasing per capita availability of renewable resources?
3. Will slower population growth alleviate pollution and the degradation
of the natural environment?
4. Will slower population growth lead to more capital per worker, thereby
increasing per worker output and consumption?
OCR for page 9
INTRODUCTION
9
5. Do lower population densities lead to lower per capita incomes via
a reduced stimulus to technological innovation and reduced exploitation of
economies of scale in production and infrastructure?
6. Will slower population growth increase per capita levels of schooling
and health?
7. Will slower population grown decrease the degree of inequality in the
distribution of income?
8. Will slower population growth facilitate the absorption of workers into
the modem economic sector and alleviate problems of urban growth?
9. Does a couple's fertility behavior impose costs on society at large?
For the first eight questions, we examine both the theoretical rationale for
the hypothesis and the empirical evidence that bears upon it. Because we are
interested in the dynamic effects of population growth, historical and time-
series data are of special interest. However, historical studies, particularly of
only one country, have two possible drawbacks: first, underlying relationships
may have changed over time so that the historical data are no longer relevant;
second, the experience of any particular country may not be representative
or generalizable. Moreover, historical information may simply be lacking.
When possible, then, we also draw on recent comparisons of countries with
different population sizes, densities, or grown rates. If confounding variables
can be controlled, these cross-national comparisons can be interpreted as
natural experiments in the effects of population variables. However, it is
more difficult to control for background variables in cross-sectional than in
time-series analyses. The two perspectives are therefore complementary.
The final question is somewhat different in fonn from the over eight. Based
primarily on theoretical arguments, it introduces the important distinction
between private and social consequences of childbearing decisions. This
distinction reflects differences between the childbearing costs and benefits
realized by He couple making the childbearing decisions and those realized
by the society at large. This question is especially important in social decision
making, since the argument for social intervention in population matters is
much stronger if the costs and benefits are shown to fall heavily on people
not involved in childbearing decisions.
While we provide a general framework for studying the population-economic
interrelationship in developing countries, it must be understood that conditions
vary quite dramatically from place to place. Temperate Soup America is
highly urbanized and has income levels that are high by historical standards.
Most people in Asia live in quite dense agrarian areas where income levels
are very low. Much of Africa is also poor but has low population density and
uses very different agricultural techniques Han Asia. Many Middle Eastern
countries are land-poor but resource-rich with oil. The importance of these
OCR for page 10
10
POPUL4~7ON GROWING AND ECONOMIC DEVELOPMENT
and other differences emerges in our review, but it should be borne in mind
throughout that we are not attempting to provide answers that pertain to all
times and places.
It should also be stressed that although Me future contains many features that
are essentially unknowable, one pertinent feature can be seen in sharp outline
and is almost certain to distinguish the future from the past: populations will
be substantially larger in developing countries than ever before. According
to We United Nation's medium variant projections of 1982, the population of
the developing world will reach 6.8 billion by 2025 an 89 percent increase
over the 1985 level. This is ensured (bamng catastrophes because of the
young age structure of these populations. The population in the middle and
older age groups is certain to grow even if fertility declines are rapid enough
to offset the growing number of reproductive-aged persons and keep the
child population from growing. Even though population grown rates are
declining in many developing counties, they seem almost certain to remain
high relative to growth rates in the developed countries during comparable
periods of their economic history.
Representative terms from entire chapter:
population grown
