Economic Development in Asia

Module 9 – Population
By (Dowling, Valenzuela and Brux)
 Population Growth
World population has followed an ‘S’ shaped pattern of
growth over time;

In antiquity, population growth was very slow.

World population growth accelerated from the 18th

century through to the 19th century due to advances in
medicine.

It continues to grow strongly today.

(Dowling, Valenzuela and Brux)
 http://www.ecologyessays.com/wp-
content/uploads/2017/11/clip_image002-11.jpg
S-shaped growth curve(sigmoid growth curve) A pattern of growth in
which, in a new environment, the population density of an organism
increases slowly initially,

in a positive acceleration phase; then increases rapidly, approaching

an exponential growth rate as in the J-shaped curve; but then
declines in a negative acceleration phase until at zero growth rate
the population stabilizes.

https://www.encyclopedia.com/earth-and-environment/ecology-and-
environmentalism/environmental-studies/s-shaped-growth-curve#:~:text
World Population – 1950 to 2050
 Population Growth
• The strong growth in world population in more recent
times (beginning from the mid-1900s) is mainly due to
high growth rates in developing countries

• Asian countries contribute significantly to the sustained

boom in the world’s population today (Dowling, Valenzuela and Brux)
 Population Growth:
Some Basic Concepts
Birth rate = number of births per thousand people per year.

– Ex. 26 new born babies per thousand people during that year in Bangladesh

Death rate = refer to number of deaths per thousand people per

year.

– Ex. 8 deaths per thousand people during that year in Bangladesh

Population growth rate = birth rate – death rate

- Net addition to the population over a certain time period

(Dowling, Valenzuela and Brux)

 Population Growth:
Some Basic Concepts
• Among Asian economies, Pakistan, Malaysia and the
Philippines stand out as having the highest population
growth rates in 2001 (see Table 9.1)

• Japan, Hong Kong, PRC, Thailand and Singapore are

the countries with the lowest population growth rates –
around 1 percent per year or less

• (Dowling, Valenzuela and Brux)

 Population Growth:
Some Basic Concepts
• Age distributions show what proportion of
the population is in certain age categories

• Asia and Latin America have very similar

age distributions. Europe and North
America also have similar age distributions

In Asia (28%) and Latin America (30%),

proportion under 15 is about one third of the
population. This group is much smaller in
Europe (16) and North America (21) –
around one fifth. (Table 9.2) (Dowling,
Valenzuela and Brux)
Age distribution, also called Age Composition, in population studies,
the proportionate numbers of persons in successive age categories in
a given population. Age distributions differ among countries mainly
because of differences in the levels and trends
of fertility. https://www.britannica.com/science/age-distribution

The age structure of a population is the distribution of people of

various ages. It is a useful tool for social scientists, public health and
health care experts, policy analysts, and policy-makers because it
illustrates population trends like rates of births and deaths.

https://www.thoughtco.com/age-structure-definition-3026043
https://www.populationpyramid.net/world
/1990/
https://www.indexmundi.com/world/age_str
ucture.html
The age structure of a population affects a nation's key
socioeconomic issues.

Countries with young populations (high percentage under age 15)

need to invest more in schools, while countries with older populations
(high percentage ages 65 and over) need to invest more in the
health sector.

The age structure can also be used to help predict potential political
issues.

For example, the rapid growth of a young adult population unable to

find employment can lead to unrest. (Dowling, Valenzuela and Brux)
 Population Distribution:
Some Basic Concepts
Life expectancy rate is the average number of years a person is expected
to live.

Total fertility rate (TFR) is the total number of children a woman is

expected to have over her lifetime.

Infant mortality rate (IMR) pertains to the number of infant deaths per
1000 live births.

TFR and population growth rates are positively correlated

Life expectancy and TFR are generally inversely related (Dowling,

Valenzuela and Brux)
 Fertility transition in South and Southeast Asia –
( between 1960 and 1999, - there is an
inverse relationship between income per capita and total fertility
rates in each of these countries)

This paper uses a combination of economic reasoning with empirical

evidence to review the fertility decline experienced in South,
Southeast, and East Asia. The fertility transition in this region has
roughly coincided with a period of rapid economic growth. There
has also been an increase in urbanization levels, greater female
education and labour force participation, and demand for skilled
labour. The paper focuses on the manner in which these macro-level
changes have raised the production cost of children as assets and
changed parental perception of children from being economic
assets to liabilities. Where these factors have not come into play, such
as in India, demographic change has not materialized, at least not to
the extent of the other countries in this sample.
https://www.jstor.org/stable/25773811?seq=1
Life expectancy and TFR are generally inversely related

One of the benefits of postindustrial life is that it is largely free of the

fear of early mortality. However, a curious side-effect of this
confidence seems to be a dramatic reduction in birthrates. Writing in
the journal Science, an anthropology professor draws a clear
correlation between increased life expectancy and lower fertility in
cities.
https://www.sciencedaily.com/releases/2008/02/080215210722.htm
Societies develop along a predictable continuum as they evolve from unindustrialized to
postindustrial.

Demographic transition theory (Caldwell and Caldwell 2006) suggests that future
population growth will develop along a predictable four- or five-stage model.
https://socialsci.libretexts.org/Bookshelves/Sociology/Book%3A_Sociology_(Boundless)/17%3A_Populatio
n_and_Urbanization/17.02%3A_Population_Growth/17.2E%3A_Demographic_Transition_Theory

The demographic transition is the change in the human condition from high mortality and
high fertility to low mortality and low fertility. Death is now less capricious and most people
live long lives. Women no longer average six or seven births but in most economically
advanced countries less than two — insufficient to replenish national populations. Most of
this dramatic social change has occurred over the last 150 years. But the question
remains as to whether this is a completely new phenomenon or whether there has long
been an inherent tendency in the human race to maximize survival and to control family
size. https://www.springer.com/gp/book/9781402043734
 Theory of Demographic Transition

• Stage 1: High birth and death rates

• Stage 2: High birth rates and falling death rates

• Stage 3: Low birth and death rates

• Thus, population growth is high in the second stage, and
lower in the first and third stages

• (Dowling, Valenzuela and Brux)

 Theory of Demographic
•
Transition
The demographic transition in early Europe was slow

• In general, demographic transition in the now industrialized countries took

many years, even centuries, to occur.

• Why?

• Slow response of birth rates to changes in death rates

• Slow changes in social norms, particularly in traditional societies

• Inertia from movement from triangular distribution of population to

a more rectangular distribution of population (Dowling, Valenzuela and
Brux)
 Demographic transition in Europe

STAGE ONE is associated with pre Modern times, and is characterized by a balance between birth
rates and death rates. This situation was true of all human populations up until the late 18th.C. when the
balance was broken in western Europe.

Stage 2 – The stage when the population exploded as a result of declining death rate, began in the late
18th century in northwestern Europe and spread over in the next 100 years to the south and east.
Reduction in the death rates resulted from a lower incidence of malnutrition and starvation owing to
improved food supply from the more productive agriculture sector.

– New food crops were introduce – increased quantity of supply

– Growing scientific knowledge of causes of diseases – medical discoveries, … improvement in

water supply, sewage and other public-health systems

Stage 3 – general decline in birth rates that moves the population into stage 3 did not begin in Europe
until the late 19th century. - factors : urbanization, increase female literacy and employment and
advances in birth control, custom of marrying relatively later in life. Early marriage was not the
custom in Europe.

(Dowling, Valenzuela and Brux)

Crude birth rate, crude death rate
https://philippines.unfpa.org/sites/default/files/pub-
pdf/Demographic%20Sweet%20Spot%20and%20Dividend%20in%20the%20%20Philippines_FINAL_DRA
FT_Ver4_OCT2015-withcover_0.pdf
https://pages.uwc.edu/keith.montgomery/D
emotrans/demtran.htm
The United Nations has classified Estonia, Latvia and Lithuania
as Northern European countries instead of Eastern European. *
According to the United Nations, Northern European countries are
Denmark, Estonia, Finland, Iceland, Ireland, Latvia, Lithuania, Norway,
Sweden and the United Kingdom. (Dowling, Valenzuela and Brux)
 Philippines

Philippines - In 1990 the economy continued to experience

difficulties, a situation exacerbated by several natural disasters,
and growth declined to 3 percent. The structure of
the economy evolved slowly over time. (Dowling, Valenzuela and Brux)
https://geographyfieldwork.com/Demo
graphicTransition.htm
Stage 1 - High Fluctuating
Birth Rate and Death rate are both high. Population growth is slow and fluctuating.
Reasons
Birth Rate is high as a result of:
Lack of family planning
High Infant Mortality Rate: putting babies in the 'bank'
Need for workers in agriculture
Religious beliefs
Children as economic assets

Death Rate is high because of:

High levels of disease
Famine
Lack of clean water and sanitation
Lack of health care
War
Competition for food from predators such as rats
Lack of education
Typical of Britain in the 18th century and the Least Economically Developed Countries (LEDC's) today.
Stage 1 - High Fluctuating
Birth Rate and Death rate are both high. Population growth is slow and fluctuating.
Reasons
Birth Rate is high as a result of:
Lack of family planning
High Infant Mortality Rate: putting babies in the 'bank'
Need for workers in agriculture
Religious beliefs
Children as economic assets

Death Rate is high because of:

High levels of disease
Famine
Lack of clean water and sanitation
Lack of health care
War
Competition for food from predators such as rats
Lack of education

Typical of Britain in the 18th century and the Least Economically Developed Countries (LEDC's) today.
Stage 2 - Early Expanding
Birth Rate remains high. Death Rate is falling.
Population begins to rise steadily.
Reasons
Death Rate is falling as a result of:
•Improved health care (e.g. Smallpox Vaccine)
•Improved Hygiene (Water for drinking boiled)
•Improved sanitation
•Improved food production and storage
•Improved transport for food
•Decreased Infant Mortality Rates

Typical of Britain in 19th century; Bangladesh;

Nigeria
Stage 3 - Late Expanding

Birth Rate starts to fall. Death Rate continues to fall. Population rising.

Reasons

Family planning available

Lower Infant Mortality Rate

Increased mechanization reduces need for workers

Increased standard of living

Changing status of women

Typical of Britain in late 19th and early 20th century; China; Brazil
Stage 4 - Low Fluctuating

Birth Rate and Death Rate both low. Population steady.

Typical of USA; Sweden; Japan; Britain

PH to miss demographic ‘sweet spot’ –
study
The Philippines is not yet reaping the benefits of having a young
population because of persistently high fertility rates in the country,
contrary to recent claims that the economy is already in the
demographic “sweet spot,” a new National Economic and
Development Authority (NEDA) study revealed.

sweet spot (plural sweet spots) Any place that is optimal for obtaining
a certain desirable effect or result. (figuratively) Any set of conditions
that is optimal for obtaining a certain desirable effect or result.

https://philippines.unfpa.org/sites/default/files/pub-
pdf/Demographicf
 Theory of Demographic
Transition
• In the developing countries of today, demographic transition is
seen to occur more rapidly. Developing countries of today
remained largely agrarian long after Europe and America had,
and this delayed entry into stage 2.

• Stage 2 is responsible for the dramatic increase in world

population
• in the last two hundred years

• (Dowling, Valenzuela and Brux)

 Developing countries

The largest improvement in child mortality rates occurred in countries

where female literacy had increase the most.

Birth rates have remained high in countries even to this date, the
main reason being that the social and behavioral chances necessary
to effect a fertility change often run in conflict with tradition and
religious values.

Associated with large number of children with higher status or strong

preference for sons over daughter continue to drive birth rates . The
use of artificial birth control was still met with strong resistance in
many rural areas. (Dowling, Valenzuela and Brux)
 Economics of Fertility
In a traditional supply-demand framework, the decision to have a
child is treated like the decision to purchase any good

As in Fig. 9.6, the demand for children will increase if the cost of
children declines, and fall if the cost of children goes up

The cost of children includes all opportunity costs, that is, all
direct costs (e.g. food, housing, clothing, school fees) and all indirect
costs (e.g. income foregone by the career-parent)

The demand curve for children is assumed to be downward sloping

(Dowling, Valenzuela and Brux)

 Economics of Fertility
In Becker’s microeconomic model of fertility (Fig
9.7), demand for children are positively related to
household income and wealth; and negatively related
to the value or price of children relative to other goods.
(including the opportunity cost) .

More children imply having less material goods to

enjoy, and having less children enables one to devote
more resources to material goods.

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 of other
goods changes positively). (Dowling, Valenzuela and
Brux)
 Economics of Fertility
In 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. (Dowling,
Valenzuela and Brux)
 Economics of Fertility
A substitution effect occurs between the
quality and quantity of children, where an
increase in the price of one will cause an
increase in the demand for the other.

An increase in the cost of schooling (measure of

quality) will lead to an increase in the number of
children demanded. Conversely, a fall in school
tuition fees will lead to a fall in the number of
children demanded. That is fewer “quality
“children will be substituted for more children of
lower quality (Dowling, Valenzuela and Brux)
The main argument in Becker and Lewis is that even if child quantity
and quality enter separately in utility, they are still closely connected
through the household’s budget constraint.

Child quality is modeled as goods spending on each child. This

implies that if child quality increases (more spending per child),
increasing quantity (more children) becomes more expensive.

Conversely, if quantity increases, increasing quality also becomes

more costly, because the spending on quality accrues for each
child.

https://faculty.wcas.northwestern.edu/~mdo738/research/Doepke_J
ODE_15.pdf
All families in a given market face the same prices regardless of their
income. ... Within the quality—quantity model, expenditures on
children tend to increase with income, implying that children are
normal goods, but most of the increase is due to rising child quality
while fertility does not vary strongly with income. (Dowling, Valenzuela
and Brux)
 Economics of Fertility
• In poorer countries, the opportunity costs are deemed low and
the perceived benefits higher. This follows from the fact that
children stay in school for less number of years, and often start to
earn money or help in the farm at very young ages.

• In richer countries, the anticipated cost of having children is

higher since more education is the norm and children are often not
allowed to work (legally) until age 15, at the earliest. (Dowling,
Valenzuela and Brux)
 Economics of Fertility
• Why is there high demand for children in developing
countries?

• Old age support: children are relied on to support parents in

their old age.

•  developing and/or strengthening the country’s social

security system can serve to lower demand for larger
families

• low opportunity costs for women.

•  women’s education and job opportunities may be a

powerful policy instrument for lowering fertility rates (Dowling,
Valenzuela and Brux)
 Economics of Fertility:
Empirical Results
• Micro-studies show that female education
beyond four years of elementary education
have a strong negative effect on fertility

• Studies also show that when the labor force

participation rate of women goes up, fertility
falls

• When the difference between child wages and

mother’s wages goes up, fertility falls (Dowling,
Valenzuela and Brux)
 The Asian Experience
• For economies in the Asian region, dramatic changes in population
levels began to occur only from the early 1900s. Population
exploded just after WWII , particularly in the NIEs and the PRC.

• Beginning in the mid-1960s, population growth in the NIEs began to

fall dramatically at the same time that economic growth was
accelerating

• (Dowling, Valenzuela and Brux)

 The Asian Experience
• By the 1990s, many countries in Asia had completed the
demographic transition

• Countries with low fertility:

• PRC, NIEs, Sri Lanka & Thailand

• Countries with medium fertility:

• India, Indonesia, Malaysia, Philippines,
• Vietnam

• Countries with high fertility:

• Bangladesh, Cambodia, Laos,
• Nepal and Papua New Guinea
• (Dowling, Valenzuela and Brux)
 Policies to Reduce
Population Growth in Asia
• Thailand, Malaysia and Sri Lanka devoted
most resources to contraceptive use –
supplying information and subsidizing the
cost.

• Other countries, such as India and PRC,

used incentive payments.

• Remark: In the Philippines, religious beliefs

have constrained the use of contraceptives.
As a result, population growth have remained
relatively rapid. (Dowling, Valenzuela and
India Tries Using Cash Bonuses to Slow Birthrates

https://www.nytimes.com/2010/08/22/world/asia/22india.html
 Policies to Reduce
Population Growth
Women’s education has also played an important role
in lowering fertility

Coercion has been used in India and PRC

(Dowling, Valenzuela and Brux)

 Policies to Reduce
Population Growth
One child per family policy has been in force in China for over 20
years.

Families with more than one child face steep penalties, including
loss of government subsidies and loss of salary.

Policy raises ethical considerations,

particularly since there is a preference
for boys.

This has led to infanticide and abortion of

girl infants and fetuses.

Preference for males in India has led to

similar problems
 Prospects for the Future
The “demographic dividend” is a term
coined to describe the demographic
transition when the working population
is growing faster than the child and
adult populations combined.

This means that the dependency rate

(non-working population over
working population) is falling.
(Dowling, Valenzuela and Brux)
What Is Demographic Dividend?

Demographic dividend refers to the growth in an economy that is the

result of a change in the age structure of a country’s population. The
change in age structure is typically brought on by a decline in fertility
and mortality rates.

https://www.investopedia.com/terms/d/demographic-
dividend.asp#:~:text=Demographic%20dividend%20refers%20to%20t
he,in%20fertility%20and%20mortality%20rates.
 •“Demographic Dividend”
• This demographic dividend trend is most evident in
East Asia, Thailand and Indonesia

• It is not as strong in South Asia where population growth

is still high

• (Dowling, Valenzuela and Brux)

 “Demographic Dividend”
• The demographic dividend is accentuated by an increase in the labor
force participation among women

• As populations age, the demographic dividend dissipates

• Population age structures will begin to look like an inverted triangle

• This will take some time – Europe is still much “older” than Asia with the
exception of Japan (see Table 8.8)
 Issues in Population Growth &
Control
• Many questions to be answered such as “Which population
control programs are most effective?” and “How should
resources be allocated to different programs?”

• Although we know that raising women’s educational attainment

works to reduce fertility and that some family planning interventions
work, a better data base for analyzing these population issues
needs to be developed.

• (Dowling, Valenzuela and Brux)

 Summary
• Basic concepts of population, and its effects
on economic development

• Economic model of fertility

• Population growth and demographic

transition in Asia

• Policies implemented to reduce population

growth

• (Dowling, Valenzuela and Brux)