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Economic Consequences of Population Change: Focus on Developing Countries

Pessimistic or Alarmist Theory
–Malthus - 19th century, Coale & Hoover (1958), Paul Ehrlich (Population Bomb), Meadows (Limits to Growth) – 1960s and 1970s. Focus on population policy & fixed, non-renewable resources.

Optimistic Theory – Ester Boserup – 1960s – 70s (agric. Intensification)
–Julian Simon – 1970s - 80s (human capital) –influencial in Reagan’s anti-family planning policies

Neutralist or Revisionist Theory
–Allen Kelley/Ron Lee/Simon Kuznets/Nat’l Academy of Sciences 1986 Report – mid 1980s to the present. Focus on longer-term, policy feedbacks, mixed impacts, renewable resources & property rights. –Population Matters by Nancy Birdsall et al – 1990s (somewhat more pessimistic as surveys confirm overall negative impact of population growth on per capita output growth across a large # of countries)

hunger and famine •Growing population leads to capital or resource “shallowing” – lower capital/labor ratios.Economic Consequences of Population Change: Focus on Developing Countries Pessimists –“law of diminishing returns” labor food •With land held fixed. lowering economic growth rates .. shelter. postpones demographic transition •Growing population leads to investment diversion from physical infrastructure to basic needs – education. increased population (labor) eventually leads to diminishing output – food. thus. reduces savings. per capita. health. reduced per capita output and lower economic growth rates •Age-dependency – high pop growth rate raises requirements for household consumption.

Economic Consequences of Population Change: Focus on Developing Countries Optimists –Between 1970 and 2000. labor abundance and relative land or capital scarcity lead to: •Increase stock of human ingenuity/human capital •Technological progress (Boserup – agricultural intensification. e. Hayami & Ruttan . World Population doubled from 3 to 6 billion and per capita incomes increased by 2/3 –Why? Population growth. tractors – scarce factor?. innovations reduce scarcities. soil fertility – scarce factor?. precision irrigation – scarce factor? •Economies of scale – for investment in infrastructure and research .Induced Innovation Model) IIM Changes in factor scarcities induce changes in factor prices that lead to innovations to reduce costs. improved seeds. gas efficient cars – scarce factor?.g.

conclude: “We arrive at the qualified judgment: rapid population growth. and its associated demographic components.2001 . Neutralists or Revisionists – current thinking Empirical studies from 1980s. over long spans of time.” Allen Kelley –No statistically significant clear relationship between population growth and economic growth.Economic Consequences of Population Change: Focus on Developing Countries Neutralists or Revisionists – 1980s “Worldwide. Kelley and Schmidt. appears to have exerted a fairly strong. adverse effect on the pace of economic growth over the period 1960-1995. Population Matters . published in 1990s. and over recent decades. diminishing returns have been more than offset by countervailing forces.

–Property rights are poorly defined – “Tragedy of the Commons”.Economic Consequences of Population Change: Focus on Developing Countries Current Thinking – Bottom Line High/rapid population growth rates will adversely affect economic growth.. per capita income.g. Latin America Enabling policies…. Sahel.particularly the demographic opportunity presented by low mortality. Nepal. agriculture and job creation. poverty and health and education of children. Population growth . Examples of East Asia vs. –Government policies are biased against labor such as low investment in education.? . family planning. Philippines). skewed land distribution. high initial but curtailing fertility. and high proportion of workers to dependents [name this!] will accelerate economic growth given functioning markets and enabling policies. where: –Livelihoods depend on fragile or degraded natural resources (e. public health.

Population Matters.Economic Consequences of Population Change: Focus on Developing Countries “As such. slower population growth simply postpones the day of reckoning. it may not be their most important cause.” -Allen Kelley. when the adverse consequences of ill-advised economic policies are tallied. while population growth “exacerbates” some problems. It therefore represents misplaced emphasis to confront such problems with population policies because without a change in economic policies. 2001 Discuss .

2. nutrition. Together. Large negative impact on distribution/equity (disproportionately reduced purchasing power + higher dependency ratio for poor households). 4.Economic Consequences of Population Change: Focus on Developing Countries Fertility. important than ‘sib crowding’ in their effects on poor households’ conversion efficiency. large negative impact on poverty.g. . “Are ‘economies of scale in consumption’ more. Plus negative impact on “capabilities and well-being” of poor via reduced access to education. conversion of given income into capabilities and welfare). Growth. Large negative impact on economic growth. or less. Poverty and Welfare (Eastwood and Lipton) What are the effects of high fertility (delayed demographic transition) on poverty? Empirical analysis across 45 developing and transitional countries: 1. 3.” (e. health.

4. . and in further oppression/ disempowerment of women. Sources of child labor & remittance income later on. Growth. leading to continued high fertility. – – – Has high cost in health and nutrition of women and children. 3. greatly increases risk of “churning down” from near poverty towards ultrapoverty” among transient poor. especially girls. Low child-rearing cost. reduced fertility can reduce the damage from given levels of poverty. Infant/child mortality remains high. Evidence shows high fertility. 2. in educational opportunities for older siblings.Economic Consequences of Population Change: Focus on Developing Countries Fertility. Poverty and Family (Eastwood and Lipton) Reasons the poor rationally attach high value to the benefits from many children: 1. nearly spaced births in poor families…. Social security/safety net for elderly poor. Whereas. esp. low opportunity cost of women’s time.

Fertility decline Economic growth Poverty High fertility Slow growth High inequity High poverty .

Eastwood and Lipton Discuss . the poor. large families. but also a consequence of poverty – probably due largely to constraints on. high child-adult ratios and near spacing of siblings – may be not only a cause of poverty through the above mechanisms.Economic Consequences of Population Change: Focus on Developing Countries “Mutual causation means that rapid population growth – with its usual accompaniments of early first births. and rational behavior by.” .

2001 Discuss .Economic Consequences of Population Change: Focus on Developing Countries “More than any factor. the strength and nature of “feedbacks” attenuating or overturning initial impacts of population growth represents a major remaining area of contention in the population debate.” .Allen Kelley.

Economic Consequences of Population Change: Focus on Developing Countries …. 2001 Discuss .” Kelley and Schmidt. fertility and mortality as well as larger populations and higher densities have all spurred growth. Population Matters.Declining population growth.

Economic Consequences of Population Change: Focus on Developing Countries “ The essence of the population problem – if there is a problem – is that individual decisions with respect to demographic acts do not add up to the recognized common good. that choices at the individual level are not congruent with the collective interest. (Demeny 1986. from Kelley) Discuss .

Discuss .Economic Consequences of Population Change: Focus on Developing Countries “Do the population-agricultural development links in poor countries offer good grounds for population optimism?” -Nadia Cuffaro. or may lead to land concentration and degradation of common property management rules (open access). land productivity. Declining real rural wages with population growth and lower labor productivity.incentives to invest in land improvements. p. purchasing power. -Population growth and agricultural incomes -Entitlement over resources. Figure 2 on labor/land ratios vs. Adequate food stocks does not ensure access to food. -Population growth and property rights on land . Boserup/ Agricultural intensification works for increasing land productivity (except for some countries in SSA) but not for labor productivity. Figure 1 on labor/land ratios vs. labor productivity.Land scarcity may lead to privatization . food. 1152 -Population pressure on land -IIM.

Capital/resource shallowing and diversion –Pessimists – Population growth leads to lower per capita output and growth. where former values large domestic markets and latter less so. Little evidence of diversion from investment in physical infrastructure to basic needs – health. –Neutralists – Studies show savings and economic growth impacts are negative but modest in size. e.Asia. outward looking trade policies. education. Optimists & Neutralists Compared Example 1 – Economies of Scale –Optimists – Population growth creates economies of scale for investment in infrastructure and domestic consumer demand. –Neutralists – Depends upon availability of K to invest. upon government priorities. .g. Also depends on inward vs. disburse rural populations in SSA vs.Economic Consequences of Population Change: Focus on Developing Countries Pessimists. dense populations in S. and upon rural population densities. Example 2 . unless supported by increased growth and income.