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ECON 3508 Text, Chapter 6 Population Growth and Economic Development 2015 Slide 2 I.Initial Overview II. Theories of Population 1.Malthus Theory and Demographic History 2.The Demographic Transformation 3.Microeconomic Theory of Population III. Demographic Experience IV. Note on Demographic Structures V. Implications of Rapid Population Growth for Economic Development VI. Population Policies Agenda Slide 3 Initial Overview: Population Distribution 2015 Slide 4 World Population Distribution, 0001-2050 Year 0001 Year 1500 Year 1960 Year 2050 Slide 5 World Population Distribution by Region, 2010 and 2050 Slide 6 Slide 7 Slide 8 Theorizing on Population 1.Malthus 2.Theory of the Demographic Transition 3.Microeconomic Theory of Fertility First: Definitions: Birth Rate; Death Rate; Rate of Natural Increase; Rate of Population Growth; Net Fertility Rate; Dependency Ratio; Population Pyramid; Population Structure; Demographic Momentum Slide 9 1.Malthus Theory of Population Growth: - People had an barely controllable urge to procreate! [This would not diminish as civilization progressed.] - Therefore population growth would continue at a rapid pace (geometrically) - Agriculture was subject to limited land and fixed technology, and thence diminishing returns. (arithmetical increase in population) - population would expand to the point where the positive checks would operate: Famine, Disease and War. Slide 10 Result: incomes would fall to the starvation level. Life would be nasty, brutish and short (Hobbes phrase) for the vast majority of human beings. Is this or was this in fact the case? Slide 11 World Population Slide 12 An Economic History of the World! (courtesy of G. Clark, A Farewell to Alms) Slide 13 Real Wage Levels, Europe, (G. Clark) Slide 14 Real Output per Worker in England, 1260-1960. (G.Clark) Slide 15 Figure 6.7 The Malthusian Population Trap To be analyzed in class ; See text pp.296-297 Slide 16 Was there any escape from this fate? Slide 17 Malthus Recommendation: Establish Preventative Checks on population: - Moral Restraint, - Delay of marriage How probable were these ? Slide 18 Was Malthus Vision Correct? In general maybe No But only for recent centuries Some parts of the world maybe still caught in the Malthusian Population Trap. Explain Slide 19 Malthus predictions have been unfulfilled for high & medium income countries, and increasingly for developing countries. Why?? Slide 20 Malthus predictions: unfulfilled for high & medium income countries: 1.Technology of contraception was unforeseen; 2. Family Planning; 3. Technological change has postponed the impacts of serious diminishing returns; agricultural output has in fact grown more rapidly than population. Why? 4. Other factors: Declining marriage rates; Abortion; Has the capacity or the urge to procreate declined? Slide 21 5. Social and sociological impacts of Modernization and Urbanization on birth rates were unforeseen: - Higher female labour force participation; - Higher status for women: increases education and reduces child-bearing - Higher costs of raising children in modern urban areas vis--vis agriculture and rural areas - Cultural factors: more Television etc. -Less need for children as family labour and old age security ; Slide 22 Was Malthus Vision Correct for Africa and a few other countries such as Haiti? Are some Countries Approaching a Malthusian Trap? Why or Why Not? Slide 23 Some Comparative Demographic Information CountrySize (square kms.) Popula tion (Millions, 2005) Population Density (persons per square km., 2001) Population Growth Rate (per cent) Fertility Rate ( Children per Woman) Burundi Rwanda Malawi Haiti 28,000 26,000 118,000 27,750 7.9 9.2 13.2 9.6 282 354 112 305 2.2 2.0 2.2 1.7 6.8 5.7 6.1 3.8 Nova Scotia New Brunswick 55,000 73,000 0.913 0.730 17 10 1.47 1.58 Slide 24 Slide 25 II. Theory of the Demographic Transition (See Charts below) Stage 1: High Birth Rate and Death rate Population stability Stage 2: Falling death Rate; Continuing High Birth Rate: Population increasing faster and faster; Stage 3: Death Rate Decline Intensifies; Birth Rate Decline accelerates; Population Growth continues but decelerates Stage 4: Low Death Rate and Low Birth Date: Population Stability To which I would add Stage 5: The Current Reality for High Income Countries? Death Rates Continue at a low level; Birth Rates fall further Population Size Declines Slide 26 www.ldeo.columbia.edu/edu/dees/V1003/imagres/demographic.transition2 Slide 27 Stage 5, Where are the Developing Countries in this Transition? Slide 28 Explaining the Demographic Transition Factors Affecting Death Rates: Factors Affecting Birth Rates: Usefulness of Approach Slide 29 III.The Microeconomic Theory of Fertility Application of basic microeconomic theory to the child-bearing decision. Assumption: children are at least in part a good like others, providing consumption benefits to the parents and serving also as an investment good (providing labour and generating family income) Slide 30 III.The Microeconomic Theory of Fertility Possible economic benefits of additional children: Old-age security Expected income from child labour Non-economic benefits Costs of additional children: Opportunity cost of Mothers time Opportunity and actual costs of educating, & looking after children How to reduce fertility rates? Change the costs and the benefits! How? Slide 31 Figure 6.9 Microeconomic Theory of Fertility: An Illustration OMIT Slide 32 Some Demographic Indicators, Africa Total Fertility Rate 1990-1995 2010-2015 Population Growth Rate 2000-2005; Working Age Population (15-64) Africa6.1 3.62.356.4 Ethiopia7.0 4.82.553.2 Kenya5.6 4.52.650.7 Liberia6.4 4.74.250.7 Mauritius2.3 1.90.869.7 Somalia6.5 6.23.053.1 Uganda6.4 4.83.158.0 Zambia5.0 4.21.956.4 Source: World Bank, World Development Indicators, 2009 Slide 33 Liberia: Basic Demographic Indicators 19902011 Population (million)2.24.1 Population Growth Rates(%) - 2.2% +2.6% Fertility Rates(births per woman) Urban Population (%) 6.4 40.9 4.7 47.8 Dependency Ratios Children and seniors as % of adults, 15-25 92.783.9 Median Age17.518.5 Slide 34 Some Demographic Indicators, Latin America Total Fertility Rate 1990-1995 2010-2015 Population Growth Rate 1990-07 2007-15 Latin America1.7 1.11.5 1.1 Brazil2.8 2.21.5 1.1 Chile2.6 1.91.4 0.2 Costa Rica3.1 2.12.6 2.1 Cuba1.7 1.50.4 -0.1 Guatemala5.6 4.22.4 Haiti5.4 3.81.8 1.7 Uruguay2.5 2.00.4 0.2 Source: World Bank, World Development Indicators, 2009 Slide 35 Some Demographic Indicators, Asia Total Fertility Rate 1990-1995 2010-2015 Population Growth Rate 1990-2007 2007-2015 East Asia South Asia 2.4 1.9 4.2 2.9 1.1 0.7 1.8 1.5 India4.0 2.71.7 1.3 China2.1 1.70.9 0.5 Indonesia3.1 2.21.4 1.0 Iran4.8 2.01.6 1.3 Lebanon3.1 2.21.9 1.0 Malaysia3.7 2.62.3 1.5 Source: World Bank, World Development Indicators, 2009 Slide 36 Why do Fertility Rates Remain High in some Countries, Notably in Africa or in lower-income countries more generally? Slide 37 Fertility Rates, Africa, 1960-2025 Slide 38 Why do Fertility Rates Remain High? Children as family labour force; Intergenerational wealth transfers Children as old age security Rural character of society Lack of contraception and abortion Lagging education for women: age of marriage remains low; and opportunity costs of having children remains low Lower access to electricity and consumer stuff Religion? Slide 39 Slide 40 IV. Demographic Structures: See: http://www.census.gov/population/international /data/idb/informationGateway.php http://www.census.gov/population/international /data/idb/informationGateway.php [Source for diagrams below] Slide 41 Slide 42 Slide 43 Slide 44 Slide 45 Slide 46 Slide 47 Slide 48 Slide 49 Slide 50 The Chinese Case: Explain the Demographic Window of Opportunity Note the prospective Aging Population phenomenon and reductions in the relative size of the labour force Slide 51 V.Implications of Rapid Population Growth for Economic Development Is rapid population growth a genuine problem? If it is a problem, does it solve itself? Slide 52 V.Implications of Rapid Population Growth for Economic Development Is rapid population growth a grnuine problem? If it is a problem, does it solve itself? Population growth: Its Not a Real Problem: The real problem is not population growth but the following, Underdevelopment World resource depletion and environmental destruction Overpopulation as a Deliberately Contrived False Issue? Population Growth as a Desirable Phenomenon ? Slide 53 V.Implications of Rapid Population Growth for Economic Development What are they? Slide 54 V.Implications of Rapid Population Growth for Economic Development 1. Impact on Income per Capita: When population is growing rapidly, economic growth must grow exceed Population Growth Rates to maintain income per capita. i.e. income per capita (Yp.c.) = income / population 2. Effects on Savings Rapid population growth tends to increase family and national consumption, thereby reducing savings Slide 55 3. Investment Rapid population growth requires that large amounts of resources must be devoted to investments, to keep up with population growth. 4. Dependency ratios: Rapid population growth leads to bottom heavy population pyramids, which means the working age population of a country is relatively small as a % of total population., or a high dependency ratio. Slide 56 Slide 57 The Chinese Case: Explain the Demographic Window of Opportunity Note the prospective Aging Population phenomenon and reductions in the relative size of the labour force Slide 58 Slide 59 5. Effects on Employment and Unemployment: Ever-growing cohorts of young people are entering the job market, adding to labour supply. Can the demand for labour demand keep up?. 6. Impacts on Income Distribution: Because family size is highest among the poor, rapid population growth affects income distribution negatively. The numerous children of the poor have less monetary, family or parental investment in their up-bringing They start off in life with minimal inheritances. Slide 60 7. Environmental Impacts Population growth in many places results in poor rural people being pushed into ever more marginal and environmentally-inappropriate farm lands. Urban environmental stresses with rapid urbanization 8. Rapid Urbanization Slide 61 Urbanization in Africa: Some Indicators Country Urban Population, millions 1990 2007 Urban Population % of Total 1990 2007 Rate of Urbanization % per year, 1990-2007 Access to Improved Sanitation, 1990 2007 Ghana 5.7 11.236 494.211 15 Kenya4.3 8.018 213.718 19 Mauritius 0.5 0.544 420.895 Nigeria33.3 70.535 484.422 25 Somalia2.0 3.130 362.7na S. Africa18.3 28.852 602.7 51 Tanzania4.8 10.119 254.429 31 Sub-Saharan Africa, Total 144.3 287.128 364.020 24 Source: World Bank, World Development Indicators, 2009 Table 3.11 Slide 62 Can Rapid Population Growth be Positive? Esther Boserup: Yes (writing in the 1960s) Population growth greater population density innovation & productivity; economies of scale better support for infrastructure Simon: Short term results likely negative Long term results, may be positive Slide 63 Goals and Objectives: Toward a Consensus? Some agreement despite some conflicting views: Rapid population growth may not be the primary cause of lower living levels for many LDCs, but can be an important factor for the lowest- or lower-income countries; Population growth is a consequence as well as a cause of underdevelopment; Slide 64 Goals and Objectives: Toward a Consensus? For quite a few developing countries as well as high income countries fertility rates have fallen below, to or near the 2.2 child per woman sustainability level; Will this happen everywhere? Voluntary decreases in fertility are desirable for those developing countries with still- expanding populations Slide 65 VI. Population Policies Should governments pursue active population control policies ? Should Governments wait for the Demographic Transition to occur automatically? i.e. Does Development lead to Population Stability? This has been controversial, for various reasons Slide 66 Types of Programs: 1.Internal Migration? In the past, a few countries have tried to relieve population pressures in some areas by migration to other under-populated areas (Amazonia in Brazil; the outer islands in Indonesia.) Current Potential ? Will rural to urban migration contribute to a solution? 2. International Migration? The annual population increase in LDCs (about 25 million) is too large to be relieved significantly via international migration. Is this correct? Slide 67 3. Constructing a policy environment promoting greater desire for smaller families Governments can change the environment in which families decide to have children - by designing programs and policies that will induce parents to choose to have fewer children and reduce family size. Slide 68 Of special importance are policies enhancing the status of women promoting education in general and especially for girls promoting breast-feeding, reducing child labour promoting higher labour force participation rates for women improving social security and pensions (so fewer children are necessary to look after their aged parents) Also: - promoting contraceptive use? - legalizing abortion ? Slide 69 4. Specific Family Planning Programs: Coercive Approaches China: One child policy, with enforcement; rural exceptions, two in some cases male child biases Major success in reducing the birth rate India: Indira Gandhi Semi-coercive male sterilization (with reward of transistor radio) Only modest success in reducing the birth rate Politically disastrous Slide 70 Note: Male-child bias and selective abortion in India, China and some other S.E. Asian countries: Slide 71 5. Specific Family Planning Programs: Promote Family Planning If families want large families in any case (for family labour purposes, for old-age security, etc.) - they may not be interested in family planning facilities even if they are available. If families want smaller families due to the types of factors mentioned earleir: -then making family planning facilities available can have an important impact. - Integrate family planning with maternal and early child care