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Conclusion
We have examined a diverse set of mechanisms through which population
growth affects economic development. This chapter opens with a review
and synthesis of our conclusions on the expected effects of a decline in
the population grown rate that works through these mechanisms. It then
proceeds to a discussion of how environmental and institutional contexts
mediate the actions of these mechanisms a major theme of this report. The
final section discusses policy implications.
EFFECTS OF SLOWER POPULATION GROWTH
ON ECONOMIC DEVELOPMENT
Following the framework set up in the Introduction, we consider how
conditions are likely to differ if a country, through a government program,
were to achieve and maintain lower fertilibr than it would otherwise have
experienced (with constant mortality). As noted above, such a decline
would produce at every subsequent point slower population growth, smaller
population size, lower population density, and an older age structure. Working
through these direct demographic effects, a reduced level of fertility is also
likely to produce several other changes.
Slower Population Growth and Exhaustible Resources
Globally slower population growth may delay the time at which a particular
stage of depletion of an exhaustible resource is reached. This effect does
not necessarily increase the number of people who will have access to
85
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86
POPUW7ON GROWTH AND ECONOMIC DEVELOPMENT
that resource; rather, it moves the consumption stream further from the
present. But it is important to recognize that no single exhaustible resource
is essential or irreplaceable; it is valued for its economic contribution,
not for its own sake. As easily accessible reserves of natural resources
are exhausted, the real cost of extraction, and hence the resource pace,
rises. This price rise should stimulate the search for alternative materials.
Historically, these adaptive strategies have been extremely successful. To
the extent that slower population growth results in a slower rate of resource
depletion, these adaptive strategies will also occur more slowly. Hence, it
seems unlikely that slower population growth will allow a larger number of
people, over future generations, to enjoy a given standard of living thanks
to lower natural resource prices.
Slower Population Growth and Renewable Resources
Slower population growth, in some cases nationally and in others globally,
is likely to lead to a reduced rate of degradation of renewable common-
property resources such as air, water, and species of plants and animals.
If significant amounts of land and forest resources are held in common in
a country, they will also tend to be degraded less rapidly. These effects
are likely to be more evident in the short run-in say, a decade or two.
In the long run, population growth itself might create greater incentives to
develop the social and political institutions necessary for conservation. Such
incentives are irrelevant, of course, if the resource has become depleted
beyond the point of restoration. Moreover, changes are costly and the need
to bear such costs is itself a consequence of population growth.
Slower Population Growth, Health, and Education
Lower fertility is likely to raise average per child levels of household
expenditure on health and education and thereby improve levels of child
health and education. By themselves, such changes should result in a
more productive labor force. Superimposed on these within-family effects
is the possibility that lower fertility will alter the distribution of children
among families by income class. If fertility declines are largest among high-
income families, average levels of schooling and health among children
could actually decrease despite an absolute improvement in measures of
well-being among poor families. But if family planning programs result in
larger fertilibr reductions among poorer families, the within-family gains will
be accentuated at the societal level.
Slower population growth is likely to raise public expenditures on schooling
per school-aged child. Evidence from the educational literature suggests that
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CONCLUSION
87
such a result may lead to some improvement in educational quality as
measured, for example, by test scores. We do not find convincing evidence
that lower fertility will result in faster growth in enrollment ratios (apart
from within-family effects).
Slower Population Growth and Income
Unless a fertility decline is concentrated among high-income families, it
is likely to lead to a reduction in income disparities among social classes.
This is primarily a long-term effect (although a variety of short-tenn effects
are also possible) and wows primarily by raising payments to labor relative
to payments to capital and raising payments to unskilled labor relative to
skilled labor.
We have found little evidence that the aggregate savings rate depends on
growth rates or the age structure of a population. Assuming that the savings
rate remains unchanged, a fertility decline will lead to an increase in the
ratio of capital to labor and, along with it, labor productivity, wages, and
per capita income. The increase in the capitalllabor ratio will reduce rates
of ran to capital and reduce payments to owners of capital.
In the short run, more land per agricultural worker is likely to raise labor
productivity in agriculture. Long-term effects may differ because of changes
in the organization and techniques of production that are induced by the
relative change in factor availability. These effects may reduce the short-
term gains of slower growth.
Slower Population Growth and Cities
Win slower population growth, cities grow more slowly, both in the short
and long run. Natural increase (~e excess of birds over deaths) accounts
for about 60 percent of city growth today in developing countnes, and it
is reasonable to expect that a decline in fertilizer levels will entail a decline
in rates of natural increase in cities. Such changes reduce the demand for
urban infras~uctural investments while eventually reducing the revenue base
that supports such investments. The evidence on Chewer reduced national
fertility levels reduce the rate of rural-url~an migration, and hence reduce He
rate of grown of He proportion of He population that is urban, is unclear.
A reduced rate of urban labor force grown in developing countries (most
of which is a product of natural increase among the urban population) is
not likely to be systematically accompanied by corresponding reductions in
joblessness. However, it may increase He proportion of He urban labor
force working in high-wage jobs in the modern sector of the economy and
reduce He proportion working in the low-wage, infonnal sector.
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POP CLARION GROWN AND ECONOMIC DEVEL()PMENT
ENVIRONMENTAL AND INSTITUTIONAL CONTEXTS
It is clear that the economic advantages of fertility reduction will vary
from place to place. Environmental and climatic conditions clearly shape the
local impact of population growth. In countries such as Bangladesh, where
ratios of agricultural labor to arable land are already very high, there is
a presumptive case that labor productivity in agriculture will decline more
rapidly with added labor than if ratios were low. Nonagricultural production
possibilities, and the opportunities for trade, also affect the importance of
these natural features.
Important as these natural features may be in conditioning the economic
response to population growth, Hey appear to be far less important than
conditions created by people. Many of the initial effects of population growth
are negative, but they can be ameliorated or even reversed in the long run if
institutional adjustment mechanisms are in place. Among the most important
of such mechanisms are property rights in land and properly functioning
markets for labor, capital, and goods. Such markets permit the initial effects
of population growth to be registered in the fonn of price changes, which
can trigger a variety of adjustments, including the introduction of other
factors of production that have become more valuable as a result of the
increase in population; a search for substitutes for increasingly scarce factors
of production; intensified research to find production processes better suited
to the new conditions; reallocation of resources toward sectors (e.g., food
production) in which demand may be most responsive to population change;
and so on. Of course, these adjustments may entail real costs, even when
these are minimized by efficient institutions. When markets function very
poorly, or do not exist, adjustments to population change are likely to be
slower or to not occur at all. These are not merely theoretical notions. Some
part of the current distress in Ethiopia, of the loss of 30 million lives during
China's '~great leap forward" (Ashton et al., 1984), and of the problems of
food production in tropical Africa during the 1970s was due to very badly
functioning markets combined with rapid population grown.
Even efficient markets do not guarantee desirable outcomes. The famines
of 1942-1943 in Bengal and of 1973-1974 in Bangladesh seem to have been
principally a result of deterioration in the income distribution-in particular,
the loss of purchasing power by unskilled wage laborers-combined with
speculative hoarding in food markets (See, 1981~. This kind of outcome
underscores the role of the distribution of wealth and of human capital as
a fundamental determinant of poverty.
The potential value of government intervention for market regulation and
for purposes of income distribution is widely acknowledged. Govemment
policies in a variety of arenas clearly play important roles in mediating Me
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89
impact of population growth. Effects of population growth on educational
enrollment and quality, on rates of exploitation of common property resources,
on the development of social and economic infrastructure, on urbanization,
and on research activities are all heavily dependent on existing government
policies and their adaptiveness to changed conditions.
In short, the effects of rapid population growth are likely to be conditioned
by the quality of markets, the nature of government policies, and features
of the natural environment. Since the effects are so dependent on these
conditions, a reliable assessment of many of the net effects of population
growth can best be carried out at the national level, although some issues
concerning the environment and resources can only be analyzed globally.
It is of interest to briefly examine and contrast Me interplay between
population grown and institutions in two important areas, China and tropical
Africa. China, with its extremely low arable landlpopulation ratio, is often
seen as greatly in need of population control policies in order to boost per
capita agricultural income; this view is reflected in the government's severe
disincentives for large families. Although it is possible Mat the resultant
decline in the population growth rate has somewhat increased per capita
agricultural income, these gains are probably small compared with those
from agricultural reforms instituted in 1979. Over the period 1979-1984,
the real per capita income of Me rural population increased 15 percent
annually, and total agricultural output increased 51 percent (U.S. Department
of Agriculture, 1985; Li, 1985~.
In contrast, tropical Africa has a comparatively high land/population ratio,
but appears to be particularly vulnerable to problems induced by population
grown. Political independence and He forces of modernization came to
tropical Africa later than to other areas. Although some countries in other
regions also share these traits, markets are generally least well developed
in tropical Africa, political factionalism is greatest, and human resource
potential is least developed. In parts of Africa, sparseness of population
itself may be responsible for some of these difficulties, but this explanation
is implausible for such countries as Ethiopia or Kenya Obviously, slowing
population growth is not a substitute for solving other problems, but it can
reduce some of the more extreme manifestations of these problems while
they are being solved.
SUMMARY
Population growth can, and often does, trigger market reactions. Many
of these reactions move a country in a '`modem" direction, that is, toward
better~efined properq rights, larger integrated marked, more agocultum1
research, and so on. However, He market-induced adjustments to higher
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go
POP ULA77ON GROWTH AND ECONOMIC DEVELOPMENT
growth do not appear to be large enough to offset the negative effects on per
capita income of higher ratios of labor to other factors of production. Nor
is population growth necessary to achieve these forms of modernization: the
fact that rates of return to agricultural research are already extremely high-in
bow developing and developed countnes-implies Mat Here is little need for
additional stimulus from population growth; the evolution of property rights
is stimulated by many factors~population grown being only one among Rem
(Binswanger and Pingali, 1984~; and the scope of many markets can be
enlarged by removing made barriers. That these over devices exist does not
imply a minimal role for population grown, but it does caution against
advocacy of growth as the only way to achieve them.
On balance, we reach the qualitative conclusion Cat slower population
growth would be beneficial to economic development for most developing
counties. A rigorous quantitative assessment of these benefits is difficult
and context dependent. Since we have stressed the role of slower population
growth in raising per capita human and physical capital, it is instructive to
use as a benchmark the effects of changes in the ratio of physical capital per
person. A simple mode} suggests that the effect is comparatively modest.
Using a typical labor coefficient of 0.5 in estimated production functions,
a 1 percent reduction in the me of labor force growth would boost the
grown of per capita income by 0.5 percent per year. ~us, after 30 years,
a 1 percent reduction in the annual rate of population grown (produced,
say, by a decline in Be crude bird rate from 37 to 27 per 1,0003 will
have raised production and income per capita to a level 16 percent above
what it would otherwise have been. This would be a substantial gain, but
by no means enough to vault a typical developing country into Be ranks
of the developed.
This simple calculation, however, does not fully reflect the complexity of Be
linkages between population growth and economic development. For instance,
the production function would be expected to change in ways that reduce
the advantages of slower population grown. We have reviewed considerable
evidence, particularly in the agricultural sector, of how technology adapts
to changes in factor proportions. In most places it is reasonable to expect
slower growth in the labor force to reduce the intensity of adaptive response
in the form of land improvement, instigation, and agricultural research. On
the other hand, the calculation does not reflect increases in production due
to the healthier and better educated work force Mat would result from lower
fertility.
Much more sophisticated models of production and fertility have been
constructed with a variety of assumptions about the nature and intensity
of relationships between economic and demograph* variables (see Ahlburg,
1985, for a thorough review). None of these models embodies the more
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91
recent evidence on the nature and magnitude of effects that is included here,
and we are not in a position to endorse any of the models.
Careful scientific research is needed both to beuer quantify and to further
elucidate most of the relationships discussed in this book. Research is
especially needed on urbanization and the consequences of urban growth;
savings and the formation of physical capital; the effect of population
grown on health, education, and the development of human capital; and
the nature and extent of extemalities of childbearing. Such research would
be appropriately supported by mission-oriented development organizations as
well as by basic research agencies.
Whether the economic problems posed by population grown are large
or small, and whether they are best approached by slowing the population
grown rate, depends ultimately on the costs of alternative policy responses.
We now turn to outline those responses.
POLICY IMPLICATIONS: THE ROLE OF FAMILY PLANNING
We have stressed that population growth can exacerbate the ill effects
of a variety of inefficient policies, such as urban bias in the provision
of infrastructure, direct and indirect food subsidies Hat distort agricultural
markets, credit market distortions, and inadequate management of common
property. A fundamental solution to these problems lies in better policies
outside the population arena. However, some policies may be extremely
resistant to correction, even over the medium to long term. Moreover, we
have found some beneficial effects of slower population grown even in
the presence of well-functioning markets and other institutions. Thus, there
appears to be a legitimate role for population policy, providing its benefits
exceed its costs.
Although educational and health policies may have indirect effects on
fertility, family planning programs have been the most conventional and direct
instrument of government population policy. By family planning programs, we
mean He provision of contraceptive services, together with information about
contraception and child spacing. The total amount spent on family planning
programs in 1982 was less than $2 billion, of which international assistance
represents about $330 million (World Bank, 1984:148~. By companson, total
official development assistance by Organization for Economic Cooperation
and Development (OECD) countries was about $27.5 billion in 1983 Should
Bank, 1984:252~. In most developing countries, family planning program
expenditures represent less than 1 percent of the government budget.
Government support for family planning programs can have an economic
and social rationale quite apart from He effect of programs on rates of
population growth. ~ many societies, individual control of reproduction
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92
POPUlA77ON GROWIW AND ECONOMIC DEVELOPMENT
is considered a basic human right, similar in nature to good health or
literacy. Lack of information about reproduction services and other services
may constrain parents from achieving the* desired number and spacing
of children. In such a situation, the supply of information and services
will increase family welfare. Govemments can often supply information and
services about reproduction more efficiently and cheaply than Me private
sector, in part because large and risky investments are required and because
some of Me benefits to consumers cannot be captured by the suppliers. In
particular, valuable information can flow from person to person without any
financial reward to the initial supplier: information about the consequences
of childbearing is one example; the rhythm method is another. In this case,
the private sector will underinvest in the provision of such services. The
rationale for government support for family planning programs is similar
to that for support of a variety of public health programs, as well as
for agricultural research and extension services. F~ermore, when health
services are provided by government, an additional rationale for government
family planning programs is that the services can be efficiently supplied
by existing health pet sonnet (World Bank, 1984~. Finally, family planning
programs are likely to be of more value to lower income groups than to
higher income groups, who may have beKer access to private services, so
government support for these programs can help to advance equity goals
If people use the services and information supplied by government family
planning programs and if fertility falls as a result, an obvious case can be
made that the program has increased the private welfare of users by reducing
the cost of fertility control and by reducing the gap between desired and
achieved fertility. This gain in private well-being is added to whatever other
gains accrue on the national agenda from fertility reduction. The large fertility
declines that occ~d in such countries as Mexico, Indonesia, and Thailand
during the 1970s~eclines that were associated over time with intensified
national family planning programs-suggest that private welfare gains from
such programs are large. The large amount of unwanted childbearing in
developing countries Mat was revealed by the World Fertility Survey (Boulder,
1985) suggests that such programs have considerable remaining potential to
increase private welfare and reduce population growth rates.
When national economic and social goals can be furthered by a reduction
in fertilibr, the fact that family planning programs can achieve such reductions
while increasing the well-being of users of these services accounts for milch
of their Inactiveness as a policy instrument for governments in developing
countries. A similar att~veness applies to removal of legal prohibitions
against access to means of ferdlity control, prohibitions that pose serious
obstacles to couples, reproductive behavior in many counties (Berelson and
Lieberson, l979~. In sum, there is little debate about the desirability of
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93
programs Hat allow couples access to easy, affordable, and effective means
of family planning, even among Hose who see population growth as a neuter
or even a positive influence on development (Wattenberg and Zinsmeister,
1985).
When a couple's childbearing decision imposes external costs on other
families-in overexploitation of common resources, congestion of public
services, or contribution to a socially undesirable distribution of income-
a case may be made for policies that go "beyond family planning." Such
policies include persuasive campaigns to change family size norms and
combinations of incentives and taxes related to family size. It is more
difficult to make the case for He imposition of drastic financial or legal
restrictions on childbearing. As noted above, such restrictions are likely to
entail large welfare losses at the individual level; these losses would be
hard to assess quantitatively, as are the possible social benefits of such
restrictions.
Because economic development is a multifaceted process, no single policy
or single-sector strategy can be successful by itself. Thus, family planning
programs by themselves cannot make a poor county rich or even move it
many notches higher on the scale of development. However, family planning
programs that enable couples to have the number of children they desire
increase the private welfare of the people who use Heir services while
reducing He burden on society of whatever economic externalities exist.
And family planning programs are likely to increase He well-being of the
users' children and to extend rawer Han to restrict personal choices. Thus,
family planning programs can play a role in improving the lives of people
in developing counties.
Representative terms from entire chapter:
family planning
