Population Growth and Economic Development PDF

Population Growth and Economic Development: Causes, Consequences, and Controversies 6 The central issue of our time may well turn out to be how the world addresses the problem of ever-expanding huma...

Population Growth and Economic Development: Causes, Consequences, and Controversies 6 The central issue of our time may well turn out to be how the world addresses the problem of ever-expanding human numbers. —James Grant, former director general, UNICEF Economic development may be far from “the best contraceptive,” but social development— especially women’s education and employment—can be very effective indeed. —Amartya Sen, Nobel laureate in economics 6.1 The Basic Issue: Population Growth and the Quality of Life In 2009, the world’s population was estimated to be 6.8 billion people. Projec- tions by the United Nations placed the figure at more than 9.2 billion by the year 2050 (another widely cited projection is higher, at 9.5 billion). The overwhelm- ing majority of that population will inhabit the developing world. What will be the economic and social implications for development if such projections are re- alized? Is this scenario inevitable, or will it depend on the success or failure of development efforts? Finally, even more significant, is rapid population growth per se as serious a problem as many people believe, or is it a manifestation of more fundamental problems of underdevelopment and the unequal utilization of global resources between rich and poor nations, as others argue? In this chapter, we examine many of the issues relating population growth to economic development. We begin, however, by looking at historical and recent population trends and the changing geographic distribution of the world’s people. After explaining basic demographic concepts, we present some well-known eco- nomic models and hypotheses regarding the causes and consequences of rapid population growth in contemporary developing countries. Controversies sur- rounding the significance of the population factor in general and these models and hypotheses in particular are then explored. Finally, we evaluate a range of alterna- tive policy options that developing countries may wish to adopt to influence the size and growth of their populations, as well as ways in which industrialized 269 270 PART TWO Problems and Policies: Domestic countries can contribute to a more manageable global population and resource en- vironment. Population policies in China and India, the nations with the largest populations in the world, are the focus of this chapter’s case study. Every year, more than 75 million people are being added to the world’s population. Almost all of this net population increase—97%—is in developing countries. Increases of such magnitude are unprecedented. But the problem of population growth is not simply a problem of numbers. It is a problem of human welfare and of development as defined in Chapter 1. Rapid population growth can have serious consequences for the well-being of all of humanity. If development entails the improvement in people’s levels of living—their in- comes, health, education, and general well-being—and if it also encom- passes their capabilities, self-esteem, respect, dignity, and freedom to choose, then the really important question about population growth is this: How does the contemporary population situation in many developing countries contribute to or detract from their chances of realizing the goals of develop- ment, not only for the current generation but also for future generations? Conversely, how does development affect population growth? Among the major issues relating to this basic question are the following: 1. Will developing countries be capable of improving the levels of living for their people with the current and anticipated levels of population growth? To what extent does rapid population increase make it more difficult to provide essen- tial social services, including housing, transport, sanitation, and security? 2. How will the developing countries be able to cope with the vast increases in their labor forces over the coming decades? Will employment opportu- nities be plentiful, or will unemployment levels soar? 3. What are the implications of higher population growth rates among the world’s poor for their chances of overcoming the human misery of ab- solute poverty? Will world food supply and its distribution be sufficient not only to meet the anticipated population increase in the coming decades but also to improve nutritional levels to the point where all hu- mans can have an adequate diet? 4. Will developing countries be able to extend the coverage and improve the quality of their health and educational systems so that everyone can have access to adequate health care and a basic education? 5. Is there a relationship between poverty and family size? 6. Is the inexorable pursuit of increasing affluence among the rich more detrimental to the global environment and to rising living standards among the poor than the absolute increase in their numbers? 6.2 Population Growth: Past, Present, and Future World Population Growth throughout History As this book goes to press, the world is approaching the population milestone of seven billion people. For most of human existence on earth, humanity’s numbers  CHAPTER 6 Population Growth and Economic Development 271 TABLE 6.1 Estimated World Population Growth Estimated Annual Estimated Population Increase in the Doubling time Year (millions) Intervening Period (%) (years) 10,000 B.C.E. 5 1 C.E. 250 0.04 1,733 1650 545 0.04 1,733 1750 728 0.29 239 1800 906 0.45 154 1850 1,171 0.53 130 1900 1,608 0.65 106 1950 2,576 0.91 76 1970 3,698 2.09 33 1980 4,448 1.76 39 1990 5,292 1.73 40 2000 6,090 1.48 47 2010 6,892 1.22 57 2050 (projected) 9,200 0.675 103 Sources: Population Reference Bureau, World Population Data Sheet (Washington, D.C.: Population Reference Bureau, 2010 and previous annuals). Warren S. Thompson and David T. Lewis, Population Problems, 5th ed. (New York: McGraw-Hill, 1965), p. 384: United Nations, Demographic Yearbook for 1971 (New York: United Nations, 1971); United Nations, Report on the World Social Situation, 1997 (New York: United Nations, 1997), p. 14, and authors’ calculations. An alternate system of broadly comparable and earlier estimates is found in Michael Kremer, “Population Growth and Technological Change: One Million B.C. to 1990,” Quarterly Journal of Economics 108 (1993): 681-716. have been few. When people first started to cultivate food through agriculture some 12,000 years ago, the estimated world population was no more than 5 million (see Table 6.1). Two thousand years ago, world population had grown to nearly 250 million, less than a fifth of the population of China today. From year 1 on our calendar to the beginning of the Industrial Revolution around 1750, it tripled to 728 million people, less than three-quarters of the total num- ber living in India today. During the next 200 years (1750–1950), an additional 1.7 billion people were added to the planet’s numbers. But in just four decades thereafter (1950–1990), the earth’s human population more than doubled again, bringing the total figure to around 5.3 billion. The world entered the twenty- first century with over 6 billion people. Figure 6.1 shows how rapidly total population grew after 1950 in comparison with the two centuries before that. It vividly portrays the magnitude of population growth, most of which has been in developing countries, both as a percentage of the total and in terms of ab- solute numbers. Finally, it provides projections to 2050, when world popula- tion is expected to reach 9.2 billion. Turning from absolute numbers to percentage growth rates, for almost the whole of human existence on earth until approximately 300 years ago, popula- tion grew at an annual rate not much greater than zero (0.002%, or 20 per mil- lion). Naturally, this overall rate was not steady; there were many ups and downs as a result of natural catastrophes and variations in growth rates among regions. By 1750, the population growth rate had accelerated to 0.3% per year. By the 1950s, the rate had again accelerated, tripling to about 1.0% per year. It continued to accelerate until around 1970, when it peaked at 2.35%.1 Today the world’s population growth rate remains at a historically high rate of about 1.1% per year, but the rate of increase is slowing. However, 272 PART TWO Problems and Policies: Domestic FIGURE 6.1 World Population Growth, 1750–2050 100 10 Population increment 80 8 Annual increment (millions) Population size (billions) 60 6 40 4 Population size 20 2 0 0 1750 1800 1850 1900 1950 2000 2050 Year Source: United Nations Population Division, The World at Six Billion, p. 7. Copyright © 2000 by the United Nations. Used with permission. the population growth rate in Africa is still an extremely high 2.3% per year. (Note that estimates of population numbers and growth rates differ according to research methods, but the broad trends are similar across major studies.) The relationship between annual percentage increases and the time it takes Doubling time Period that for a population to double in size, or doubling time,2 is shown in the rightmost a given population or other column of Table 6.2. We see that before 1650, it took nearly 36,000 years, or about quantity takes to increase by its present size. 1,400 generations, for the world population to double. Today it would take about 58 years, or two generations, for world population to double at current growth rates. Moreover, whereas it took 1,750 years to add 480 million people to the world’s population between year 1 and the onset of the Industrial Revolu- tion, this same number of people is today being added in less than seven years. The reason for the sudden change in overall population trends is that for al- most all of recorded history, the rate of population change, whether up or down, had been strongly influenced by the combined effects of famine, disease, malnutrition, plague, and war—conditions that resulted in high and fluctuat- ing death rates. In the twentieth century, such conditions came increasingly un- der technological and economic control. As a result, human mortality (the death rate) is now lower than at any other point in human existence. It is this decline in mortality resulting from rapid technological advances in modern  CHAPTER 6 Population Growth and Economic Development 273 FIGURE 6.2 World Population Distribution by Region, 2010 and 2050 Europe Europe Africa 8% 11% 15% Africa 22% Northern America 5% Northern Latin America America 5% Asia and 8% Asia and the Pacific the Pacific 61% 58% Latin America 7% (a) Total population 2010: 6.89 billion (b) Total population 2050: 9.5 billion Source: Data from Population Reference Bureau, World Population Data Sheet, 2010. medicine and the spread of modern sanitation measures throughout the world, particularly within the past half century, that has resulted in the unprecedented increases in world population growth, especially in developing countries. In short, population growth today is primarily the result of a rapid transition from a long historical era characterized by high birth and death rates to one in which death rates have fallen sharply but birth rates, especially in developing countries, have fallen more slowly from their historically high levels. Structure of the World’s Population The world’s population is very unevenly distributed by geographic region, by fertility and mortality levels, and by age structures. Geographic Region More than three-quarters of the world’s people live in developing countries; fewer than one person in four lives in an economically developed nation. Figure 6.2 shows the regional distribution of the world’s population as it existed in 2010 and as it is projected for 2050. World population distribution is put into dramatic perspective by the map in Figure 6.3. Each box represents 1 million inhabitants. The ever-growing population share of the developing world is revealed by the large size of India in comparison with Europe. China is bordered on the north and west by a thin strip of land that represents Russia. Mexico looms very large in comparison with Canada—a dramatic reversal of conventional maps; taken together, even the Caribbean islands are larger than Canada. Bangladesh, smaller in size than the state of Wisconsin, appears larger than Germany and France combined. In Africa, the prominence of Nigeria stands out. Indonesia, which gets compara- tively little international attention, dwarfs its neighbor Australia while ap- pearing nearly as large as the United States. 274 FIGURE 6.3 The Population Map: World Map with Country Sizes Proportional to Population, 2005 TOTAL WORLD POPULATION = 6,446,131,400 1 grid square = 1 million people SWEDEN FINLAND NORWAY RUSSIA MONGOLIA 143 million DENMARK ESTONIA LATVIA NORTH IRELAND NETHERLANDS KOREA 16 million 23 million UNITED LITHUANIA CHINA GERMANY 1,306 million SOUTH KINGDOM POLAND (1.306 billion) 60 million BELGIUM 82 million KOREA 10 million 10 m 49 million CZECH BELARUS REPUBLIC 10 million CANADA 33 million SLOVAKIA UKRAINE JAPAN FRANCE AUSTRIA HUNGARY 47 million 127 million 61 million TIBET SWITZERLAND 10 million ROMANIA KYRGYZSTAN TAIWAN 22 million BHUTAN 23 million ITALY UNITED STATES 58 million CROATIA NEPAL 296 million MOLDOVA KAZAKHSTAN 28 million SLOVENIA 11 m 15 million TAJIKISTAN BOSNIA- SPAIN HERZEGOVINA AZERBAIJAN PORTUGAL 40 million BULGARIA UZBEKISTAN GEORGIA 27 million VIETNAM 11 million SERBIA & 84 million MONTENEGRO MACEDONIA ARMENIA GREECE MYANMAR LAOS ALBANIA 11 million TURKEY TURKMENISTAN 70 million AFGHANISTAN 43 m MEXICO CUBA 30 million 106 million IRAN 11 m SYRIA 68 million PUERTO RICO INDIA JAMAICA HAITI (U.S.) 1,080 million ISRAEL LEBANON 26IRAQ million PAKISTAN (1.080 billion) DOMINICAN TUNISIA 162 million THAILAND GAZA STRIP 65 million REPUBLIC 15m HONDURAS 10 m PHILIPPINES GUATEMALA ALGERIA LIBYA SAUDI KUWAIT 88 million MOROCCO 33 million WEST ARABIA UNITED ARAB NICARAGUA TRINIDAD & TOBAGO 33 million CHAD BANK EMIRATES CAMBODIA EL SALVADOR EGYPT 26 million 14 million 10 m MAURITANIA 78 million JORDAN COSTA RICA MALI NIGER OMAN VENEZUELA 12 m 12 million YEMEN 21 million 25 million GAMBIA 11 m 14 m PANAMA COLOMBIA SENEGAL BURKINA 43 million GUINEA-BISSAU FASO GUINEA ERITREA ECUADOR SIERRA NIGERIA LEONE GHANA 141 million SUDAN BANGLADESH 13m 21m 40 million MALAYSIA BRAZIL ETHIOPIA 144 million 24 million LIBERIA 18 m 70 million 186million SOMALIA PERU CENTRAL 28 million COTE TOGO D'IVOIRE BENIN AFRICAN CAMEROON REPUBLIC BOLIVIA 16 million UGANDA SINGAPORE GABON 27 million PARAGUAY DEMOCRATIC KENYA 32 million CONGO REPUBLIC OF ARGENTINA CONGO 40 million 60 million RWANDA INDONESIA EAST PAPUA CHILE ANGOLA 242 million TIMOR NEW 16 million 11 million ZAMBIA BURUNDI GUINEA 11 million TANZANIA URUGUAY MALAWI 37 million NAMIBIA MADAGASCAR AUSTRALIA 12 million 18 million 20 million BOTSWANA MOZAMBIQUE 19 million MAURITIUS ZIMBABWE 13 million SRI LANKA 20 million SOUTH AFRICA SWAZILAND NEW ZEALAND 43 million Countries with more than 10 million people have their populations labeled on the map Countries with less than 1 million people not shown on map: LESOTHO Andorra Cyprus Kiribati Nauru Sao Tome and Principe Antigua and Barbuda Djibouti Liechtenstein Palau Seychelles Bahamas Dominica Luxembourg Qatar Solomon Islands Bahrain Equatorial Guinea Maldives St Kitts & Nevis Suriname Barbados Fiji Malta St Lucia Tonga Belize Grenada Marshall Islands St Vincent & the Grenadines Tuvalu Brunei Guyana Micronesia Samoa Vanuatu Cape Verde Iceland Monaco San Marino Vatican City Comoros Sources: U.S. Bureau of the Census, International Data Base 2005 population estimates; Tibet Information Network; Free Tibet Campaign Source: The population Map. © 2005, www.ODTmaps.com. For maps and other related teaching materials, contact: ODT, Inc., PO Box 134, Amherst MA 01004 USA; (800-736-1293; Fax: 413-549-3503, E-mail: [email protected]. Web: www.odtmaps.com).  CHAPTER 6 Population Growth and Economic Development 275 Fertility and Mortality Trends The rate of population increase is quantita- Rate of population increase The growth rate of a popula- tively measured as the percentage yearly net relative increase (or decrease, in tion, calculated as the natural which case it is negative) in population size due to natural increase and net increase after adjusting for international migration. Natural increase simply measures the excess of immigration and emigration. births over deaths or, in more technical terms, the difference between fertility Natural increase The differ- and mortality. Net international migration is of very limited, though growing, ence between the birth rate importance today (although in the nineteenth and early twentieth centuries it and the death rate of a given population. was an extremely important source of population increase in North America, Australia, and New Zealand and corresponding relative decrease in western Net international migration Europe). Population increases in developing countries therefore depend al- The excess of persons migrat- ing into a country over those most entirely on the difference between their crude birth rates (or simply who emigrate from that birth rates) and death rates. country. Recall from Chapter 2 that most developing nations have birth rates rang- Crude birth rate The num- ing from 15 to 40 per 1,000. By contrast, in almost all developed countries, the ber of children born alive rate is less than 15 per 1,000. Moreover, developing country birth rates today each year per 1,000 popula- tion (often shortened to birth are still often higher than they were in preindustrial western Europe. But there rate). has been a substantial decline in fertility over the past three decades, not only Death rate The number of in countries like Taiwan, South Korea, and China, where rapid economic and deaths each year per 1,000 social development have taken place, but also in nations where growth has population. been less rapid, including Mexico and Bangladesh, and in some where growth has stagnated, such as Zimbabwe. Table 6.3 lists seven countries that experi- enced significant fertility declines between 1970 and 2009. Nevertheless, the total fertility rate (TFR)—(the average number of children a woman would Total fertility rate (TFR) The have assuming that current age-specific birth rates remain constant through- number of children that would be born to a woman if out her childbearing years (15 to 49 years of age)—remains very high in sub- she were to live to the end of Saharan Africa (5.3) and western Asia (3.1).3 her childbearing years and Modern vaccination campaigns against malaria, smallpox, yellow fever, bear children in accordance and cholera as well as the proliferation of public health facilities, clean water with the prevailing age- specific fertility rates. supplies, improved nutrition, and public education have all worked to- gether over the past three decades to lower death rates by as much as 50% in parts of Asia and Latin America and by over 30% in much of Africa and the TABLE 6.3 Fertility Rate for Selected Countries, 1970 and 2009 Total Fertility Ratea Country 1970 2009 Bangladesh 7.0 2.3 Colombia 5.3 2.5 Indonesia 5.5 2.4 Jamaica 5.3 2.4 Mexico 4.9 2.3 Thailand 5.5 1.8 Zimbabwe 7.7 3.9 Sources: World Bank, World Development Report, 1994 (New York: Oxford University Press, 1994), tab. 26; Population Reference Bureau, World Population Data Sheet (Washington, D.C.: Population Reference Bureau, 2009). a Average number of children born to women who live beyond age 49. 276 PART TWO Problems and Policies: Domestic Middle East. Death rates have fallen for all age groups. Nevertheless, the average life span remains about 12 years greater in the developed countries. This gap has been sharply reduced in recent decades. For example, in 1950, Life expectancy at birth The life expectancy at birth for people in developing countries averaged 35 to number of years a newborn 40 years, compared with 62 to 65 years in the developed world. Consider- child would live if subject to the mortality risks prevailing able progress has been made on reducing the under-5 mortality rate. For ex- for the population at the time ample, according to UN compilations between 1990 and 2008 it fell from 121 of the child’s birth. per 1,000 to 74 per 1,000 in South Asia, from 73 to 38 per 1,000 in South- Eastern Asia, and from 52 to 23 per 1,000 in Latin America and the Caribbean. Under-5 mortality rate Deaths among children Although the under-5 mortality rate declined from 184 to 144 per 1,000 in between birth and 5 years of sub-Saharan Africa in this period, progress in the region continued to lag. In age per 1,000 live births. 2009, because of still relatively high under-5 mortality rates and the AIDS epidemic, sub-Saharan Africa had the lowest life expectancy, 51 years, while in the high-income countries, life expectancy at birth averaged nearly 78 years. In East Asia and Latin America, life expectancies have now an impressive 74 and 73 years, respectively. Finally, note that there remains a biological sus- ceptibility for old people to die at higher rates than young people due to ag- ing. Although death rates of children and younger people are higher on av- erage in a developing country with rapid population growth, the fact that their populations are so youthful on average explains why they may have an overall population-average death rate that is lower than that of a developed country with a much older average population. You may notice this possibly unexpected relationship when you look at demographic statistics. Age Structure and Dependency Burdens Population is relatively youth- ful in the developing world. Children under the age of 15 constitute more than 30% of the total population of developing countries but just 17% of de- veloped nations. In fact, at least 10 developing nations have over 44% of their population under the age of 15; as of 2009, 43% of Ethiopia’s population, 45% of Nigeria’s, and 38% of Pakistan’s was under 15; for both India and Mexico, the comparable figure is 32%. In countries with such an age structure, the Youth dependency ratio youth dependency ratio—the proportion of youths (under age 15) to eco- The proportion of young peo- nomically active adults (ages 15 to 64)—is very high. Thus the workforce in ple under age 15 to the work- ing population aged 16 to 64 developing countries must support almost twice as many children as it does in a country. in the wealthier countries. In North America, the workforce age group (15 to 64) amounts to about 68% of the total population. This workforce has to sup- port only about 20% of the population as youthful dependents. In Europe, about 15% of the population is under 15, with a comparable number over age 65, leaving some 69% in the 15-to-64 age group. Japan and at least nine Euro- pean countries have over 17% of their populations over age 65. The main problems in more developed countries relate more to their low population growth and old-age dependents (over age 65). By contrast, in sub-Saharan Hidden momentum of popu- Africa, the economically active workforce makes up about 54% of the total lation growth The phenom- enon whereby population population (just 3% of the population is over age 65). In general, the more continues to increase even af- rapid the population growth rate, the greater the proportion of dependent ter a fall in birth rates because children in the total population and the more difficult it is for people who are the large existing youthful population expands the working to support those who are not. This phenomenon of youth depend- population’s base of potential ency also leads to an important concept, the hidden momentum of population parents. growth.  CHAPTER 6 Population Growth and Economic Development 277 The Hidden Momentum of Population Growth Perhaps the least understood aspect of population growth is its tendency to continue even after birth rates have declined substantially. Population growth has a built-in tendency to continue, a powerful momentum that, like a speed- ing automobile when the brakes are applied, tends to keep going for some time before coming to a stop. In the case of population growth, this momen- tum can persist for decades after birth rates drop. There are two basic reasons for this. First, high birth rates cannot be altered substantially overnight. The social, economic, and institutional forces that have influenced fertility rates over the course of centuries do not simply evaporate at the urging of national leaders. We know from the experience of European na- tions that such reductions in birth rates can take many decades. Consequently, even if developing countries assign top priority to the limitation of population growth, it will still take many years to lower national fertility to desired levels. The second and less obvious reason for the hidden momentum of population growth relates to the age structure of many developing countries’ populations. Figure 6.4 illustrates the great difference between age structures in less developed FIGURE 6.4 Population Pyramids: All Developed and Developing Countries and Case of Ethiopia Developed Countries Developing Countries Ethiopia: Rapid Growth Age Age 100+ 95–99 85+ 90–94 80–84 85–89 75–79 80–84 70–74 75–79 65–69 70–74 60–64 65–69 55–59 60–64 50–54 55–59 45–49 50–54 40–44 45–49 35–39 40–44 30–34 35–39 25–29 30–34 25–29 20–24 20–24 15–19 15–19 10–14 10–14 5–9 5–9 0–4 0–4 300 200 100 0 100 200 300 300 200 100 0 100 200 300 10 8 6 4 2 0 2 4 6 8 10 Population (millions), 2010 Population (millions), 2010 Share of population (%), 2005 Male Female Source: Graphs detailing Developed Countries from World Population Data Sheet of the Population Reference Bureau, Inc. by Popula- tion Reference Bureau. Copyright 2010 by Population Reference Bureau, Inc. Reproduced with permission of Population Refer- ence Bureau, Inc. via Copyright Clearance Center. Graph detailing Ethiopia from Population Bulletin 62 (2007), p. 6. Reprinted with permission from Population Reference Bureau, Inc. 278 PART TWO Problems and Policies: Domestic Population pyramid A and more developed countries by means of two population pyramids for 2010. graphic depiction of the age Each pyramid rises by five-year age intervals for both males and females, with the structure of the population, with age cohorts plotted on total number in each age cohort measured on the horizontal axis. The left and the vertical axis and either middle panels show population pyramids for developed and developing coun- population shares or numbers tries, respectively (the age scale is that listed between these two figures). Expressed of males and females in each in millions of people, rather than percentages, the figure clearly reveals that most cohort on the horizontal axis. future population growth will take place in the developing world. The steeper bottom rungs for the developing world as a whole, in contrast to a very low- income country such as Ethiopia (right hand-panel), reflects the large declines in population growth in lower-middle income developing countries over the past quarter century, and particularly in China (see the case study at the end of this chapter). For developed countries, in the contemporary period the population in middle cohorts is typically greater than that of young cohorts; this is partly but certainly not exclusively viewed as a transitional feature of a period in which women have been delaying births until later in life. From the Ethiopia pyramid expressed as share of population, young people greatly outnumber their parents (the age scale in this case is found to the right of the figure). When their generation reaches adulthood, the number of potential parents will inevitably be much larger than at present. It follows that even if these new parents have only enough chil- dren to replace themselves (two per couple, as compared with their parents, who may have had four or more children), the fact that the total number of couples having two children is much greater than the number of couples who previously had more children means that the total population will still increase substantially before leveling off.4 6.3 The Demographic Transition The process by which fertility rates eventually decline to replacement levels has been portrayed by a famous concept in economic demography called the Demographic transition demographic transition. The demographic transition attempts to explain why The phasing-out process of all contemporary developed nations have more or less passed through the same population growth rates from a virtually stagnant growth three stages of modern population history. Before their economic modernization, stage characterized by high these countries for centuries had stable or very slow-growing populations as a birth rates and death rates result of a combination of high birth rates and almost equally high death rates. through a rapid-growth stage This was stage 1. Stage 2 began when modernization, associated with better pub- with high birth rates and low death rates to a stable, low- lic health methods, healthier diets, higher incomes, and other improvements, led growth stage in which both to a marked reduction in mortality that gradually raised life expectancy from un- birth and death rates are low. der 40 years to over 60 years. However, the decline in death rates was not imme- diately accompanied by a decline in fertility. As a result, the growing divergence between high birth rates and falling death rates led to sharp increases in popula- tion growth compared to past centuries. Stage 2 thus marks the beginning of the demographic transition (the transition from stable or slow-growing populations first to rapidly increasing numbers and then to declining rates). Finally, stage 3 was entered when the forces and influences of modernization and development caused the beginning of a decline in fertility; eventually, falling birth rates con- verged with lower death rates, leaving little or no population growth. Figure 6.5 depicts the three historical stages of the demographic transition in western Europe. Before the early nineteenth century, birth rates hovered  CHAPTER 6 Population Growth and Economic Development 279 FIGURE 6.5 The Demographic Transition in Western Europe Actual birth and death rates per 1,000 inhabitants 40 30 20 Birth rate 10 Death rate Stage 1 Stage 2 Stage 3 0 1780 1840 1850 1890 1910 2000 Future Year around 35 per 1,000 while death rates fluctuated around 30 per 1,000. This re- sulted in population growth rates of around 5 per 1,000, or less than 0.5% per year. Stage 2, the beginning of western Europe’s demographic transition, was initiated around the first quarter of the nineteenth century by slowly falling death rates as a result of improving economic conditions and the gradual de- velopment of disease and death control through modern medical and public health technologies. The decline in birth rates (stage 3) did not really begin un- til late in the nineteenth century, with most of the reduction many decades af- ter modern economic growth had begun and long after death rates began their descent. But since the initial level of birth rates was generally low in western Europe as a result of either late marriage or celibacy, overall rates of popula- tion growth seldom exceeded the 1% level, even at their peak. By the end of western Europe’s demographic transition in the second half of the twentieth century, the relationship between birth and death rates that marked the early 1800s had reversed, with birth rates fluctuating and death rates remaining fairly stable or rising slightly. This latter phenomenon is simply due to the older age distributions of contemporary European populations. Figure 6.6 shows the population histories of contemporary developing coun- tries, which contrast with those of western Europe and fall into two patterns. Birth rates in many developing countries today are considerably higher than they were in preindustrial western Europe. This is because women tend to marry at an earlier age. As a result, there are both more families for a given pop- ulation size and more years in which to have children. In the 1950s and 1960s, stage 2 of the demographic transition occurred throughout most of the develop- ing world. The application of highly effective imported modern medical and public health technologies caused death rates in developing countries to fall much more rapidly than in nineteenth-century Europe. Given their historically 280 PART TWO Problems and Policies: Domestic FIGURE 6.6 The Demographic Transition in Developing Countries Actual birth and death rates per 1,000 inhabitants 50 Case B 40 Birth rate 30 Case A 20 Case B Death rate 10 Case A Stage 1 Stage 2 Stage 3 0 1900 1950 1965–1970 Future Year Source: Adapted from National Academy of Sciences, The Growth of World Population (Washington, D.C.: National Academy of Sciences, 1963), p. 15. high birth rates (over 40 per 1,000 in many countries), this has meant that stage 2 of the demographic transition has been characterized by population growth rates well in excess of 2.0% per annum in most developing countries. With regard to stage 3, we can distinguish between two broad classes of developing countries. In case A in Figure 6.6, modern methods of death con- trol combined with rapid and widely distributed rises in levels of living have resulted in death rates falling as low as 10 per 1,000 and birth rates also falling rapidly, to levels between 12 and 25 per 1,000. These countries, including Taiwan, South Korea, Costa Rica, China, Cuba, Chile, and Sri Lanka, have thus entered stage 3 of their demographic transition and have experienced rapidly falling rates of overall population growth. But some developing countries fall into case B of Figure 6.6. After an initial period of rapid decline, death rates have failed to drop further, largely because of the persistence of widespread absolute poverty and low levels of living and more recently because of the AIDS epidemic. Moreover, the continuance of still quite high birth rates as a result of these low levels of living causes overall population growth rates to remain relatively high. These countries, including many of those in sub-Saharan Africa and the Middle East, are still in stage 2 of their demographic transition. Though fertility is declining, it remains very high in these parts of the world. The important question, therefore, is this: When and under what conditions are developing nations likely to experience falling birth rates and a slower expan- sion of population? To answer this question, we need to ask a prior one. What are the principal determinants or causes of high fertility rates in developing countries,  CHAPTER 6 Population Growth and Economic Development 281 and can these determinants of the “demand” for children be influenced by gov- ernment policy? To try to answer this critical question, we turn to a very old and famous classical macroeconomic and demographic model, the Malthusian “pop- ulation trap,” and a contemporary and highly influential neoclassical microeco- nomic model, the household theory of fertility. 6.4 The Causes of High Fertility in Developing Countries:The Malthusian and Household Models The Malthusian Population Trap More than two centuries ago, the Reverend Thomas Malthus put forward a theory of the relationship between population growth and economic develop- ment that is influential today. Writing in his 1798 Essay on the Principle of Popula- tion and drawing on the concept of diminishing returns, Malthus postulated a universal tendency for the population of a country, unless checked by dwin- dling food supplies, to grow at a geometric rate, doubling every 30 to 40 years.5 At the same time, because of diminishing returns to the fixed factor, land, food supplies could expand only at a roughly arithmetic rate. In fact, as each mem- ber of the population would have less land to work, his or her marginal contri- bution to food production would actually start to decline. Because the growth in food supplies could not keep pace with the burgeoning population, per capita incomes (defined in an agrarian society simply as per capita food pro- duction) would have a tendency to fall so low as to lead to a stable population existing barely at or slightly above the subsistence level. Malthus therefore con- tended that the only way to avoid this condition of chronic low levels of living or absolute poverty was for people to engage in “moral restraint” and limit the number of their progeny. Hence we might regard Malthus, indirectly and inad- vertently, as the father of the modern birth control movement. Modern economists have given a name to the Malthusian idea of a popula- tion inexorably forced to live at subsistence levels of income. They have called it the low-level equilibrium population trap or, more simply, the Malthusian pop- Malthusian population trap ulation trap. Diagrammatically, the basic Malthusian model can be illustrated The threshold population level anticipated by Thomas by comparing the shape and position of curves representing population Malthus (1766–1834) at which growth rates and aggregate income growth rates when these two curves are population increase was each plotted against levels of per capita income. An example of this is pre- bound to stop because life- sented in Figure 6.7. sustaining resources, which increase at an arithmetic rate, On the vertical axis, we plot numerical percentage changes, both positive would be insufficient to sup- and negative, in the two principal variables under consideration (total popula- port human population, which tion and aggregate income). On the horizontal axis are levels of per capita in- increases at a geometric rate. come. Figure 6.7 depicts the basic ideas. The x-axis shows the level of income per capita. The y-axis shows two rates—of population growth and of total in- come growth. Per capita income growth is, by definition, the difference be- tween income growth and population growth—hence the vertical difference between these two curves. Thus, as you saw in Chapter 3 in our discussion of the Harrod-Domar (or AK) model, whenever the rate of total income growth is greater than the rate of population growth, income per capita is rising; this corresponds to moving to the right along the x-axis. Conversely, whenever the 282 PART TWO Problems and Policies: Domestic FIGURE 6.7 The Malthusian Population Trap Population growth rate (ΔP/P) Growth rates Total income growth rate (ΔY/Y) S T Income per capita rate of total income growth is less than the rate of population growth, income per capita is falling, moving to the left along the x-axis. When these rates are equal, income per capita is unchanging. We can then explore the shapes of population growth and growth of income to understand potential implica- tions of this relationship. First consider population growth. When income is very low, say, below $250 per year at purchasing power parity, nutrition is so poor that people be- come susceptible to fatal infectious diseases, pregnancy and nursing become problematic; and, ultimately, outright starvation may occur. This is shown on the left in Figure 6.7. But after this minimum level of income per capita is reached, population begins to grow, eventually reaching a peak rate (perhaps at 3% to 4% per year); and then the population growth rate begins to fall until at last a fairly stable population is reached (a growth rate close to zero). Note that this pattern of population growth first increasing and then decreasing as per capita income rises corresponds to the pattern of the demographic transition, explained in section 6.3. In Figure 6.7, total income growth becomes greater as the economy develops (and income per capita rises). An economic reason for this positive relationship is the assumption that savings vary positively with income per capita. Coun- tries with higher per capita incomes are assumed to be capable of generating higher savings rates and thus more investment. Again, given a Harrod-Domar- type model of economic growth (see Chapter 3), higher savings rates mean higher rates of aggregate income growth. Eventually, however, growth levels off at a maximum. (Incomes of middle-income countries might grow fastest as they borrow technology to catch up—not shown in this diagram—but these higher rates cannot be continued once the technology frontier is reached.) As drawn, the curves first cross at a low level of income, labeled S (for subsis- tence). This is a stable equilibrium: If per capita income levels became somewhat  CHAPTER 6 Population Growth and Economic Development 283 larger than (were to the right of) S, it is assumed that population size will begin to increase in part because higher incomes improve nutrition and reduce death rates. But then, as shown in the figure, population is growing faster than income (the ΔP/P curve is vertically higher than the ΔY/Y curve), so income per capita is falling, and we move to the left along the x-axis. The arrow pointing in the di- rection of S from the right therefore shows per capita income falling back to this very low level. On the other hand, if income per capita were a little less than S, the total income curve would be above the population growth curve and so in- come per capita would be rising. This corresponds to a move to the right along the x-axis. Thus our conclusion that point S represents a stable equilibrium (much as in our study of stable equilibria in Figure 4.1). This very low population growth rate along with a very low income per person is consistent with the expe- rience of most of human history. According to modern-day neo-Malthusians, poor nations will never be able to rise much above their subsistence levels of per capita income unless they initiate preventive checks (birth control) on their population growth. In the absence of such preventive checks, Malthusian positive checks (starva- tion, disease, wars) on population growth will inevitably provide the restrain- ing force. However, if per capita income can somehow reach a threshold level, labeled T in Figure 6.7, from that point population growth is less than total income growth, and thus per capita income grows continually, at a rate such as 2% per year (the approximate U.S. per capita growth rate from 1870 to 2008). Countries or regions in such a population trap can also escape it by achiev- ing technological progress that shifts the income growth rate curve up at any level of per capita income. And it may be able to achieve changes in economic institutions and culture (“social progress”) that shifts the population growth curve down. In this way, the population trap equilibrium is eliminated alto- gether, and the economy is able to proceed with self-sustaining growth. An ex- ample of such a result is depicted in Figure 6.8. Total income growth is now greater than population growth at each level of per capita income. As a result, income per capita now grows steadily. We have examined strategies for accelerating income growth in Chapters 3 and 4, and will examine specific growth policies further in chapters 7, 9, 12, and 14. The main focus of the remainder of this chapter is on changes in economic institutions, economic power in households, and cultural norms, to reduce fer- tility to maintain population growth below income growth, and eventually to achieve population stability. In addition to the classic Malthusian model, Figure 4.1 in Chapter 4 is also relevant to understanding high-fertility traps. In the diagram, we can take the x-axis to represent (expected) fertility and the y-axis the family’s own fertility decision. The upward-sloping response of own fertility to average fertility may be caused by at least two important factors. If others have high fertility, this may increase the number of formal-sector job seekers without (proportionally) increasing the number of formal-sector jobs. Each family may feel it needs a larger number of children to raise the probability that one child will get a mod- ern job. In addition, families often follow local social norms about fertility and tend to model their own behavior on the behavior of others in their community. If the fertility response curve cuts the 45-degree line from above at least twice, 284 PART TWO Problems and Policies: Domestic then there are at least two stable equilibria (see Chapter 4), one with high and another with low levels of average fertility.6 Criticisms of the Malthusian Model The Malthusian population trap provides a theory of the relationship between population growth and economic development. Unfortunately, it is based on a number of simplistic assumptions and hypotheses that do not stand the test of empirical verification. We can criticize the population trap on two major grounds. First, the model ignores the enormous impact of technological progress in offsetting the growth-inhibiting forces of rapid population increases. As you saw in Chapter 2, the history of modern economic growth has been closely as- sociated with rapid technological progress in the form of a continuous series of scientific, technological, and social inventions and innovations. Increasing rather than decreasing returns to scale have been a distinguishing feature of the modern growth epoch. While Malthus was basically correct in assuming a limited supply of land, he did not—and in fairness could not at that time— anticipate the manner in which technological progress could augment the availability of land by raising its quality (its productivity) even though its quantity might remain roughly the same. In terms of the population trap, rapid and continuing technological progress can be represented by an upward shift of the income growth (total product) curve so that at all levels of per capita income it is vertically higher than the population growth curve. This is shown in Figure 6.8. As a result, per capita income will continue to grow over time. All countries therefore have the potential of escaping the Malthusian population trap. FIGURE 6.8 How Technological and Social Progress Allows Nations to Avoid the Population Trap 5 4 Total income growth rate (ΔY/Y) 3 Growth rate (%) 2 Population growth rate (ΔP/P) 1 0 Income per capita (Y/P) –1  CHAPTER 6 Population Growth and Economic Development 285 The second basic criticism of the trap focuses on its assumption that na- tional rates of population increase are directly (positively) related to the level of national per capita income. According to this assumption, at relatively low levels of per capita income, we should expect to find population growth rates increasing with increasing per capita income. But research indicates that there appears to be no clear correlation between population growth rates and levels of per capita income. As a result of modern medicine and public health pro- grams, death rates have fallen rapidly and have become less dependent on the level of per capita income. Moreover, birth rates seem to show no rigid rela- tionship with per capita income levels. Fertility rates vary widely for countries with the same per capita income, especially below $1,000. It is not so much the aggregate level of per capita income that matters for population growth but rather how that income is distributed. It is the level of household income, not the level of per capita income, that seems to matter most. In sum, Malthusian and neo-Malthusian theories as applied to contemporary developing nations have severely limited relevance for the following reasons: 1. They do not take adequate account of the role and impact of technological progress. 2. They are based on a hypothesis about a macro relationship between popu- lation growth and levels of per capita income that does not stand up to empirical testing of the modern period. 3. They focus on the wrong variable, per capita income, as the principal deter- minant of population growth rates. A much better and more valid approach to the question of population and development centers on the microeconom- ics of family size decision making in which individual, and not aggregate, levels of living become the principal determinant of a family’s decision to have more or fewer children. We continue to study the Malthusian trap even though evidence shows that it is not currently relevant for three main reasons: First, because many people still believe it holds in poor countries today, despite the recent evidence; and people working in the development field should understand the model and the elements of it that do not currently apply so that they can engage the debate ef- fectively. Second, because it seems clear that such traps have occurred in the his- torical past and may have been factors in population collapses including in the pre-Columbian Americas. Third—as we will explore in the remainder of this chapter—the fact that this model no longer applies underlines the importance of factors that can prevent its emergence. These include efforts to continue steady and sustainable rises in agricultural productivity; moreover, they encompass increases in women’s empowerment and freedom to choose—along with their incomes—which reduce the old-age security motive behind high fertility. The Microeconomic Household Theory of Fertility In recent years, economists have begun to look more closely at the microeco- nomic determinants of family fertility in an attempt to provide a better theoret- ical and empirical explanation for the observed falling birth rates associated with stage 3 of the demographic transition. In doing this, they have drawn on 286 PART TWO Problems and Policies: Domestic the traditional neoclassical theory of household and consumer behavior for their basic analytical model and have used the principles of economics and optimization to explain family size decisions. The conventional theory of consumer behavior assumes that an individual with a given set of tastes or preferences for a range of goods (a “utility func- tion”) tries to maximize the satisfaction derived from consuming these goods subject to his or her own income constraint and the relative prices of all goods. In the application of this theory to fertility analysis, children are considered as a special kind of consumption (and in developing