The bad economics of rapid population growth

Family planning can help lead a poor nation to prosperity, but you don't want to miss a crucial demographic window.

Topics: Globalization, How the World Works,

In James Hookway’s excellent Wall Street Journal article today on the tension between the Catholic Church and family planning advocates in the Philippines, he references, in passing, the latest thinking on the interaction between high rates of population growth and economic prosperity.

In many ways, rapid population growth is a sort of multiplier of bad economic policy. World Bank adviser Thomas Merrick wrote in an influential paper in 2002 that “while misguided agricultural and trade policies and poor food distributions may be the key determinants of hunger, rapid population growth exacerbates bad policies, while slower growth may buy time for good ones to have an effect.”

Since I posted just a few days ago on conservative Boston Globe columnist Jeff Jacoby’s assertion that the real nightmare facing the world is a population bust, instead of overpopulation, I was sufficiently intrigued to dig up a copy of Merrick’s paper, “Population and Poverty: New Views on an Old Controversy.”

It’s worth a read for anyone interested in population and development issues. First off, Merrick provides a brief history of how the conventional thinking on the topic has progressed. In the 1960s and 1970s, he says, “neo-Malthusians” who believed that high fertility rates torpedoed chances for economic growth dominated the field. But in the 1980s, the neo-Malthusians were eclipsed by adherents to the view that it was more important for governments to institute the correct economic policies than to worry about fertility rates.

Surprise, surprise, the current wisdom is more nuanced.

…The potential benefits of slower population growth depend on the timing and intensity of demographic change, the economic and social status of women, and the type and focus of economic policies in countries undergoing demographic change.

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Merrick’s most interesting contribution is the proposition that developing nations that succeed in reducing fertility get a demographic window for economic growth that they’d better not miss:

When fertility is high, the proportion of the population made up of children and teenagers is large relative to the share made up of working adults… As fertility rates drop, the ratio of potential workers (people aged 15–64) to nonworkers (people 14 or younger and people aged 65 and older) rises, meaning that more workers are responsible for fewer children. The reduction in the ratio of youthful dependents to working-age adults should enable countries to increase their stocks of physical and human capital (schools and well-trained teachers, health care facilities and well-trained health workers, and modern communications networks and well-trained workers to staff them).

However, opening a demographic window of opportunity does not guarantee a surge in economic growth. For one thing, it is temporary, because low fertility will eventually increase the proportion of another dependent group — the population made up of older people who are no longer working. The intensity of the age-structure effect depends on the speed with which the transition to low fertility takes place. It also depends on countries’ pursuing sound economic and social policies, to enable the large wave of potential workers to acquire skills and find productive employment. When this happens, as it did in countries like South Korea and Taiwan, a temporary surge in the accumulation of physical and human capital contributes to a rapid rise in living standards.

So a mix of family planning, education and economic opportunity for women, and sound macroeconomic policies add up to the magic recipe. Doesn’t sound so hard!

Andrew Leonard
Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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