Does Population Matter? New Research on Population Change and Economic Development
Summary of a meeting with Nancy Birdsall, President, Center for Global Development, and Steven Sinding, Professor of Clinical Public Health, Mailman School of Public Health, Columbia University.
Does population growth matter to economic development? Emphatically yes, according to the new book Population Matters: Demographic Change, Economic Growth, and Poverty in the Developing World. The book, edited by Nancy Birdsall, Allen C. Kelley, and Steven Sinding, attempts to resolve the three-decade old debate among U.S. economists and policymakers on population growth and development—a debate which has had explicit implications for U.S. foreign assistance policies. Birdsall and Sinding explained their book's findings at a meeting sponsored by the Environmental Change and Security Project.
Steven Sinding described the course of the population and development debate from the 1950s to today. The consensus that rapid population growth inhibited economic development began unraveling with Ronald Reagan's 1980 election as U.S. president. Reagan Administration officials began to make policy based on the assumption that population growth has a neutral effect on development. This "revisionist" position (as academic Allen Kelley has called it) grew in favor and eventually lead population program advocates to justify their programs on a humanitarian instead of a macroeconomic basis.
Based on demographic data from the past four decades, however, Population Matters reasserts that population growth impacts not only economic development but also poverty and environment. Nancy Birdsall stressed two underlying themes of the collection of essays: 1) slower population growth creates the potential to increase the aggregate economic growth rate, and 2) a rapid decline in the average fertility rate helps bring many families out of poverty. In particular, Birdsall and Sinding focused on the importance of the dependency ratio (ratio of workers to dependents), with a high number of workers relative to dependents (children or the elderly) creating a "demographic bonus" or "window of opportunity" for fantastic economic growth. Combined with a nurturing policy environment, the demographic bonus can lead (as it did with spectacular success in East Asia in the last two decades) to increases in productivity, accumulated wealth, and supplies of human capital.
But despite similar demographic situations in Latin America and East Asia, Latin American countries did not experience Asia's high economic growth rates. Birdsall explained that Latin American has for the most part lacked good policy (fiscal discipline, competitive markets, and public investment in health and education) as well as the necessary institutions (rule of law, property rights, and political stability). To countries with a demographic bonus, Birdsall recommended: 1) undoing existing policy-induced distortions; 2) ensuring economic policies that strengthen land, labor, and financial markets; 3) investing heavily in education and health; 4) improving the status of women; and 5) subsidizing voluntary family planning and information services.