Luis F. Dumlao, PhD, is Associate Professor at the Ateneo de Manila University; he is also a Post- Doctoral Fellow of Fordham University, New York . This article was published in the Business World on October 27,2008, pages S1/4 to S1/5.
There are basically three fronts in the debate, whether high population growth drags economic development (the position of the “pros” henceforth) or the opposite (the position of the “cons” henceforth). These are theory, evidence and policy sense.
Let’s go to theory. The most classical model that attempts to explain the negative effect of population on developing economies is the Malthusian population trap model, named after English professor of political economy and demographer Thomas R. Malthus (1766-1834). Accordingly, the economy has three possible equilibriums: the poverty trap equilibrium or the Malthusian population trap, the unstable threshold equilibrium and the high per capita income equilibrium. The pros would argue that the Philippines is in the Malthusian population trap. As soon as the economy booms, population grows rapidly to offset the boom, keeping it trapped in poverty. Metaphorically, the increase of limited food to share is offset by the increase of people who would share the food. The solution is to control the increase of people so that the share of each will be bigger. The recommendation therefore is population control policy that the pros relentlessly support. Does it mean that the pros win? The answer depends on the evidence.
A more recent theoretical model that pros use to establish their position is the neoclassical growth model. The theory is that increase of population while everything else is held constant causes an increase of output. The availability of more workers obviously improves the economy’s ability to produce. But because of the congestion and other consequential inefficiencies of having too many people, the increase of output is not able to catch up with the increase of people to feed – thus calling for population control policy.
The pros’ argument however is too focused on the short term and neglects the long run implication of the theory. In the long run, it is not just population that grows, for capital and productivity also grow. As such, the cons would argue that the pros are “barking up the wrong tree.” Population growth is irrelevant. The more relevant issue is why capital and productivity are not able to outpace population.
A more recent, elegant and mathematical theory that goes beyond the neoclassical theory is the endogenous growth model. A two-hour mathematical lecture to doctoral students in economics would do to show the dragging effect of population. But extending the lecture to three hours of mathematics would show otherwise; that population growth actually boosts national output. Does it mean that the cons win the debate? Of course not! It only shows that three hours of mathematics would support the cons’ position, but four hours would probably support the pros’ position. The contest is no longer a population debate, but a contest of who has better mathematics. So in theory, the population debate is not settled and remains a debate.
Let’s go to evidence. If the economy is stuck in the Malthusian population trap, the debate would strongly support the pros’ position of adopting a population control policy. But whether the Philippines is actually on the poverty trap equilibrium is not clear. If the economy is in the trap, an increase of income should result in increase of population growth to cause an offset. But that has not been the case. As a first example, per capita income grew faster in the 1970s because average income growth was extremely higher and not because population growth was low. As the second example, per capita income grew slower in the 1980s because average income growth was extremely lower and not because population growth was higher. As third example, in the boom years from 1993 to 1996, population growth rate remained relatively the same. If anything, the data only reveal that population growth rate does not change with economic booms and busts.
Perhaps the most used evidence that the pros use would be cross-comparisons. In cross country-comparisons , the most developed economies tend to have the lowest population growths while the poorest economies tend to have the opposite. In cross-income group comparisons, the more affluent families tend to have less children while poorer families tend to have more. The problem with this evidence is that it is evidence of correlation and not of causality. One cannot automatically assume that population growth causes lack of development; lack of development might just be the reason why population growth is high. One cannot just say that having more children makes one poorer; poverty and lack of education may be the reason why poor families have more children.
Consider another angle. If a couple is irresponsible, there is a good chance that they are jobless and poor. If a couple is irresponsible, there is also a good chance that they do not family plan. Irresponsibility and poverty have causal relation because the former ultimately leads to the latter. Irresponsibility and number of children may have causal relation because the former may lead to the latter. Poverty and number of children have correlation, but one does not cause the other and vice-versa. So in this given example, it does not make sense to support the pros’ policy recommendation.
We can look at another angle. Over 500 years before the 1970s, population growth had coincided with economic prosperity. Compare population growth in the glory postwar years of the US up to the 1960s compared to Europe . The same goes for the US’s and Britain ’s population growth in the industrial revolution of the late 1800s compared to the population growth for rest of the world. In the colonial period, compare the population growth rates of “mother” countries to the growth rates of the colonies. There are countless comparisons and all show that low population growth had historically coincided with poverty and stagnation. Does this mean that population growth was the key to economic prosperity? Does the cross-country evidencesof the past 40 years justify the claim that population control policy is needed for development? The answers to these questions are debatable.
Let’s go to policy sense. Assume for the sake of argument that indeed population growth drags economic development and population control programs would fulfill their intended outcomes. Is it really optimal to put, say PhP1 billion a year, in population control programs? Alternatively, is it more optimal to put that same PhP1 billion a year in public school education, social services and other health programs? Hypothetically, putting PhP1 billion in population control programs would fulfill the program intentions. But putting the same in education and others might fulfill numerous other intentions. These include improved productivity, economic self reliance, self esteem and responsibility, knowledge for the sake of knowledge, and even population management. So where should government spend that PhP1 billion a year? Now that is truly debatable.