POPULATION, ECONOMY AND POVERTY

MANILA
, February 24, 2005 (STAR) STAR SCIENCE By Ernesto M. Pernia, Ph.D.  -  Is it any wonder why we have fallen behind our Asian neighbors, and are likely to be left behind by the rest of developing Asia? We’re still debating such rudimentary matters as the population issue and fiscal deficits, while our neighbors have moved on to focus on more contemporary economic concerns, such as global competitiveness, investment climate and productivity growth. The lack of a resolution of the population issue in the Philippines can be attributed to its soft state and hard church. Our government has been unable to adopt an unambiguous and coherent population policy because it is more concerned with the opposition from the Catholic Church hierarchy rather than listening to the voice of the people.

The link between population growth and economic development was the subject of intense research from the 1960s to the 1980s. A common view was that rapid population growth – of two percent or higher per year then prevailing in many developing countries – was more likely to hinder than foster economic development. This negative effect operates via reduced child care and human capital investment, lower household savings for private and public investments, and constraints on allocative efficiency, entrepreneurship and innovation. Rapid population growth results in available capital being thinly spread among many workers, as well as in fiscal and environmental externalities.

Many developing countries have imbibed these lessons well, with good results, and since have moved on – but not the Philippines. Other countries in East and Southeast Asia have experienced sharp reductions in poverty as a consequence of rapid and sustained economic growth, attributable to sound economic strategy that included strong population policy. These countries have benefited from a "demographic bonus" resulting from marked increases in the share of workers (population ages 15-64) relative to young dependents (ages 0-14), while the Philippines continues to bear a "demographic onus" – a large share of young dependents relative to workers (and savers). Thus, in the 1990s, research and the debate on the population issue in the developing world began to taper off, except in the Philippines.

Population growth in the Philippines diminished slowly from 3.0 percent yearly in the early 1970s to 2.4 percent in the 1990s and leveling at this rate today. Thailand’s and Indonesia’s population growth rates, which were about the same as the Philippines’ in the early 1970s, have dropped to 1.4 percent and 1.5 percent, respectively. At the same time, while poverty incidence in the Philippines remains high at 34 percent, Thailand’s poverty incidence has fallen to 9.8 percent and Indonesia’s to 18.2 percent.

These comparisons are quite telling about the links between governance, population policy and poverty. Thailand is reputed to be the best among the three countries on all three counts, suggesting that good population policy combined with good governance results in rapid economic growth and poverty reduction. On the other hand, the experience of Indonesia, where governance and corruption ratings are worse than those of the Philippines, implies that good population policy by itself can contribute to significant poverty reduction.

Moreover, contrary to claims that significant population growth slowdown can happen only in countries at high income levels, Indonesia, with a lower per capita income and lower literacy rate, was able to reduce population growth faster than the Philippines. A similar experience has been shown by Bangladesh, Sri Lanka and India’s Kerala state.

Macro data are corroborated by household data, indicating consistently over time the close association between poverty incidence and family size. Data for 2000 show that poverty incidence rises monotonically from 9.8 percent for a family size of one to 57.3 percent for a family size of 9+. And the larger the family size, the more likely it is to become destitute owing to exogenous shocks (e.g., typhoons, droughts and price increases).

The country’s current total fertility rate (TFR) is 3.5 children per family. But this average TFR masks the wide variance across asset groups: 5.9 children for the poorest quintile (or 20 percent), 3.5 for the middle quintile, and 2.0 for the richest quintile. Desired fertility declines monotonically from bottom to top asset class: 3.8 children for poorest quintile, 2.6 for the middle, and 1.7 for the richest quintile. The wide gap between actual and desired fertility (2.1 children) among poor households suggests that family size adversely impacts on their living standards. Behind this gap is a large unmet need for family planning services: 27 percent for poorest versus 15 percent for middle class and 12 percent for richest. And the poor depend on the government for these services which it has failed to provide.

It is imperative for the national government to adopt an unequivocal and coherent population policy for three reasons: (a) negative externalities, (b) imperfect information, and (c) poverty reduction.

Negative externalities (costs imposed by some people on others) are often associated with the environmental effects of rapid population growth, such as congestion, environmental degradation and resource depletion. Moreover, in poor countries like the Philippines, population growth also results in fiscal externalities: the more poor people, the higher the taxes that the non-poor must pay just to maintain the quality of education, health services and infrastructure.

Information about and access to family planning services are inadequate. Low-income or less educated couples are often ill-informed about the health risks to both mothers and children of many and closely spaced births. And even those who are sufficiently informed about the advantages of family planning may not know how to operationalize the information they have or often do not have access to suitable services.

The large gap between wanted and actual fertility, the high unmet need for contraception, and the low contraceptive use among the poor constitute cogent justifications for the government’s provision of effective family planning services. Population policy is a necessary complement of a poverty reduction strategy.

Population policy must be initiated by the national leadership and must be national in scope. First, local government leaders typically get their cues from the national authority. In fact, controlling population growth at the local level is incentive-incompatible with internal revenue allotments, which increase with population size, as well as with politicians’ electoral chances. No wonder why at present only a handful of local government unit (LGU) executives take the population issue seriously.

Second, there are negative spillovers since population is mobile across LGU boundaries. Hence, a town or province with successful population management, good economic performance, and adequate infrastructure and social services would find itself swamped with migrants from poorly performing areas. And, third, varying fiscal resources and technical capabilities among LGUs are likely to work against a consistent and effective implementation of population policy.

There are three key objectives and instruments of an effective population policy. First, is to reduce unwanted fertility (or to meet unmet needs for contraception) through a strong national family planning program, i.e., one that allows a choice among both traditional and modern methods of contraception. Family planning services, comprising good information and effective contraceptive means, should be made readily available to low-income couples who want such services.

Second, raising the quality of basic education, reducing infant mortality, fostering women’s empowerment, and increasing employment opportunities for women would result in a smaller desired family size and reinforce the decline in fertility.

Third, women’s empowerment and job opportunities would also lead to later childbearing and wider birth spacing that slow population momentum. Slowing population momentum, like the first and second objectives, also requires fully responsive and effective family planning programs.

In sum, rapid population growth remains a critical national concern for our country. A sound population policy must be part of good governance to promote faster economic growth, lower income and wealth inequality, and hasten poverty reduction. The Church and State must arrive at an entente on this critical issue – an understanding on the need for a national population policy – as has long happened in other countries. The national government must take the lead in formulating, financing and implementing a population policy so that LGUs would carry out effective programs. This is what the majority of Filipino women across all socio-economic classes want, and Filipinos in general have affirmed the importance of addressing the population issue, as surveys have consistently shown time and again.

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Ernesto M. Pernia, Ph.D., is a professor of Economics at the University of the Philippines. He was a former lead economist of the Asian Development Bank. This article draws on a recent paper, "Population and Poverty: The Real Score" (December 2004), authored by 22 economists of the UP School of Economics, including the writer. E-mail at empernia@up.edu.ph or empernia@info.com.ph.


Reported by: Sol Jose Vanzi

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