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Population and Development
Economic Perspective
Ernesto M. PerniaUP School of Economics
Mulat Pinoy
28 August 2010
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Outline
Introduction Negative externalities of rapidpopulation growth
Macro perspective Micro perspective
Food & fuel shortages
Tale of diverging twins Conclusion: Daunting challenges for P-
Noy
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Population issue remainscontentious
Majority of Filipinos regard rapid populationgrowth as hindrance to development,requiring policy intervention.
But government appears immobilized owingto opposition from Catholic Church hierarchyand other conservative groups.
Yet the influence of the Church on fate ofpolitical leaders seems overrated.
Hard Churchand soft Stateat the root of RPsinability to achieve demographic transitioncumeconomic development.
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Population issue remains
Reality is that a well-organized, single-
issue vocal opposition is tamping thesilent majority.
Filipinos typically dont want to talk
openly about sex which intimatelyrelates to the population issue.
Thus, parents try to maintain reticent
dignityvis-a-vis their kids sexualityeven if they dont want them involvedin pre-marital pregnancy, so they can
finish their education!
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Population issue remains
The squeaky wheel phenomenon.
Isnt the State to blame, even more sothan the Church, for not addressing thepopulation issue?
In other Catholic countries, the Statehas not allowed itself to be kepthostage by the Church.
Little wonder, RP has a hardpopulationand a softeconomy!
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Negative externalities of rapidpopulation growth (RPG)
Economic growth: RPG constrainsinvestments in physical and human capital
low productivity, hence, social cost of sloweconomic growth & poverty reduction.
Environment: RPG strains the environment,incl. sources (forests, water) and sinks (air
thats polluted) climate change, thoughdeveloped countries contribute much more toglobal climate change.
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Negative externalities (contd)
Poverty and inequality: RPG raises supply
of labor relative to land and physical capital lower wages (esp. for less skilled), hence,greater inequality and poverty.
In RP, poorest quintile increases close todouble the overall average growth rate.
Inequality adversely affects economic growthdirectly.
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Macro perspective: population,economic growth, and poverty
In 1970s-80s, population growth of 2%+ in poorcountries was already considered high & hindrance toeconomic growth via low human capital investment,
unfavorable saving and capital-shallowing effects, etc. Echoed by a recent studies (e.g., Mapa 2006) that
highlights the demographic dividend fromdemographic transition, with work force rising fasterthan dependents.
Demographic transition must be early and quick toresult in significant dividends (higher saving rate, HRD,productivity, etc.) an opportunity RP has sadlymissed.
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Population Poverty
Annualgrowth
rate (%)
2005-2007
Totalfertility
rate
2006
% below poverty line
ca. 2004% share of
the poorest
quintile in
national
income or
consumption
2004
National
2004
PPP
$/day
2004
Bangladesh 1.3 2.9 40.0 536.3 5
8.6 5
Indonesia 1.1 2.2 16.6 7 7.7 2 8.4 2
Malaysia 2.0 2.7 5.1 2 0.0 6.1
Nepal 2.2 3.4 30.9 24.7 3 6.0
Pakistan 2.0 3.6 23.9 9.8 9.2
Philippines 2.1 1 3.3 33.0 6 13.2 3 5.5 3
Thailand 0.7 1.8 9.8 2 0.0 2 6.4 2
Vietnam 2.0 2.2 19.5 8.4 7.2
Table B: Population and Poverty StatisticsSelected Asian Countries
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Micro PerspectiveFertility and poverty
Consistent and tight link between fertility andpoverty.
Family size also directly related to likelihoodof falling into poverty owing to exogenous
shocks (e.g., typhoons, droughts, inflation). Mean per capita income, expenditure and
savings fall monotonically as family size rises.
Likewise, mean education spending perstudent and mean health spending per capita.
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Family Size and Poverty
Large family sizeclosely associated
with higherpoverty; be itincidence, gap orseverity.
This has notchanged in the last21 years; if at allincidence amongthose with smaller
family size hasgone down whilefor those withlarge family sizehas gone up.
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Family size and provisions for current andfuture needs
As family size rises, families
are not able to maintainper capita income, percapita expenditure, percapita savings, per capitahealth expenditure, and perstudent education
expenditure.
Less able to provide forcurrent needs
Less able to protect
against income shocksLess able to invest inhuman capital or poorerincome prospects for theirchildren.
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Family size and hunger
Strong association between family size(FS) and poverty further substantiatedby link beween FS and hunger (Mangahas
2009). Hunger rates tend to rise monotonically
with number of family members,especially for severe hunger.
Average hunger incidence for RP
is about the rate for families of 5-6
members.
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Table E. Hunger Incidence by Number of Family Members
Family members Total hungry Moderately hungry Severely hungry
(number) (%) (%) (%)
Philippines 18.4 15.2 3.2
1-2 10.0 8.0 2.0
3-4 17.6 15.5 2.1
5-6 18.5 15.4 3.1
7-8 23.9 18.5 5.4
9+ 25.2 17.9 7.3
Source: Mangahas (2009) based on SWS September 2008 Survey.
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Food-fuel shortages
Both a supply-side and a demand-side problem.
Agricultural production neglected foryears (irrigation, farm-to-market roads,technology, post-harvest facilities, etc.).
Slow moves in oil & gas exploration(e.g., Malampaya & Galoc) & alternativefuels (consider Brazils foresight!)
No demand-side management(population policy and FP programs).
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Bigger bang per buck
In 60s & 70s, studies showing thatinvestment in FP to avert (unwanted)pregnancies gives higher return
higher income per capita vis--visinvestment in physical infrastructure.
Many LDCs, including RP, took the
message to heart. RP among the first to initiate population
policy and FP in 1969.
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RPs policy failure
Unfortunately, RP failed to sustain whatit started.
By contrast, Thailand followed RPs leadlater in the 70s and sustained the effortwith vigor.
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A tale of diverging twins
In 1970, RPs population was 36.7mand Thailands about the same.
Population growth rate also about 3%
per annum for both twins. By 2008, RPs growth rate reported as
2.04%, while Thailands at 0.7%.
In 2010, Filipinos number 94m, whileThais about 67m the difference aboutMalaysias population!
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RPs rice shortage
If RP had sustained its population policy
and FP programs as did Thailand,annual rice consumption only about13m metric tons instead of 18m m.t.
At 16m m.t. domestic production, RP anet exporter of 3m m.t.
A conservative estimate because
savings from lower spending on publicservices could have been used to boostproductivity.
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Income and poverty
Moreover, at Thailands populationgrowth trajectory, RPs income p.c.would have been markedly higher,
poverty & unemployment rates lower.Again, pure demographic effects.
Does not allow for favorable feedback
effects in terms of higher saving,investment and productivity.
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Daunting challenges for P-Noy
Sustained political stability Improved governance curb corruption
Fiscal responsibility Better investment climate infrastructure
and regulatory system Higher investments in human capital
(education, health & nutrition) Raise investment in S&T (from 0.15% to1.0% of GDP)
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RPs daunting challenges
Review labor export policy seriouspolicy reforms to strengthen economy
Food security
Energy sufficiency Eco-tourism (open skies policy) Reduce population growth rate
demand management unambiguouspopulation policy
Poverty reduction quality of life
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Thank you!
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