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Tuesday, September 07, 2004
Do we need a two-child policy? Economist says no
By Ernesto M. Pernia, Ph.D.
(Excerpts of a paper written by Dr. Pernia, professor of Economics at the University of the Philippines, and former lead economist of the Asian Development Bank)
THE proposed two-child policy exemplifies a radical measure to deal with our country’s persistently difficult situation brought about by an economic growth that barely keeps up with population growth and people’s rising expectations.
Do we really need such a policy? The answer is no, especially in terms of a legislated policy (implying coercion).
What the country needs is a clear national population policy to slow population growth towards improving—in conjunction with other socioeconomic policies—the well-being of households and society as a whole.
Given its soft state and hard church, the Philippines has neglected the population problem, practically just sweeping it under the rug. Consequently, it now finds itself virtually alone among middle-income developing countries as not having made any significant demographic transition. And it finds itself having to debate an issue that is passé for most of developing Asia, including such less developed countries as Bangladesh and India.
In the other East and Southeast Asian economies, sharp reductions in poverty have occurred as a consequence of rapid and sustained growth, attributable to sound economic policies coupled with strong population policy.
Bonus
These countries have been benefiting from a demographic bonus resulting from sharp 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,” meaning a large share of young dependents relative to workers (and savers).
A study done at the World Bank in 2001, based on cross-country data involving some 123 countries, shows a one-to-one relationship between economic growth and income increase for the poorest 20 percent of the population.
Our own more recent research using sub-national (provincial- or district-level) data finds that the growth-poverty nexus is less than a one-to-one correspondence for individual countries like Indonesia (0.7) and the Philippines (0.55).
The less-than-one coefficients indicate that poverty reduction could be further hastened by addressing other factors that improve the distribution of the benefits of economic growth. Among the critical ones are rural infrastructure, human capital investment, better agricultural prices, and agrarian reform.
In the Philippine case, which has among the highest fertility in all of Asia, it can be argued that dealing with the demographic factor will have a direct positive effect on the poor’s welfare apart from its indirect effect via economic growth. The lack of a clear and consistent population policy starkly sets the Philippines apart from the rest of Asia and partly explains its anemic economic growth and persistent mass poverty.
Some observers may point to problems of poor governance and corruption, or to external shocks brought about by trade liberalization and WTO (World Trade Organization) rules as the culprit. The counterargument, however, is that these problems have also beset the other Asian economies. And so the question remains—why have they consistently performed better than the Philippines?
What are the key proximate objectives and instruments of an effective population policy for the Philippines? Our research suggests mainly three.
* The first is to reduce unwanted fertility (or to meet unmet needs for contraception) through a strong national family planning program, i.e., one that offers both traditional (“natural”) and modern (“artificial”) methods of contraception.
Family planning services, comprising information and contraceptive means, should be provided free to low-income couples who want such services.
* The second is to change the preference for large family size through an incentive structure that raises the investment per child and lowers the demand for children (e.g., through compulsory quality basic education, lower infant mortality, gender equality, and employment opportunities for women).
* The third is to reduce population growth momentum through promoting later age at marriage, later childbearing, and wider birth spacing, made possible by a responsive family planning program. [Note that birth spacing is about the only measure that President Arroyo favors; however, without an effective family planning program, as described above, it would be meaningless lip service.]
These measures amount to a set of mutually reinforcing policy agenda and, if backed by appropriate policy reforms in the economic and social sectors, would bring about best results.
Further specific measures to help improve the welfare of the poor include investments in infrastructure and human capital that directly benefit the poor, and good agricultural prices and other food productivity-enhancing programs that are likely to favor poor households.
The country’s average per capita income and labor productivity today are at the same levels as in the early 1980s. Why is this so? Population does matter. It matters to the question whether we will remain in a low-level equilibrium trap or get out of it.
A low-level equilibrium trap simply means a vicious chain of low economic growth, high unemployment, low productivity, persistent poverty, depleting human capital, and high fertility feeding back into low economic growth, high unemployment, low productivity, persistent poverty, and so on.
A clear and consistent national population policy, matched by an adequately funded action program, is needed to break this vicious circle.
(September 7, 2004 issue)
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