Gloria Macapagal-Arroyo

President of the Republic of the Philippines 2001 - 2010

Unique Approach to Population in the Arroyo Administration

The Administration of President Gloria Macapagal Arroyo (2001-2010) has been unique in the developing world in that it has managed to resist pressures from the population control lobby of international agencies that have targeted the Philippines literally for decades, at least since the Administration of President Ferdinand Marcos. Refusing to accept the neo-Malthusian theory, recently resuscitated after it had been discredited for most of the last century, the population policy adopted by the Arroyo administration is succinctly summarized in a statement made by former Presidential spokesman Anthony Golez to the critics of government's population policy: "This has to be viewed in totality. Population equals economy plus education plus rural development plus infrastructure plus basic service. It's the whole gamut of factors that is being addressed by this administration."

Lessons from the Great Recession

Lessons are being learned from the ongoing global economic crisis. One of them is that a large and young population can partly insulate a country from the ill effects of a global recession. It should not come as a surprise that in Southeast Asia, there are three countries that posted positive growth rates in Gross Domestic Product, i.e. Vietnam, Indonesia, and the Philippines (VIP) in 2009 in 2009, the worst year of the Great Recession.

The VIP countries, like the so-called tiger economies such as Singapore, Taiwan, and South Korea, also experienced precipitous drops in their exports (declines of 30 percent or more). Their economies still grew, however, because their businesses could still sell to their respective domestic markets. Indonesia, for example, has close to 250 million consumers. That is why, despite sporadic terrorist bombings, sales of consumer goods and services were still booming. Vietnam and the Philippines have each close to 90 million consumers. Their GDP was being fueled by private consumption, thanks to large and young populations.

The VIP countries also share a common feature: their populations are relatively young. Close to 70 percent of their populations are less than thirty years old. Those who are over 65 are less than 5 percent (in contrast with Japan, where those who are over 65 are nearing 20 percent of the entire population). Young populations tend to consume more. They also are magnets for foreign investors from the developed countries that are looking for lower labor costs. Vietnam, for example, has been attracting some $5 to$7 billion worth of Foreign Direct Investments annually in recent years.

Among the so-called emerging markets that are led by the BRIC (Brazil, Russia, India and China) countries, those that have the best of both worlds are those with large and young populations and are endowed with rich natural resources, such as vast agricultural lands, petroleum and other energy resources, and mineral resources. The VIP countries are among these fortunate emerging markets. If Vietnam and the Philippines are able to follow the example of Indonesia in installing good governance in the coming years, all three of them can follow the example of India and China in growing at 8 to 10 percent in GDP for at least the next two decades. Such a high growth rate will enable the three countries to significantly reduce their high rates of poverty.

The favorable demographic conditions prevailing in the VIP countries are in stark contrast with those of their neighbors to the North. As Philip Bowring reports in a recent issue of the International Herald Tribune, the city of Shanghai has recently decided to ease China's one-child policy because of the alarming aging of the population as a result of the lowest fertility rate in the world: 0.7 births per woman of child-bearing age. As Bowring observes: "Shanghai's situation is extreme, but it reflects a trend. A recent U.N. report estimates that China's total population could peak as early as 2020. The median age was forecast to rise from 34 today to 37 by 2020 and 50 by 2050. And this pattern has been developing in other Chinese societies. Hong Kong has a fertility rate of about 1.0; Taiwan and Singapore are at 1.2. All of these are below the lowest fertility rates in Europe (Italy and Greece both have a rate of 1.2), and the rate of 1.4 for South Korea and Japan."

The developed countries of East Asia are trying desperately to reverse their fertility decline. Unfortunately, as Bowring reports in the same article, they have had little success despite all the financial incentives they are giving to their populations to have more babies. I hope the VIP countries will have enough sense to fight mass poverty, not with the very dubious tool of family planning and population control, but with dozens of other positive measures that are available from the tool kit of sustainable economic development, such as the education of women, the improvement of public education, agricultural and rural development, microfinance and microenterprise development, social housing, etc. The VIP countries should avoid like the plague the serious problem of becoming old before becoming rich, whose symptoms are already being observed in Thailand, a country in Southeast Asia that adopted a very aggressive approach to population control.

Overwhelming Evidences Against Population Control

For over two hundred years, the evidence—both anecdotical and empirical—was that population growth was at best a positive stimulus to economic growth and at worst a neutral factor in development. In the 1990s, there was a spate of studies by American and other economists who questioned the Malthusian thesis.

The common feature of these studies is that they cannot be suspected of any bias whatsoever concerning the population-control debate. They have been designed to examine a large number of possible determinants of economic success. Using multiple correlation studies, these projects employ time-series data covering the last 20 to 30 years on hundreds of developing economies. They contain, therefore, some of the most recent lessons in combatting mass poverty in countries where the population is growing, either rapidly or slowly. Their impartiality stands in stark contrast with the evident bias of many studies funded or sponsored by the UN Population Fund or local population commission agencies.

The most comprehensive of these studies is that based on a 119-country sample (which included the Philippines). American economists Ross Levine (WB) and the late David Renelt (Harvard) conclude that population growth, among other variables, does not significantly explain economic growth in the countries studied. There is very little correlation, they report, between population growth and the growth of gross domestic product (GDP). In plain language, population growth may or may not prejudice economic progress, depending on other conditions.

Some Filipino economists make a grossly unscientific statement when they hypothesize that one peso spent on population control can save eight to nine pesos in expenditures on social services. This is a perfect example of the ivory-tower reasoning of economists who misuse statistical tools. First, they present no hard evidence that, in the Philippines, there is a correlation between amounts spent on population control and lower birth rates. In fact, the evidence is that during the Marcos years, the money spent on the promotion of contraceptives—some P3 billion—had absolutely no impact on population growth.

This sad experience in population control is shared by at least another populous country, Pakistan. Dr. Mahbub ul Haq, one of the leading development specialists at the UN and former minister of planning and finance in Pakistan, recounted in an interview for The Earth Times that he pushed hard for the promotion of contraceptives during his tenure in the government of Pakistan. Today, he regrets having spent all those resources on population control: "If we could start again, I would invest almost everything in literacy for women." Dr. Mahbub ul Haq, the father of the Human Development Index, is convinced that all the distribution campaigns for contraceptives in the Third World have proved incapable of curbing demographic growth.

Even if we assume that population-control programs are effective in preventing births, the conclusion that one less baby is a benefit to society in the form of savings in social services violates a cardinal principle of welfare economics: In trying to achieve economic efficiency for the whole of society, the welfare of one cannot be sacrificed to promote the welfare of another (with the exception of redistributive policies in favor of the poor). In birth control, it is the very existence of a human being that is being prevented in order to save money that can be diverted to other people. These ivory-tower economists are indeed playing God: They have the audacity to ignore the possibility that the birth they may be preventing is that of a human being who may contribute to society through his genius or creativity an amount infinitely more that the eight of nine pesos saved in social services. How reckless some economists can be.

Population as a Gift

The Philippines had a first opportunity to benefit from what is known as the demographic gift or bonus during the 1960's and 1970's when its "tiger economy" neighbors capitalized on their baby boom after the Second World War to energize their respective economies. By following an export-oriented, labor-intensive industrialization strategy, these countries – and after them Malaysia, Thailand and Indonesia – registered rapid growth rate of their Gross Domestic Product and even more importantly, practically eradicated mass poverty.

To our eternal regret, the Philippines followed the opposite route: inward-looking, protectionist and capital intensive industrialization. The results were predictable: the Philippines became the "Sick Man of Asia" by the 1980's. It lost its initial advantage after the Second World War, when our country was ranked second only to Japan as the most developed economy in East Asia.

But all is not lost. The Philippines is still at the demographic stage (together with Indonesia and Vietnam) while the former tiger economies (notably Singapore) are already suffering from the rapid aging of their populations. The Philippines has a second opportunity to profit from a young population by asserting its leadership in such sectors as business process outsourcing, health care and tourism, education, IT-related services and manpower exports. We cannot kill the goose that lays the golden eggs by introducing population control.

What is "demographic gift"?

The governments of these Asian countries have laudably taken full advantage of the demographic bonus, gift, window or dividend stage – the stage in a country's economic development when the fertility rate decelerates and the labor force increases. This stage presents an opportunity for government to devise economic incentives that will encourage the work force to stock up wealth from their savings. In a market-friendly environment, the working population would be able to work and earn, migrate and shift jobs depending on where it is most productive to do so. With the stock of wealth, an economy would have enough resources to provide for the needs of a fast growing old and dependent population once workers retire.

Nobody knows for sure how long such a demographic window usually lasts. But it lasts long as the labor force is growing faster than the dependent population, i.e., the proportion of 0-to-14 and above 65 years age groups. For East Asian countries, it will last until 2015. It can last for five decades, as in the case of Hong Kong, Taiwan, South Korea and Singapore.

The demographic window will happen only once. Thus, it is imperative that governments recognize this bonus or gift stage of their economic development. Economic opportunities can be viable as long as the proper economic incentives – such as a market-determined system of prices, i.e., interest rates, commodity and service prices, taxes and exchange rates – are in place. By allowing the price mechanism to direct economic agents toward viable enterprises, economies would be able to reap substantial benefits from the demographic gift.

Is it possible to miss this opportunity? Yes, especially when governments formulate policies that destroy the price or market mechanism, or when a population control program hastens the decline of the labor force participants. When such a program is enforced, the demographic window or gift stage is reduced by at least two decades. This means that an economy would have narrowed the time period for storing wealth for the future use of a rapidly aging population.

The Philippines' demographic gift stage

Any demographic transition takes place when an economy experiences a large positive difference between crude birth rate and crude death rate. This means that life expectancy has increased and the market economy experiences population growth. The population growth level starts out to be very high then tapers off. During the tapering off or slowdown in population growth, which happens in consonance with a deceleration in fertility rates, the market economy is said to be in a demographic gift or bonus stage. This stage can serve as a demographic dividend if governments take full advantage of a large labor force's capacity to acquire knowledge and skills, and thereby secure gainful employment.

Any economic development undergoing a demographic transition, i.e. a stage when the crude birth rate is much greater than the crude death rate, is favored with a window of opportunities for economic growth if macroeconomic policies are in place. With the right policy mix, this stage can also be called a demographic gift because the market economy will benefit through the productivity of its labor force.

The demographic gift stage started in the Philippines during the period 1980 to 2000. This period saw a rapid decline in the fertility rate – from 4.13 in 1990 to 3.25 in 2000 (see Figure 1). There was a continuous deceleration of the fertility rate from 1980 to 2000. On the other hand, the number of labor force participants, that is, those aged 15 to 64, grew in 1995 to about 3% (see Figure 2). The growth of the labor force is expected to be higher than the growth of dependents, that is, those aged 0 to 14 and 65 and over, from 1980 to 2030. Thus, the demographic gift in the Philippines will take place during this span of five decades. With misguided macroeconomic policies from 1980 to 1990, we missed an opportunity to reap economic growth from our large labor force. From 1995 to 2000, our macroeconomic policies were put in place. Now is the time to sow, so we can reap from a productive labor force.

A lot of economic strategies can be formulated during the current economic development phase. With a more open trade and financial environment, our macroeconomic policies have been slowly reflecting the true value of our resources, i.e., labor and capital. Particularly, our labor force is a main economic growth driver. For example, given our labor force composition from 1995 to 2040, about 1.24 to 2.25 persons in the labor force are capable of earning for the sustenance of every dependent person in the population. Now is the time for our huge labor force to start earning for future needs. The goal is attainable if there is access to resources – food, education and health, and financial resources for entrepreneurship, especially for women. Women at this stage prefer working to doing leisure or non-productive activities. They need not choose between having more or fewer children. For example, women who choose to stay at home can also contribute to income and savings by setting up a small business or by choosing jobs compatible with the needs of being a mother.

The country's demographic gift stage is likely to continue until 2030, that is, until the growth rate of dependents surpasses the growth rate of the labor force. However, the benefits of having a large labor force will be reaped even until 2040, or when about 2.25 persons in the labor force are able to earn for every dependent (see Figure 3). Our East Asian neighbors also posted a ratio of 2.25 persons in the workforce for every dependent from 1965 to 1990 – about three decades. During this period, personal savings increased and provided for capital accumulation. This capital was primarily used to improve the quality of education via increased tertiary education enrolment. It was also used to improve manufacturing technology via research and development. Thus, it was a quality leap in human capital that gave East Asians their "miracle economy". About 25% to 30% of their economic growth is due to human capital improvement brought about by the demographic gift.

Effect of population control

If our country embarks on a massive population control program in 2004 by drastically reducing the fertility rate to 2.0 – the targeted moderate fertility rate level in 15 years or by 2020 without any population control program – our demographic gift phase will be shortened by two decades. Thus, instead of having a ratio of 2.25 in the work force for every dependent during 2020 to 2040, the country may post a ratio of only 1.7:1.0 by 2010 to 2020. With a drastic population control program, the capital will be accumulated within less than three decades. For the East Asians, capital is being accumulated within five decades – from 1960 to 2015 – by incurring double-digit private per capita savings growth rates for at least three decades up to at most five.

The Philippines could accumulate capital also within five decades but we started to have double-digit private per capita savings only in 2000. We need to sustain this level up to at least 2030 and extend it to 2040. But if the government enforces a drastic population control program, our work force would have at most only 2.5 decades to accumulate enough savings for human capital and research and development because our demographic gift phase would have been shortened by 20 years. Could we accumulate enough savings for our current and future needs within a s pan of only 2.5 decades when our East Asian neighbors took five? Are we trying to beat "Miracle Asia's" record?

To reap the fruits from the demographic gift, the country needs a sustained per capita real gross domestic product or real output growth of at least 6% annually from 2003 to 2030. This figure is sustainable with high per capita savings growth rates of the working population. If we meet this goal, we can accumulate in at least three decades enough capital and investments to maintain a high level of growth until 2040. Currently, the country is not yet in a position to reap the benefits of the demographic gift. We are still experiencing the pains from misguided policies in the past three decades. To enable each Filipino to have a better life, the country needs to maintain the current market-friendly policy scenario and the current fertility rates deceleration for five decades.

If we need at least five decades to sustain high per capita savings rate, then an aggressive population control program may not be a good move. In the first place, the projected decreasing fertility rates (see Figure 1) already point to a reduction in number of the 0 to 14 age group, indicating that the number of live births is likewise decreasing. In fact, about 12 years from now, there would be considerably less births, because the growth rate of this age group would be negative (see Figure 4). Furthermore, savings may still be negligible at the beginning of a demographic gift stage, where the country is at the moment. The young – still a big number – need to be fed, clothed, housed, cared for medically and educated. When they become adults–and thus income earners–they are more likely to spend only part of their income for their own needs. The rest of the income is used to provide for children or is saved, most often for retirement and for an education and health plan, savings will increase significantly only when the growth in the number of the potential labor force is faster than the growth in dependents.

When a bigger part of the population is made up of the economically active and this sector increase their savings, then they will contribute significantly to per capita real income growth. Such is the case for the Philippines. We can see this trend if we examine the growth of per capita GDP.

Learning from our neighbors

This welcome opportunity can serve as a demographic gift when the mechanisms to make it work are stimulated through pertinent policies. The most important mechanisms are labor supply, savings and human capital. The demographic gift stage works through labor supply via a boost in per capita production as the number of workers increase and more women enter the workforce to help augment family income. The demographic gift also affects savings. As an economy's capacity to earn increases, a portion of income is put into educational, insurance, pension and retirement plans.

Finally, the demographic gift has significant effects on investments in human capital effects that are the least tangible but are the most significant and far–reaching. Longer life expectancy causes fundamental changes in the way people live–people become valuable assets, and parents are likely to invest in their children's more advanced education. Healthier children, in turn, tend to experience greater cognitive development per year of schooling. Because of this educational investment, the labor force as a whole becomes more productive, meriting higher wages and a better standard of living.

David E. Bloom, David Canning and Jaypee Sevilla (2001), pp. 18 to 20., >Bloom, Canning and Sevilla (2001). Pp. 21-24, Ibid.

Our neighbors took full advantage of this. The good news is that because of our recent macroeconomic policies that promote a market environment of commodity trade and financial services liberalization, the country's labor force and physical capital are maximized and contribute to per capita output growth. Table 2 shows some parallelisms between our current policies and those of Taiwan, Hong Kong, South Korea and Singapore in the 1960s, when their economies started with a demographic gift stage. Following the example of the East Asians, our current macroeconomic policies have enabled the country to reap a demographic dividend by vitalizing the mechanisms of labor supply, saving and human capital.

The East Asian demographic transition (i.e., positive difference between the crude birth rate and the crude death rate) was one of the critical factors that accounted for the region's spectacular economic growth. Between 1965 and 1990, per capita income rose annually by over 6%. One reason for this phenomenal growth is the entry of the baby boom generation into the work force in the late 1960s. It changed the proportion of workers-to-dependents in the population. With the benefits of a good education and a liberalized trade environment, this generation was absorbed into the job market and into gainful employment, thereby increasing the region's capacity for economic production. Between 1965 and 1990, the region's working-age population grew nearly four times faster (an average of 2.4% a year) than its dependent population. A virtual spiral was thus created, whereby population change increased income growth, and income growth decelerated population growth–and therefore the number of dependents–by reducing fertility. All these explain how the mechanisms of labor supply, saving and human capital helped deliver high per capita output growth levels for these countries. The increase in private household livings provided the capital accumulation needed to finance growth. Some studies show that the demographic gift accounts for between one-fourth and two-fifths of East Asia's "economic miracle." On the other hand, our demographic structure and recent policies are not too far off (see Table 2).

See Bloom, Savid E., and Jeffrey Williamson (1998). "Demographic Transitions and Economic Miracles in Emerging Asia." World Bank Economic Review, and Bloom, David E., David Canning and PIa Malaney (2000). "Demographic Change and Economic Growth in East Asia." Population and Development Review. Vol. 26. Supplement pp. 257 to 290.

Our policy shift of having a free trade with a liberalized financial environment, coupled with a prudential exchange rate policy all helped the market scenario from 1995 to 2003 to parallel East Asia's performance during the 1960s. By continuing this good policy mix (sans a population control program), we can extend the benefits we are now experiencing from our demographic gift stage to at least four to five decades more. However, a liberalized trade and financial environment does not directly benefit the country's poorest sector but mechanisms are currently being put in place.

Showdown on the Reproductive Health Bill

For nine years, the administration of President Macapagal Arroyo had consistently repudiated any aggressive population management program, basing its policy on all the evidences cited above. In the last two years of this administration, some elements in the independent Legislature tried to pass the so-called Reproductive Health Bill. The vigorous debates in the congressional halls, media, academe and business focused on the positive and negative aspects of the RH Bill.

A number of my colleagues at the University of Asia and the Pacific combined their respective areas of specialization in the social sciences to present to the Legislators the scientific bases for rejecting the underlying premise behind the RH Bill that population growth is the direct cause of mass poverty in the Philippines. Dr. Roberto de Vera, Director of the Industrial Economics Program of UA&P, summarized these views in a primer, excerpts of which are reproduced below.

Bloom, Canning and Sevilla (2001). Pp. 25 to 27., Krugman, Paul (1994). "The Myth of Asia's Miracle." Foreign Affairs. Vol. 73. Pp. 62 to 78., Mason, Andrew, ed. (2001). Population Change and Economic Development in East Asia: Challenges Met, Opportunities Seized. Stanford University Press, and Bloom, David and Williamson, J. (1998). "Demographic Transitions and Economic Miracles in Emerging Asia." World Bank Economic Review 12, 419 to 456.

Various groups of Malthusian bent claim that today's high food and fuel prices that are impoverishing more people are caused by overpopulation. So they propose that it would be reasonable to stabilize the population through a reproductive health, responsible parenthood and population development bill that promotes economic growth and lifts people out of their poverty.

We reckon that their proposal rests on five assertions: 1) Higher population growth leads to slower economic growth; 2) A larger population means more hungry and malnourished people; 3) Our population growth is out of control; 4) Larger families are poor families; and 5) Instituting a two-child population policy, through the proposed Reproductive Health, Responsible Parenthood and Population Development Bill, will significantly reduce poverty.

How does this proposal and its assertions hold in the face of economic, historical and demographic evidences?

Assertion 1: Higher population growth leads to slower economic growth

Economic studies do not support this seemingly logical assertion. Nobel prize winner Simon Kuznets's pioneering study contained in his 1966 book Modern Economic Growth: Rate, Structure and Spread (pp. 67-68) showed that "[n]o clear association appears to exist in the present sample of countries, or is likely to exist in the other developed countries, between rates of growth of population and of product per capita."

Other studies have confirmed Kuznets's findings, showing no clear link between population growth and economic growth (or poverty). Here are the findings of five studies:

  • the 1992 Ross Levine and David Renelt study of the relationship between growth and its determinants found no significant effect of population growth on economic growth;
  • the 1994 Jeff Kling and Lant Pritchett study arrived at a similar finding where they allowed the effect of population growth on economic growth to vary according to the level of development and resource scarcity;
  • in a 1996 review of the population growth-poverty relationship, Dennis Ahlburg points out that studies have showed population growth has little or no direct effect on poverty;
  • in a 2004 study examining the determinants of long term growth, Gernot Doppelhofer, Ronald Miller and Xavier Sala-I-Martin, found that average annual population growth from 1960-1990 was not robustly correlated with economic growth;
  • the 2007 Eric Hanushek and Ludger Wömmann study found that total fertility rates, which can be seen as an alternative measure of population growth, did not have a statistically significant association with economic growth.

Similar conclusions have been arrived at by the US National Research Council in 1986 and in the UN Population Fund (UNFPA) Consultative Meeting of Economists in 1992.

Moreover, these studies support Kuznets's explanation of why no direct relationship could be expected between population growth and economic growth. Population growth and economic growth are linked through "a common set of political and social institutions." Thus, any "direct causal relation" between them "may be quite limited." Moreover, any relationship that is measured cannot be used as a basis for managing population to affect economic growth.

It is important to note that even if there are recent econometric studies that show that population growth is negatively correlated with per capita income growth in the Philippine case (i.e. an increase in the population growth rate leads to a decrease in per capita income growth rate), these studies cannot conclude that higher population growth rates causes lower per capita income growth rates. It is more probable that there are intervening factors such as those mentioned by Kuznets that may cause economic growth. Thus, these studies cannot serve as bases for a policy that aims to reduce population growth to raise per capita income growth.

Assertion No. 2: A larger population means more hungry and malnourished people.

On the contrary, Food and Agricultural Organization (FAO) statistics indicate that the food supply available for consumption has increased and the historical trend shows it can continue to outpace population growth in the future. The FAO statistics for the Philippines from 1961 to 2002 show that the food supply available for consumption increased in three categories:

  • calories per person per day: from 1,745.0 to 2,379.3
  • grams of protein per person per day: from 40.6 to 56.1
  • grams of fat per person per day: from 28.7 to 48.4.

These national trends follow world trends. Based on food and nutrition statistics found in FAOSTAT, the online FAO internet database, we find that from 1961 to 2002, available world food supply per person has gone up by 24.4% and enough food is being produced for everyone on earth to enjoy a healthy diet. The FAO reports in The State of Food and Agriculture 2003-2004: "Over the past two decades, progress has been made in reducing undernourishment in developing countries. The incidence of undernourishment has declined from 28 percent of the population two decades ago to 17 percent according to data from 1999-2001."

These trends of food supply outpacing population growth clearly prove Ester Boserup's point in her 1965 book The Conditions of Agricultural Growth: that it is population growth that causes increases in food production and not the other way around. Her argument can be paraphrased as follows: Population growth puts pressure on communities who acquire food through hunting and gathering, slash-and-burn farming methods, and other inefficient methods to adopt more efficient ones such as plowing with livestock and multi-cropping. As populations grow, towns develop and people can specialize in other non-farming production activities. This is the result of farmers, being pressured by a growing population, to produce more food with more efficient methods to serve a larger demand.

If the statistics show that food supply is adequate to give every Filipino a healthy diet, why are some families still eating less? For instance, FAO's The State of Food and Agriculture 2007 shows that the incidence of undernourished people in the Philippines to be 17% in 2001-2003, lower than the 26% recorded in 1990-1992. The FAO argues in their report Agriculture: Towards 2015/2030 that families that are eating less have heads that are not able to get good paying jobs to pay for foodstuffs. Or that they live in poor, isolated communities dependent on agriculture and are unable to raise local agricultural production to meet their food needs.

In some cases, it may, in fact, be sparse population that makes it difficult for people to access food supplies. This was the case of the famine in Sahel, West Africa in the 1970s. Because of the region's low population density, not enough roads and transport services were made available in the area. In the case of the Philippines, families need to pay higher food prices due to wastages that can be avoided if there were more food processing and storage facilities. Food prices are also higher due to a fragmented transportation system, which is now being remedied by the roll-on, roll-off (roro) services of the government's Strong Republic-Nautical Highway project.

Moreover, in his book The Ultimate Resource Julian Simon has shown that in addition to food supply, the supply of oil, copper, aluminum and other resources have more than kept up with demands of an increasing population. Simon has shown that amid population growth, resources have become less scarce (or are in greater supply relative to the technology used to extract and to employ the resource) by showing that their prices have gone down over time. These trends bolster his argument first pointed out by Simon Kuznets, the 1971 Nobel prize winner: "More people, and increased income, cause problems in the short run. This increased scarcity of resources causes prices to rise. The higher prices present opportunity, and prompt inventors and entrepreneurs to search for solutions. Many fail at cost to themselves. But in a free society, solutions are eventually found. And in the long run the new developments leave us better off than if the problems had not arisen. That is, prices end up lower than before the increased scarcity occurred."

In other words, additional persons born in a democratic society mean more minds and hands to feed additional mouths, shelter and clothe additional bodies, and educate additional minds. Each additional person is a net producer of ideas and resources. This is proven by history wherein every larger generation has left the world in a better state for next one. One good proof of this is that the life expectancy of the Filipino has increased from 47.8 years in 1950-1955 to 68.6 years in 1995-2000.

Assertion No. 3: Our population growth is out of control.

Some persons point out that we need to manage the Philippine population because it is simply growing too fast for its own good (without clearly stating why). For if we don't, they warn that the population will reach 178 million in 2036, double the 89 million in 2007.

We shouldn't worry about this at all since this figure is way above the UN high variant projection of 142 million for 2036. Why the wide difference? On one hand, the 'population doubles' projection assumes that the 1995-2000 annual population growth rate of 2.36% will hold steady for the next 29 years. On the other hand, the UN high variant projection assumes that these growth rates will come down from 2.08% in 2000-2005 to 1.02% in 2045-2050. The latter assumption seems to be a more reasonable one since Philippine annual population growth rates have been decelerating: from 3.06% in 1948-1960 down to 2.36% in 1995-2000. Based on the last census, it has gone down even further to 2.04% in 2000-2007.

What people don't realize about an increasing population is that it is caused by less babies dying and more people living longer. Peter Bauer has written: "Clearly, the much-deplored population explosion…should be seen as a blessing rather than a disaster, because it stems from a fall in mortality, a prima facie improvement in people's welfare, not a deterioration." For instance, infant mortality rates in the Philippines (number of deaths per 1,000 births between birth and up to age one year) have gone down from 134.4 in 1950-1955 to 34.4 in 1995-2000 and further down to 25 in 2005. Life expectancies from birth have increased from 47.8 years in 1950-1955 to 68.6 years in 1995-2000.

Assertion No. 4: Larger families are poor families.

This is true. A sample of families that have reached their final family size taken from the 2000 Family Income and Expenditure Survey (FIES) (published by the National Statistics Office) indicates an increasing proportion of poor families as family size increases: from 4.9% in families with no children to 59.1% in families with seven children (see Table 6).

Nonetheless, it would be poor judgment on our part to use this observation as a basis for limiting the family size of poor people for two reasons. First, finding that increasing family size is associated with increasing incidence of poor families does not prove that a larger family size is what makes a family poor. The more likely reason why some families are poor is the limited schooling of the household head. In fact, 78% to 90% of the poor households in each family size had heads with no high school diploma (See Table 2). In other words, poor families are poor not because they are large but because most of their heads have limited schooling which prevents them from getting good paying jobs.

This finding that poor families have heads that lack schooling confirms the results of the 2002 Balisacan and Pernia study on poverty incidence in Philippine regions: the provision of education, hand in hand with roads, helps reduce poverty. In other words, persons can take full advantage of their education only if they have access to jobs that pay good wages and to markets that pay good prices for the goods they produce. The study also showed that agrarian reform and irrigation alleviate poverty. This finding makes sense, especially in regions where agriculture is dominant. In his 2001 paper on Philippine poverty, Balisacan showed that poverty is mainly a rural phenomenon and nearly two-thirds of the rural poor work in the agricultural sector.

This sample represents 3.3 million families with zero to seven children whose heads are married, aged 40-49 and held a job.. A family is classified as "poor" when its annual income falls below the family poverty threshold income. The latter figure can be calculated by multiplying the number of family members by the per capita poverty threshold income. The latter was estimated to be P11,605 in 2000 and represented the minimum amount of money needed to enable a person to eat enough food that would give the minimum amount of calories and nutritional requirements and to buy essential non-food items.

Table 2. Proportion of families that are poor and proportion of poor families whose heads had no high school diploma, by number of children, 2000.*

*This sample consists of families with married household heads, aged 40-49 and held a job at the time of the survey. Poverty incidence was families that earned annual incomes below the family poverty threshold level in 2000 (P11,605 times the number of family members).

Source: 2000 FIES; authors' calculation

Second, finding that larger families are usually poor cannot be used as a basis to conclude that poor parents cannot control and do not consider the consequences of their procreative capacities. For Lant Pritchett, of the Harvard Kennedy School of Government, has found that 90% of the variation in actual fertility rates can be accounted by variations in desired fertility rates. In other words, parents who have large families want large families; parents want the children that they actually beget.

Assertion No. 5: Instituting a two-child population policy, through the proposed Reproductive Health, Responsible Parenthood, and Population Development Bill will significantly reduce poverty.

Successfully implementing this two-child policy will not hasten the economic growth that will reduce poverty because it was shown in the review of the earlier assertions that (1) population growth has no direct effect on economic growth or poverty and (2) larger families are more likely to be poor not because they are large but because their heads have a limited education that limits their access to well-paid jobs. Moreover, implementing this population control policy will put the country on a practically irreversible course of population decline and ageing whose consequences we would want to avoid.

For example, slowing down the population growth leads to a situation wherein the share of persons 65 years and older (i.e. retired workers) increases while the share of persons between the ages of 15 and 65 years decreases. This results in fewer and fewer workers supporting one retired worker and makes it more difficult to finance pension fund systems in the long run. Moreover, history tells us that government population programs typically drive fertility rates below the replacement level of 2.1 children per family which means that the country's population will be declining in the long run. A shrinking population means fewer minds and hands will be around to find and implement innovative solutions to the challenges it faces.

Instead of implementing a two-child policy, we should focus our efforts on reaping a possible demographic dividend—a stage in a population where potential workers support relatively fewer number of child and elderly dependents—by educating our people for well-paid jobs and attracting the investments needed to generate the additional jobs for the 1.1-1.2 million entrants into the workforce each year.

We reckon that the Philippines has a 35-year window of opportunity to reap this possible demographic dividend. Based on the UN high variant projection, the total dependency ratio (total number of dependents for every 100 potential workers) is expected to ease from 65 in 2005 to its lowest level of 53 in 2040. Over the same 35-year period, the UN projects that the child dependency ratio (number of child dependents for every 100 potential workers) will go down from 59 to 39. The elderly dependency ratio (number of elderly dependents for every 100 potential workers) of six in 2005 is expected to increase to a still manageable ratio of 14 in 2040. These figures clearly show that the Philippines is not suffering from a "demographic onus" as some people are claiming. Rather, we are actually sitting on top of a possible 35-year "demographic bonus."

To reap this demographic dividend over the next 35 years, what needs to be done is to educate these potential workers to prepare them to get good jobs and to implement policies that would attract the investments needed to generate good paying jobs that would match the projected annual addition of 1.1-1.2 million to the potential workforce.


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