Philippine population

Does size matter?
By RODERICK T. DELA CRUZ
TODAY Reporter
November 16, 2004
“Too many people doesn’t cause poverty; bad governance and policies do.”
Thus claimed a group of economists at the University of Asia and the Pacific (UA&P) who insist that population growth has nothing to do with the grave poverty situation in the Philippines.
In their paper, the UA&P economists said they have found no evidence that “supports the claim that a large, fast-growing population causes more poverty.”
“Moreover, we have found that it is bad governance and bad economic policies that have caused poverty,” the authors said.
The paper was written by Roberto de Vera, Emilio Antonio, Ronilo Balbieran, Enrico Basilio, Jovi Dacanay, Stephen Huang, Maia Tyche King, Winston Stan Padojinog, Cherrylyn Rodolfo, Kimberly San Agustin, Leandro Tan, Cid Terosa, Peter Lee U and Bernardo Villegas.
In its 1999 report, the World Bank noted that many Filipino economists concurred that the country’s high population growth rate was a major cause of the widespread poverty, particularly in the rural areas. It is estimated that the Philippines has a population of over 80 million people, which increases by 1.7 million or close to 2 percent every year.
Analysts said the economy, with its dwindling resources, cannot support the expansion of the population, resulting in the increasing number of poor people.
Data from the National Statistics Office show that as of 2000, 34 percent of the Philippine population and 28.4 percent of all Filipino families are living in poverty.
Figures from the United Nation Development Program are more alarming, with 46.4 percent of Filipinos reportedly living on less than $2 a day.
MOST IMPORTANT CHALLENGE
Ernesto Pernia, the former lead economist of the Asian Development Bank (ADB) and now a professor at the University of the Philippines School of Economics, said the single most important challenge for the Philippines has been and continues to be high poverty incidence.
In his paper “Population: Does It Matter? Revisiting an Old Issue,” which was presented at the Philippine Institute for Development Studies, Pernia said that because it has neglected the issue of population growth, the Philippines has not made any significant demographic transition.
“The country’s average per capita income and labor productivity [average output per worker] 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,” Pernia said.
“The country has remained in a low-level equilibrium trap which involves a chain of low economic growth, high unemployment, low productivity, persistent poverty, declining human capital and high fertility feeding back into low economic growth and so on and so forth,” he said.
In order to break this vicious chain, he said a clear and consistent population policy, matched by an adequately funded action program, is needed.
“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. These countries have been benefiting from a ‘demographic bonus’ resulting from an increasing share of workers [population aged 15-64] relative to young dependents [ages 0-14],” he said.
On the other hand, Pernia said the Philippines continues to be burdened by a “demographic onus” or large share of young dependents relative to workers.
“The lack of a clear and consistent population policy starkly sets the Philippines apart from the rest of East and Southeast Asia and partly explains its anemic economic growth and persistent mass poverty,” he said.
TWO-CHILD POLICY
Pernia acknowledged that some observers would point to problems of poor governance, corruption and political economy or to exogenous shocks brought about by trade liberalization and the World Trade Organization rules as the culprit.
The counter argument to this, he said, is that these problems or circumstances have also beset or affected the other Asian economies. And so the question remains: Why have they consistently performed better than the Philippines
To address poverty, Pernia gave three suggestions:
Reduce unwanted fertility (or meet unmet needs for? contraception) through a strong national family planning program, that includes both traditional and artificial methods of contraception;
Change the preference for large family? size through an incentive structure that raises the investment per child and lowers the demand for children; and
Reduce population momentum through promoting later age at? marriage, later childbearing, and wider birth spacing, made possible by a responsive family planning program.
The Population Commission warned that at its present pace of growth, the Philippine population would double from the present 84 million to around 168 million in 29 years. At present, the Philippines is ranked as the 12th most populated nation in the planet.
A study made by the Asian Institute of Management showed that if the population grows by 2 million a year, the Philippine economy has to expand by at least 10 percent annually over the next 10 years to be where Thailand is today.
Alarmed by these figures, Albay Rep. Edcel Lagman filed early this year House Bill 16, otherwise known as the Reproductive Health Care Act of 2004, which proposes a two-child policy. The bill seeks to limit the size of families to two children.
The bill also seeks to provide scholarship grants for children at the tertiary level of couples who can comply with the two-child policy.
The Catholic Church vehemently opposed the bill, saying that the roots of poverty in Philippine society go much deeper than the growing population.
DEBUNKING ASSERTIONS
In response, the economists from the UA&P, an institution that subscribes to the Opus Dei theology, denied the following assertions:
• A larger population worsens poverty. “On the contrary, poverty incidence actually went down as our population got larger,” de Vera said, explaining that as the population increased threefold from 27 million in 1961 to 76 million in 2000, the proportion of poor families fell from 59 percent in 1961 to 34 percent of all families in 2000. “It is true that poverty incidence increased from 32 percent in 1997 to 34 percent in 2000, but this increase was most likely due to the 1997 Asian financial crisis,” he added.
• Higher population densities mean lower personal incomes. De Vera argued that thickly populated areas can exhibit higher incomes and greater economic activity, noting that densely populated cities like Metro Manila, Cebu and Davao provide higher income opportunities than the less densely populated regions. For instance, Metro Manila, which had a population density of 15,617 persons per square kilometer, had a per capita income of P66,173 in 2000. This was more than thrice the per capita income of P19,291 in Central Visayas, which had a population density of 381 persons per square kilometer.
The case is similar in other countries, he said. For instance, there are countries, such as Bolivia, Kenya and Ethiopia, with lower population densities than the Philippines yet have lower personal incomes. Countries such as Hong Kong, Singapore and South Korea, with higher population densities also have higher personal incomes than the Philippines, he added.
De Vera said that based on their statistical analysis using population density and personal income, an average increase of 100 persons per square kilometer is associated with an increase of P292 to its personal income.
• Higher population growth leads to lower economic growth. De Vera said economic studies do not support this seemingly logical assertion, citing the 1966 book Modern Economic Growth: Rate, Structure and Spread by Nobel prize winner Simon Kuznets who said there is no clear association between rates of growth of population and of product per capita. Other studies, de Vera added, support Kuznets’s argument.
“So if population growth doesn’t affect economic growth, what will? Good governance and well-implemented economic policies do,” he said, adding that this is evident in the cases of East and West Germany, North and South Korea, and China and Taiwan. “In 1950, both the communist and noncommunist countries had practically the same birthrates and the centrally planned economies had less population pressure than their market-directed counterparts as measured by population per square kilometer.”
“Yet the economic growth of West Germany, South Korea and Taiwan was better than their counterpart centrally planned economies... Due to faster economic growth, personal incomes in Taiwan and South Korea were roughly double than those in China and North Korea, respectively while those in West Germany was more than 10 percent larger than East Germany’s in the 1980s,” he added.
• A larger population means more hungry and malnourished people. De Vera said that on the contrary, data from the Food and Agriculture Organization show that food supply available for consumption has increased and that the historical trend shows it will continue to outpace population growth in the future.
He said that the calories per person per day in the Philippines went up from 1,745.0 in 1961 to 2,379.3 in 2002 while the grams of protein per person increased from 40.6 to 56.1. “These national trends follow world trends,” he added.
“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,” he said.
• A larger population means less funds for education. De Vera said people get worried about this, since government funds may not be sufficient to provide the education needed by their citizens. However, he noted that based on the 1994 World Bank Policy Research Paper prepared by Lant Pritchett, there is no correlation between population growth and years of schooling.
In order to raise funds to construct the 18,000-classroom backlog, he said the government should instead focus its efforts in stopping tax evasion which amounted to P193.7 billion in 2001 alone and corruption, which cost the government over $48 billion over the past 20 years.
• Our population will double in 29 years. “We should not worry about this at all. First, the mere fact that our population is growing means that people are living longer,” de Vera said.
“Our growth rate is not out of control, for it is actually expected to go down, thanks to the fact that parents rationally adjust their family size based on the child mortalities and economic opportunities they face,” he said.
De Vera pointed out that the Philippines is far from reaching a “standing room only” situation. “We can fit the 2050 population of the whole Philippines in Luzon with a population density that is less than one-tenth the 2000 density of Metro Manila,” he said.
Moreover, he said the 6.396 billion people in the world today can fit on the island of Luzon, with each person getting 16 square meters of living space.
He noted that there are projections that the Philippine population will reach 166 million in 2033, or double the 83 million in 2004. However, this figure is way above the United Nations projection of only 130 million for 2033.
De Vera also said the fertility rates in the Philippines would drop from 2.36 percent in 1995-2000 to 1.98 percent in 2000-05 to 1.2 percent in 2030-35 and down to 0.92 percent in 2045-50.
• Larger families are poor families. While this may be true, de Vera insists that it would be poor judgment to use this observation as a basis for limiting the family size of poor people.
“It is not proven that a larger family size is what makes a poor family,” he said. “The more likely reason why some families are poor is the limited schooling of the household head.”
Data, he said, show that 78 percent to 90 percent of the poor households in each family size had heads with no high-school diplomas. “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,” he said.
• Instituting a two-child policy will significantly reduce poverty. De Vera asserted that successfully implementing the two-child policy will not hasten the economic growth that will reduce poverty.
“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,” he said.
De Vera said that according to Joseph Chamie, director of the UN Population Division, 60 countries or a third of the countries in the world have period fertility rates of below 2.1 percent. Fertility rates below the replacement rate of 2.1 percent means that these countries will eventually experience the decline and aging of their populations.
Among these countries, de Vera said, are Russia, Japan, Germany, Italy, Poland, South Korea and Taiwan. He noted that the population of these countries started to decline because of the two-child policy.
“Instead of implementing a two-child population policy, we should focus our efforts on cashing in on a possible demographic dividend,” he said. This exists when a previously fast growing population decreases it growth rate and thus results in the labor force growing faster than the dependent population of children and elderly.
“If the proper policies are in place during this demographic stage, then the expected increase in savings and labor supply can be harnessed to sustain rapid economic growth that reduces poverty,” he said.
The Philippines, de Vera said, has a 35-year window of opportunity to reap this possible demographic dividend.
“Thus, nongovernment organizations, firms and government should focus their efforts on providing these future workers with access to education and training programs to prepare them to take well-paid jobs,” he concluded.