UNFPAState of World Population 2002
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HOME: STATE OF WORLD POPULATION 2002: Macroeconomics, Poverty, Population and Development
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Macroeconomics, Poverty, Population and Development

The Demographic Window
Fertility Decline and Economic Growth
Globalization and Poverty

Fertility Decline and Economic Growth

Half of the improvement in economic growth attributable to population has come from cashing in the demographic bonus, the other half from shifting economic consumption towards the poor (12). Many mechanisms contribute to this effect: for example, lower fertility increases women's participation in the labour force and helps improve family health and nutrition. Smaller family sizes reduce dependency ratios within families and increase incentives to acquire income beyond the basic necessities of life.

Long-term demographic and economic data from 45 developing countries show that high fertility increases poverty by slowing economic growth and by skewing the distribution of consumption against the poor. Reducing fertility-by reducing mortality, increasing education and improving access to services, especially reproductive health and family planning-counters both of these effects. The national effects on poverty reduction are clear from both average GDP increase and consumption figures.

The average poverty incidence in 1980 was 18.9 per cent, about one in every five people. Had all countries reduced net fertility by five births per thousand women of reproductive age during the 1980s (as many Asian countries did), poverty incidence would have been reduced by a third, to 12.6 per cent, or one in eight.

9 MEETING THE NEEDS OF THE ELDERLY POOR

Poverty is the main threat to the well-being of older persons. Many of the 400 million people over age 65 in developing countries live below the poverty line. To meet the Millennium Development Goal of halving the proportion of people living in extreme poverty by 2015, poverty reduction strategies must focus on the poorest and most vulnerable older persons, especially women, and on breaking the poverty cycle that runs from one generation to the next.

The experience of poverty in childhood and adulthood deepens with age. People who have endured a lifetime of poor diet, multiple pregnancies, inadequate reproductive health care and arduous physical labour are likely to enter old age in ill health. The inevitable physical decline brought on by ageing reduces each person's ability to contribute to the household and to remain economically self-sufficient.

Population ageing is an inevitable consequence of the shift from high to low birth and death rates, which is occurring much faster in developing countries than was the case with developed countries.

An effective response to older people's needs, expectations and rights requires action to:

  • provide adequate health services for older persons;
  • eliminate violence against older women and men;
  • support the care-giving services older persons provide, especially women's care for grandchildren orphaned by HIV/AIDS;
  • strengthen social protection schemes, and ensure that older persons are provided with appropriate social services;
  • support research on population ageing, especially its gender and sociocultural aspects and its implications.

Guided by the ICPD Programme of Action and the Millennium Development Goals, UNFPA advocates for mainstreaming ageing issues into the development agenda, with a particular focus on the needs of the older poor and the excluded, especially women.See sourcess

Country studies reinforce the conclusion. In Brazil, 25 per cent of those born in 1970 are poor. If fertility levels had stayed as high as they were early in the century, this would have been 37 per cent. The reduction in poverty is equivalent to what would be gained from a 0.7 per cent annual increase in per capita GDP (13).

FEWER EXPENSES, MORE OPPORTUNITIES The positive redistribution effect comes first, from slower growth in outlays on children's basic needs and education, and second, from more opportunities for poor households to increase their labour contribution, income and savings. Growing consumption across the board helps poor households because it increases demand for labour, which raises wage rates-even for families whose own fertility does not decline. Slower growth in the rural labour force lowers demand for land (reducing the cost and slowing the unsustainable fragmentation of holdings).

About half the estimated decline in poverty comes from increases in economic growth and half from the consumption side. The impacts can be considerable. A fall of 4 per thousand in the net birth rate, for example, would translate into a 2.4 per cent decline in those living in absolute poverty in the next decade.

DIFFERENT STAGES OF THE TRANSITION The effects vary at different stages in the transition from high to low fertility and mortality. At first, when mortality declines and more infants and children survive, expenditure on childhood needs increases and economic growth slows. As fertility declines and population growth slows, economic growth increases.

In the early stages of transition the gap between poor and other households may actually widen, because fertility decline starts among the better off and they reap the greatest benefit from it. As poorer families join in the transition (which has been slow to happen in many parts of the world) poverty and inequality start to decrease.

Increasing inequality in the early stages of the demographic transition has a particular effect on those near poverty. It takes just a small decrease in resources or increase in needs to push them over the line into poverty (14). High fertility, moreover, appears to have a greater impact on the depth than on the frequency of poverty (15).

The poorer the country, and the higher fertility is when it starts to decline, the greater the contribution of reducing fertility to reducing poverty. The beneficial effects increase as the demographic transition proceeds. The faster the fertility decline, the larger the potential benefits of the demographic bonus, but the shorter the time available to take advantage of it.

SUPPORTING FACTORS Demographic changes interact with markets, institutions and government policy. The impact of fertility declines on poverty will be stronger where labour markets and school systems are working well and parents are prepared to invest in their children's education.

Economic and social policies matter. Combined with access to reproductive health information and services, they can accelerate poverty reduction.

Changing opportunities for women reinforce the effects of the demographic bonus as the age structure changes. Female labour force participation also contributes to economic growth, particularly when wages are fair and declining fertility is linked to increased women's employment.

Rising levels of women's education and increased demand for labour by a growing formal sector increase the "opportunity cost" of high fertility-women lose income and other opportunities by having more children. Higher education levels and fertility declines can combine in a positive feedback in which the labour force increases faster than the growth of the workingage population.


EFFECTS OF DEMOGRAPHIC TRANSITION ON THE POOR The effects of the demographic transition vary for different groups. Poorer couples, acting according to their perceptions of their best strategies for survival and success, start their families earlier, have more and more closely spaced children and over-compensate for high child mortality.

FAMILY SIZE NORMS Family size and family welfare relationships are not only matters of individual choice and behaviour. Choices are affected by social norms, patterns of gender relations, public policies and institutions.

In the past, large families were the norm. Once a woman was married, her fertility was not a matter of choice. A woman who had many sons was honoured and secure: sons (and to a lesser extent daughters) were perceived to be a blessing. They were needed for their economic or household contributions, to give assistance in old age, and for performance of cultural practices. Today, such rationales are losing force.

Larger families drain poor people's capacity to provide for children. Whatever economies of scale they provide-sharing living space or handing down clothes, for example-are outweighed by increased expenditures and competition for scarce resources. (Over 70 per cent of consumption income for families near the poverty line is devoted to food (16). As governments seek to collect fees and revenues for a range of services, including education, health and transport, the disadvantages increase.

The poor lack education in general and education about health in particular. They also lack access to treatment for illness and funds for care. Poor populations begin mortality decline later than their wealthier counterparts. Their incentive to reduce fertility lags even further.

These delays impose further burdens on the poor. There is a higher risk of malnutrition associated with birth intervals of less than two years in households with little property. Losses to health and education are considerable (17).

MISSED OPPORTUNITIES With better health care, better and more accessible services, more education and wider choices for women, millions of people in many countries have opted for smaller families.

The poorest have missed these opportunities. They do not get the information or support that would allow them to recognize the changes that favour smaller family sizes and larger investments in the health and education of fewer children (18). As a result, they expect benefits that large families no longer provide-returns from child labour, for example. They still see a need for the "insurance effect" large families used to provide, although today's children are much more likely to survive until their parents are elderly. Women and girls in poor families who have little part in decision-making and resource allocation bear the higher costs of high fertility, but they do not benefit from the immediate gains when fertility falls. They are less likely to challenge the conditions that restrict their access to reproductive health information and services.

The poor need investments that strengthen services and institutions and increase opportunity for all, particularly for women. These investments will promote better health, allow parents to have the number of children they wish, encourage further declines in desired fertility and enable better education and life choices. The process will hasten the accumulation of the "human capital" needed for accelerated and sustainable development. The challenge is to ensure that the poor are included in these opportunities.

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