UNFPAState of World Population 2004
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HOME: STATE OF WORLD POPULATION 2004: Population and Poverty
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Population and Poverty

Millennium Development Goals
Reproductive Health and the MDGs
Economic Impact of Population Dynamics
HIV/AIDS and Poverty
Ageing Populations
National Action to Reduce Poverty

Economic Impact of Population Dynamics

There is clear evidence that enabling people to have fewer children, if they want to, helps to stimulate development and reduce poverty, both in individual households and at the macro-economic level.

FAMILY SIZE AND WELL-BEING. Recent research supports the premise that having many (and unplanned for) children imposes a heavy burden on the poor, while smaller families have higher upward economic mobility.(2)

Fertility impacts on a family’s poverty in several ways:

  • Smaller families share income among fewer people, and average income per capita increases. A family of a certain size may be below the poverty line, but with one less member may rise above the poverty threshold.

  • Fewer pregnancies lead to lower maternal mortality and morbidity, and often to more education and economic opportunities for women. A mother’s death or disability can drive a family into poverty. Her ability to earn income can lead the family out of poverty.
  • High fertility undermines the education of children, especially girls. Larger families have less to invest in the education of each child. In addition, early pregnancy interrupts young women’s schooling, and in large families mothers often remove daughters from school to help care for siblings. Less education typically implies increased poverty for the family as well as the inter-generational transmission of poverty.

  • Families with lower fertility are better able to invest in the health of each child, and to give their children proper nourishment. Malnourishment leads to stunted growth, cerebral underdevelopment and subsequent inability to achieve high levels of productivity in the labour force.

MACRO-ECONOMIC IMPACT. High fertility impedes development in a variety of ways. The World Health Organization (WHO) Commission on Macroeconomics and Health noted in 2001, “At the societal level, rapid rural population growth in particular puts enormous stress on the physical environment and on food productivity as land-labour ratios in agriculture decline. Desperately poor peasants are then likely to crowd cities, leading to very high rates of urbanization, with additional adverse consequence in congestion and in declining urban capital per person.”

Lower fertility, on the other hand, is linked to economic gains. A 2001 study of 45 countries found that if these countries had reduced fertility by 5 births per 1,000 people in the 1980s, the average national incidence of poverty of 18.9 per cent in the mid-1980s would have been reduced to 12.6 per cent between 1990 and 1995.(3)

At the time of Cairo, econometric proof of this “population effect” on economic growth was difficult to obtain, and mainstream economists tended to dismiss it or play down its importance. A 1986 study by the National Research Council in the United States(4) concluded that population growth had little or no effect on overall economic growth, despite its important effects at the household level; but it relied on data from the 1960s and 1970s, when many developing countries were early in their demographic transition.

THE DEMOGRAPHIC WINDOW. A new round of research in the mid-1990s,(5) using data from longer periods, showed clearly that falling fertility opens a “demographic window” of economic opportunity. With fewer dependent children relative to the workingage population, countries can make additional investments which can spur economic growth and help reduce poverty.

This window opens only once and closes as populations age and the ratio of dependants (children and the elderly) eventually starts to rise again.

Several countries in East Asia—the so-called Asian Tigers—and a few others have taken advantage of this economic bonus. China has seen a dramatic drop in the incidence of poverty.(6) One study estimated that declining fertility in Brazil has raised the annual growth of GDP per capita by 0.7 percentage points. Mexico and other Latin American countries have registered similar effects. On the other hand, some countries have largely squandered the opportunity for a one-time “windfall” because of a lack of good governance or policies that have led to unproductive investments.(7)

In the poorest countries where fertility remains high, the demographic window will not open for some time, but investments now—particularly in improving reproductive health service delivery—could hasten its arrival and ensure future dividends.

The world’s regions are at different stages of the demographic transition. South Asia will reach its peak ratio of working-age to dependent-ages between 2015 and 2025. In Latin America and the Caribbean, the proportion in working ages started to increase earlier than in East Asia and will peak during 2020-2030, but the proportional change has been less marked, and the economic bonus will be correspondingly less sudden and less intense. Some Arab and Central Asian countries will approach their demographic opportunity within two decades, while others are farther away.

In much of sub-Saharan Africa the demographic bonus is still a long way off. The population is still very young and the proportion in working ages relatively low. Many countries are just beginning the demographic transition, and others have not even started. Only 11 countries are projected to reach their maximum working-age proportion before 2050. Unmet need for contraception in the region is high, however, suggesting the expansion of quality programmes could hasten the arrival of the bonus.


The ICPD recognized that ill health and unplanned births can determine whether a family falls into or escapes poverty, as the poor themselves have long known. But policy makers have been slow to address the inequitable distribution of health information and services that helps keep people poor.

An analysis of data on access to reproductive health among different income groups in 56 countries shows that the poorest groups are clearly disadvantaged, in a number of ways:

  • The biggest gap between richer and poorer populations is in delivery by a skilled attendant, the most expensive of the reproductive health services;
  • Adolescent fertility showed the next largest differential—poorer women have children at younger ages;
  • Wealth-based health inequities are greater for safe motherhood, adolescent fertility, contraceptive use and total fertility than for infant mortality;
  • Poor women have more children throughout their lives than wealthier women;
  • Poor countries have a heightened risk of maternal, infant and child death and illness, and poor women in all countries face higher risks than others;
  • Use of family planning, particularly of modern methods, is higher in richer segments of society.

These findings corroborate those presented in The State of World Population 2002 which examined data from 44 countries. Shortages of resources, skills, opportunities and outreach deprive the poor of access to reproductive health information and services and the effects are apparent.

The information and service deficits result from various factors:

  • Poor women and couples have less access to information and to the skills education provides to expand their knowledge;
  • Poor individuals and communities are riskaverse —less likely to try new behaviours— since their room for error is so small;
  • Costs for information and services (formal and informal monetary costs, and transport and opportunity costs) are more daunting for the poor;
  • When addressing the poor, service providers are less willing or able to interact as closely as is required to exchange information and support about sensitive topics;
  • Services are not in locations or open at times accessible to the poor;
  • Richer populations are more skilled at working with formal institutions and receiving a responsive hearing.

In 2000, only 3 per cent of gross domestic product was devoted to the health sector in developing countries; in the least-developed countries the figure was even lower. Expenditures in many countries still tend to favour hospitals and medical facilities in the capital city, and there has been little progress towards more equitable distribution of resources at local levels: the percentage of national health expenditures devoted to local health services has stagnated in developing countries and decreased in the least developed. See Sources

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