Winds of change are blowing in China. A one-child policy was implemented in the eighties. A family had to pay a hefty fine if it produced a second child. The pregnant woman was forced to undergo an abortion if the family was not able to pay the fine. The rate of population growth declined steeply as a result from 3.6 births per woman to 1.8 births per woman presently. Less than 2 births per woman means that the two living persons are giving birth to lesser numbers. The population will therefore decline. This may, however, not happen immediately because life expectancy is increasing and people are living longer. In a few years, however, the lower birth rate will catch up and the total population is expected to start declining. China has got immense economic benefits from the one child policy in the last two decades. Moa Zedong has encouraged the Chinese people to produce more children.
Large number of births took place in the three decades of fifties, sixties and seventies. These large numbers of persons joined the work force beginning the eighties. The availability of labour increased and production shot up. Simultaneously, a one child policy was implemented in the eighties. That led to reduced burden of childbearing and childrearing on the families and enabled them to undertake yet more productive work in farms and factories. This was a major factor that begot high economic growth rates of 10 per cent-plus after the nineties. The situation changed dramatically around 2010. The large numbers of baby-boomers born till 1980 started becoming old. As a result, many working persons had two parents and four grandparents to support. On the other hand, lesser numbers of births after 1980s led to fewer persons joining the work force.
The ratio of elderly dependents and working persons got highly skewed in favour of dependents. On the other hand, lesser numbers of births after 1980s led to fewer persons joining the work force. Energies of the people were directed more towards taking care of the elderly; and less toward increasing production. This has been a major factor contributing to the decline in the growth rate after 2010. It is clear from the above sequence of events that population control has only a short term benefit. This is called ‘demographic dividend.’ Professor at University of Maryland, Julian Simon, notes that densely populated countries like Holland, Hong Kong, Japan and Singapore have had high rates of growth while sparsely populated Africa has had low rates of growth.
A study by the Population Research Institute tells us that between 1900 and 2000 the population of the United States increased from 76 million to 270 million. The average life expectancy increased in this same period from 47 years to 77 years; and Standard and Poor’s Share Index rose from 6.2 to 1430. These, he says, indicate the positive impact of population growth on economy. A report by Bloomberg says: “Singapore Prime Minister Lee Hsien Loong last November told that encouraging citizens to have more children is the city-state’s biggest challenge. The government announced in January a plan to spend 25 per cent more for fertility-treatment funding, paternity leave, housing assistance, and other measures to encourage families to have more children. It is clear that population has a positive impact on economic growth as it comes from increased production which requires a bigger work force and higher population.
United Nation’s agency UNFPA says that higher population deprives children of education, their productive capacities are not developed and they are not able to add to production. I am not convinced. Education can be provided to the people by cutting other consumption and expenditures. We should remember that the requirement of educated workers depends upon the technological makeup of the economy. The presence of large numbers of educated unemployed points to the same direction. The correct situation is that population is an asset if it is engaged in production; and a liability if unemployed. Therefore, policies to create employment along with an increase in population will beget higher economic growth. Second argument extended by UNFPA is that standard of living declines with increasing population because it becomes difficult for the government to provide necessary infrastructure such as education and roads. Again I am not convinced. The ability of the government to provide infrastructure depends upon revenues which, in turn, depends upon whether workers are productively employed. An employed person produces more than the cost of services provided to him by the government. Thus, the strategy should be to increase population, provide them with jobs, collect more taxes and provide more facilities.
My assessment is that the hype about population being a ‘problem’ has been created by the businesses to encourage women to enter the workforce and thereby reduce the cost of labour and an increase in profits. But this is a shortsighted policy because soon the number of workers reduces and growth rate suffers as is happening in China now. The Chinese Government has learnt this hard truth and has now made the one-child policy a bit lenient. Only couples who were both single child of their parents were allowed to have a second child. Now couples where one of the two persons is a single child will be allowed to bear another child. This step is in the right direction. The lesson for India is that we must focus on making economic policies that provide employment instead of trying to curtail population.
Bharat Jhunjhunwala is a former professor of Economics at IIM Bangalore.