Population Management In Order To Maintain Steady Economic Growth (Case Study)

POPULATION MANAGEMENT IN ORDER TO

MAINTAIN STEADY ECONOMIC GROWTH

“ A Case Study of Population Management “

Submitted To:

Sir Asim Mashkoor

M PHIL , ECONOMICS (Leading to Ph.D Scholer)
Research Head (Newports Institute of Communication & Economic)

Submitted By:

Muhammad Rashid Iqbal

Muhammad Ovais
Muhammad Anas Ali
Muhammad Mehdi
Muhammad Muslim
Azeem Sagar
Newports Institute of Communications & Economics

ABSTRACT
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Population Management In Order To Maintain Steady Economic Growth (Case Study)

This research titled “POPULATION MANAGEMENT IN ORDER TO MAINTAIN

STEADY ECONOMIC GROWTH” provides information about the importance of
population management for steady economic growth.

It contains a lot of information about the state of Population Management, Poverty

Reduction, Income Generation and Social Pressures.

Population growth & size have remained the focus of debate for centuries but the
recent demographic transition in developing country has made social scientists take
note of the changing age structure of the population as well. As a result of declining
population growth & consequent changes in age structure, the proportion of
working-age population is increasing in most developing countries, with an
associated decline in the dependent age population offering a window of
opportunity to these countries that is referred to as the “demographic dividend”

Youth are an important segment of the population for various reasons. From an
economic point of view, the youth represent a source of creativity, energy and
talent, which constitutes the basis for the future development of nations &
countries. From a labor market point of view the youth can be expected to remain
active for a long period & returns on investment in education & training are
therefore relatively high.

Pakistan is also going through the demographic transition and is experiencing a

once in a lifetime demographic dividend as the working-age population bulges and
dependency ratio declines. Demographic dividend available to Pakistan and its
implication for the country mainly through three mechanisms: labor supply, saving
and human capital.

Labor Supply: As the demographic transition follows its path, children born during
the high fertility years enter adult life and become workers. However, sound policies
are needed to be in place before the demographic transition to train and educate
them, so that they are not left unemployed. Women are more likely to enter the
labor force as fertility rates decline and they are released from their childrearing
responsibilities sooner to be able to be part of the labor force. Also, as the transition
moves forward, younger women may tend to become better educated than those in
the older cohorts, and are thus more productive in the labor force. This assumes

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Population Management In Order To Maintain Steady Economic Growth (Case Study)

that provision would be made to create more jobs and accommodate the growing
numbers of workers entering the labor force, thus seizing the ‘dividends’ of the
changing age-structure.

Savings: The demographic transition also promotes the growth of savings,

improving the country’s ability for investment and growth. Prime working-age adults
have the potential to earn more and thus can save more than new entrants to the
labor market, which can encourage personal and national
savings. Deaton and Paxson (1997) believe that people tend to save more between
the ages of 40 and 65, when they are less likely to be investing in their young
children and the need to prepare for their retirement is becoming more dominant.
Likewise, improved health and longevity, which are by-products of the demographic
transition, make savings easier and more attractive. Personal savings can continue
to grow and be able to serve as a source of investment that can stimulate economic
growth, as was the case in the East Asian countries [Krugman (1994); Higgins
(1998) and Kelley and Schmidt (1995, 1996).
Countries can thus move from being heavily dependent on external finance to a
position of relative financial self-sufficiency.

Human Capital: Demographic transition affects investment in human capital.

These effects are least evident but have far-reaching implications. Increase in life
expectancy makes people think differently about education, family, retirement,
status and role of women and labor force participation. Fewer children means better
educated ones as more investment is allocated to each individual child, including
girl child, making them more productive workers once they enter the labor force.
Female participation in the labor force enhances the social status and personal and
financial independence of women which in turn improves the productivity of a
population as a whole. All these mechanisms, however, depend on the policy
environment of the country. Health and education can only improve if there is a
provision
for quality health and education. Likewise, savings can only increase if people have
access to acceptable savings mechanisms and have confidence in the domestic
financial markets [Bloom, et al. (2001)]. It is these institutional differences that
make a certain country take full benefit of the ‘dividend’ provided by the

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Population Management In Order To Maintain Steady Economic Growth (Case Study)

demographic change while some do not, examples being the East Asian and Latin
American countries, respectively

In Pakistan the population of non-working age is declining and the country has
therefore entered the “demographic bonus” phase. This means that the share of
youth is significant part of the overall population. The extent to which this
demographic bonus will be translated into an economic & labor market bonus
depends on opportunities for youth to find productive employment & decent work,
which satisfy their basic needs & uplift their living standards, if such opportunities
are not available or not sufficiently available, the demographic bonus may become
an economic & labor market burden.

For economic benefits to materialize there is a need for policies dealing with
education, public health & that promote labor market flexibility & provide incentives
for investment & savings on the contrary, if appropriate policies are not formulated,
the demographic dividend might in fact be a cost, leading to unemployment and an
unbearable strain on education & health.

A country without proper population management system, which in turn increase

poverty & unemployment & population pressures, socio-political conditions &
economic arrangement have resulted in massive natural resources depletion.

Poverty is the major factor that distorts the population transition in response to food
supply. The best way to reduce poverty is to bring fundamental change in society.

There is a complex link between rising income and slowing of population growth
rates. Most of the developing countries are passing through the second phase
where the death rates and child mortality rates have fallen due to improved health
services but the birth rates are still high due to low levels of income and wide
spread poverty. As income levels improve, falls in population growth rates could
occur, resulting in a demographic transition.

The skewness of income distribution with distortion in income and substitution

effects on population increase. They perceive that the population transition would
take its natural course if the distributional issues were resolved properly. The key to

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both sustained steady economic growth and a slowing of the population growth
rates lines in the removal of distortion from income distribution.

KEYWORKDS

 Demographic dividend

 Age-structure

 Demographic transition

 Socio-political

 Population pressure

 Human capital

 Savings

 Labor supply

INTRODUCTION
This research paper is about “POPULATION MANAGEMENT IN ORDER TO
MAINTAIN STEADY ECONOMIC GROWTH”

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In which we have tried to find out that what factors can play major role in steady
economic growth.

Then we took some major part of economic growth like poverty reduction,
population management income generation & social pressures then we found out
the questionnaire regarding these major areas of economy of Pakistan.

Objectives of the study method of investigation, source of information importance,

scope of the study & method of analysis. Some detail introductions are as follows.

POVERTY REDUCTION

Population pressure is a direct cause of environmental degradation, in fact poverty

and unequal distribution of resources is causing both environmental degradation
and a persistent increase in population. Elimination of the condition of poverty
rather than trying to control the reproductive rates of people living in poverty would
bring natural progression in demographic transition. A reduction in the number of
people living in poverty, by slowing their reproductive rate would not eliminate the
root cause, poverty.

Elimination of poverty would occur only with the improvement in the living
conditions of the low-income group. Coercing families living in abject poverty to
have fewer children is only a short –term solution to reduce the number of people
living in poverty. Fewer children with no change in economic well being, no social
security net and without any assurance that a smaller family size would ensure
survival and sustenance would not bring any meaningful change as a result of
reduced fertility.

Poverty, inequality in wealth and resource allocations are all causing population
pressures. If people were economically secure they have no need for large families.
People living in the condition of poverty, children represent their only
superannuation. The condition of poverty has to be removed in order to follow the
natural course of demographic transition. Demographic transition is in three phases:

i) High birth and high death rates;

ii) High birth and low death rates; and

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iii) Low birth and low death rates.

INCOME GENERATION

There is a complex link between rising income and slowing of population growth
rates. Most of the developing countries are passing through the second phase
where the death rates and child mortality rates have fallen due to improved health
services but the birth rates are still high due to low levels of income and wide
spread poverty. As income levels improve, falls in population growth rates could
occur, resulting in a demographic transition similar to the one experienced by the
high-income countries of Western Europe and North America.

The skewness of income distribution with distortion in income and substitution

effects on population increase. They perceive that the population transition would
take its natural course if the distributional issues were resolved properly. The key to
both sustained economic growth and a slowing of the population growth rates lies in
the removal of distortion from income distribution.

Pakistani economy in which the traditional role of agricultural sector in employment

creation in diminishing. Average real wage rates in highly skilled occupation
diverge sharply from those of skilled and unskilled occupations. The overall increase
in real wage rates in highly skilled occupations between 1999-00 and 2005-06
amounted to 22.7 percent, as opposed to 8.1 and 11.6 percent in skilled in unskilled
occupation, respectively. These date refer to the employment status group of wage
and salaried employees only, but nevertheless illustrate that a ‘decent wage’ or a
‘living wage’ requires skills, and more so if economic development becomes more
skill-intensive.

However, much depends on which skills have been acquired, as highlighted in

figure 4, among generally well-paid professionals, the highest paid sub-major group
(physical, mathematical and engineering professionals).

The relatively low proportion of females in highly skilled occupation, more

pronounced among adults but also evident among youth, can be attributed at least
in part to gender gaps in education and training. At the same time, the relatively
high proportion of female youth with a degree suggests that other factor are

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important as well, including institutions in the broad sense and gender

discrimination

For youth to function in an increasingly knowledge intensive economy, numeracy

and literacy is a necessity. More generally, a completed general education, at least
at primary level, is an essential preparation for labor market integration, and to
ensure trainability and career development later in life. When moving closer to the
labor market, however, the evidence including the probit estimates indicate that it
becomes more important that education and training meet specific labor market
demands. S kills development decisions, at the individual as well as the enterprise
level, should be based on adequate labor market information as education in itself
does not guarantee a job, not for adults and certainly not for youths.

POPULATION MANAGEMENT

Increasing population can play a positive role in order to maintain a steady

economic growth. There is only a need to formulate policy which balance which
balance population in a positive manner, we have a good example of China, which is
in large in population but they take great advantage of being large in population to
maintain steady economic growth by investing on their basic education, technical
skills, providing them an opportunity for full employment. Now today the China has
become economically sound & ruling the entire world by exporting their human
capital & can capable of producing from needle to fighter planes. In case of
Pakistan, Pakistan should have to make policies dealing in order to maintain steady
economic growth they have to overlook each & every policies equally for the well
being of population management. Which are as follows:

1.) Education.

2.) Control the prices which in turn reduce poverty.

3.) Income distribution .

4.) Don’t rely on foreign aids.

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5.) Employment (make sure that each & every people should work & it is only
possible to create opportunities for employment without sex discrimination
on merit basis to every individual according to their skills.).

6.) Food (distribution of food according to increasing population).

7.) Public health.

As argued before, policies to raise the educational attainment of the labor force
beyond primary levels should be based on proper labor market information. At least
three broad, complementary approaches can be distinguished to generate such
information

1) Labor market analysis (e.g. an analysis of shifts in sectoral and occupational

distributions, changes in wages and earnings).

2) Economic sector level skills assessments (demand and supply, quantitative

and qualitative)

3) Specialized studies (e.g. tracer studies, econometric studies, policy

evaluations.)

This is the only possible solution by implementing these policies we can overcome
the increasing population growth by diverting these huge population as a
participative steady economic growth.

Higher population growth has eroded fruits of higher economic growth. Although
Pakistan has witnessed higher economic growth, it is unable to adjust its economic
structure. Higher population growth has implication for natural resources. Pakistan
has to incur huge expenses on importing food items like edible oil, wheat and
pulses. Pakistan could not replicate the industrial countries’ transition because of its
inability to modernize agriculture or develop industrial base. In Pakistan population
growth is a cause for poverty, environmental degradation and high debt levels.

SOCIAL PRESSURES

Pakistan has to control population explosion for various reasons. Pakistan has socio-
religious problems which are hampering its development efforts. Effective

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population planning is a must for Pakistan. Due to socio-cultural of Pakistan women

are not prefer to be get educated. They are discouraged in the society, which results
in low participation of women in labor force. In short even their services are not
accounted in rural areas. Therefore women are restricted in few profession only
mostly in agriculture, nursing and teaching.

LITERATURE REVIEW
Since the gathering of representatives of more than 178 nations at Rio de Janeiro in
1992 for UNCED (United Nations Conference on Environment and Development),
there continues to be a lively debate regarding the relationship between population
growth, economic development and the natural environment.

Different schools of thought give very different perspectives on the relationship

between population, economic growth and the environment. These perspectives can

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be as far apart as Malthusian and Boserupian or as similar as the Neoclassical

Economists and the Dependency Theorists [Cleveland (1998)]. There are vast
differences in some of the basic assumptions made by these schools but still they
cannot be deemed mutually exclusive as each presents only a partial view of this
very complex relationship [Boserup (1996)].

The Neo-Malthusians, mainly ecologists and biologists, predict future disasters are
unavoidable unless the population surge is controlled in time. On the other hand,
the new classical Economists predict that human ingenuity would be able to
overcome resource scarcities [Stevens (1994)].

Malthusians
The Malthusians are of the view that natural resources are limited and sooner or
later the human population will exceed the carrying capacity of the planet. The
primary focus of this group is to reduce population growth rates in rapidly increasing
population regions of developing countries.

For the Malthusians, the population densities and high growth rates within these
densely populated areas have special significance. They argue that it is difficult to
maintain a high living standard in a densely populated area with a high rate of
population increase. The reason is that due to the rapid growth of the population,
adjustment time is too short for new technology to be adapted. The result is
continuous degradation of the natural environment.

They may not agree with the original Malthusian thesis presented in 1798 by
Thomas Malthus which, stated that the population grows at an exponential rate
whereas food supply grows in a linear progression. However, Malthusians do believe
that natural resources are limited and that the carrying capacity is finite and
decreasing. As a result, they see population growth anywhere beyond this carrying
Capacity may have dire consequences for everyone.

Present-day followers of the Malthusian ideas present a synthesis of traditional

Malthusian concerns and contemporary environmentalism. They argue that even if
the growing population could be provided with food now, eventually the population

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explosion would completely ruin the fragile environment of this planet and sufficient
food supplies would not be available for all. In a recent study of 36 countries from
sub-Sahara Africa it was evident that the Malthusian mechanism was at work in the
population-agriculture-environment relationship [Drechsel, et al.(2001)].

Followers of the Malthusian doctrine also believe that rising income leads to a
lowering of population growth rates and that these might not be applicable in
developing countries mainly due to poverty. They argue that the developing
countries are stuck in a vicious cycle of poverty. High incidence of poverty leads to
high birth rates which in turn lead to a continuing high proportion of the population
living in poverty. To experience a demographic transition similar to the developed
countries it is important to have aggressive population control methods
implemented together with economic growth policies [Goodstein (1995)].

The followers of socio-biological ideas take the Malthusian concerns to an extreme

level with demands for immigration control and reduction of foreign aid to the
developing countries. They reason that foreign aid needs to be reduced otherwise it
would stimulate high population growth rates in developing countries and reduce
the infant mortality rates. The supporters of this school of thought also emphasise
the differential rates of fertility between developed and developing countries could
stimulate friction in the future due to the distributional issues related to income and
other material resources. The imbalance in population growth rates is also
perceived as a potential threat due to the increasingly aging population in the
developed countries [Furedi (1997)].

Neoclassical Economists
Alfred Marshall was one of the founders of Neoclassical Economics. He was one of
the first to consider the contribution made by nature to the production of goods and
services [Lutz (1993)]. Neoclassical economists believe that perfectly competitive
open markets can reach optimal economic outcome for both producers and
consumers. An increasing population represents increasing demand which in turn
represents expanding markets. Expanding markets generate wealth and this takes
the form of improved living conditions and technological improvement. Hence in the
absence of market distortions, increasing population represents expanding

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economic activity and wealth. The concern of the neoclassical economists however
is whether the standard of living can be maintained under the condition of
increasing population. They consider that markets functioning free of distortion are
capable of maintaining the standard of living even with increasing population [Jolly
(1994)].

With efficient market conditions and increasing population, the neoclassical

economists see two outcomes, which will overcome the limits to growth due to non
renewability of natural resources. The first is to substitute the natural resources with
man-made resources and the other is to improve technology for the more efficient
use of natural resources. When natural resources become scarce in an efficient
market, both producers and consumers substitute other resources like labor and
man-made resources for natural resources. They argue that degradation of both
land and other natural resources is due to inefficient market structures. If a market
was not functioning properly then it would not be able to set a real price for natural
resources. If it is unable to price this commodity properly, the chances are that it
would be overused and hence, degraded [Thampapillai, et al. (2000)].

The issue that concerns neoclassical economists is the continuing reduction in

wages due to continuing increase in labor supply. They think that if other factors of
production are unable to keep pace with one rapidly increasing factor of production
e.g. labor, then the price of labor would go down. If there were limits to expansion
of other factors of production then the rate of increase of labor would only reduce
its value compared to other factors of production. Therefore, stabilized population
growth rate would result in stable returns to labor.

For the neoclassical economist, decrease in the human fertility rate is not the only,
nor indeed the main solution to maintenance of natural resources. Making markets
efficient, so that they can set prices more efficiently is fundamentally more
important. They acknowledge that reduced fertilities leave more time in the critical
adjustment period and new technologies can be adopted in that time to reassure
proper maintenance of natural resources [Jolly (1994)].

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Some neoclassical economists present the population transition of Western Europe

as a three-stage model [Oded and Weil (1999)]. The first stage is Malthusian, the
next is post-Malthusian and the third is Modern.

In the first stage technological development is very slow, therefore, the increase in
both income and population, while positive, is very low. In the post-Malthusian
period, the rate of increase in income accelerates but there is still a positive
relationship between increase in income and increase in population. The reason
given is that as income increases so does the standard of living. As health and
wellbeing improves the mortality rate decreases, even with a constant fertility rate;
the net increase in population is positive and accelerating. This is a pure income
effect when income and substitution effects are considered in terms of economic
theory.

By the end of the 1800s population growth rate started to fall in Western Europe.
This was a time of rapid technological improvement and as a consequence, a rapid
increase in income. The background for this final stage of transition is the increased
rate of return to human capital. This influenced the family’s decision to substitute
quality for quantity of children [Oded and Weil (1999)]. In the final stage the
population growth rate slowed but the rate of increase of income continued to
accelerate. The returns on human capital increased to such a level that minimal
numbers of offspring guaranteed continued increase in total income in the family
and hence in the economy.

The reason for a slow down in the population growth rate, when income increased
at an accelerated rate, is due to the fall in mortality rates particularly the mortality
rate of children. As the probability of a child reaching maturity increased, this
resulted in decreased fertility, where children’s quantity has been substituted by
quality. Fertility also fell due to the substitution effect. For women the opportunity
cost of raising children became very high as employment and other opportunities
opened up for them elsewhere. They eventually substituted high personal income
for large family size. This is the substitution effect in economic terms. A study using
historical data (1880-1910) shows that the decline in infant mortality was the basis
for fertility decline [Sanderson (2001)]. The same study also shows that

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Empowerment of women was not the reason for fertility decline, rather the decline
in fertility empowered women to pursue economic interest.

If the same economic explanation is applied to the demographic pattern in the

developing countries, a very clear picture emerges. In most developed countries
technological development was low for a long period of time. Mortality rates
continued to stay high together with reasonably high fertility rates. The net result
was a slowly growing population. However, with the transfer of technology from the
developed countries to the developing countries the natural transition was
disturbed. The income distribution that was unequal to begin with became even
further skewed. For the population in the top income bracket the income effect
became much more significant than the substitution effect. The net result was an
increase in the fertility within that income group. However, for the population in the
low-income bracket, mortality rates did not decline in the same proportions as it did
in other income groups. To counter the effect of high mortality rates, the fertility
rates stayed high that resulted in continued high net fertility rates in the lowest
income groups.

The population in the middle income groups in developing countries showed results
similar to the demographic transition experienced in the Western Europe. The
substitution effect became significant in these groups outweighing the income
effect. The net result was decrease in fertility. The developing countries, which were
able to increase the impact of this substitution effect, were able to reduce their
Population growth rates significantly. Other developing countries are still struggling
with skewed income distributions and high fertility rates.

Boserupians
The Boserupians believe in Induced Intensification thesis [Turner and Ali (1996)]. In
1965 Ester Boserup presented her provocative thesis of agricultural change. She
argued that in an agrarian scenario, when there is an increase in demand for food,
producers intensify the production process [Winfrey and Darity (1997)]. Boserup’s
thesis concludes that as certain resources become scarcer e.g. land, technology is
adopted that uses more intensively the relatively more abundant factor (labor).
Rapid population growth in this case spurs economic development [Cleveland

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(1998)]. Given these assumptions, there is a real possibility of land degradation in

the short term. Since there is a time lag between increase in the population and
adaptation of new technology, land degradation could be visible during the “critical
transition stage” [Jolly (1994)] when the population adjusts to improved technology.

Boserupians believe that population pressure on limited natural resources induces

resource efficient technology. This belief is based on the assumption that carrying
capacity is fluid and may be increased by converting to technologies that conserve
natural resources. Boserupians and Neoclassical Economists both make a common
assumption namely, the substitutability of factors of production.

Boserupians who follow the Development a list perspective believe that with
increased prosperity and improved lifestyle, demand for a larger family would
decrease. This means that in regions with low-incomes and high population,
economic development would thereby reduce the population growth rates. On the
other hand, Boserupians with re-distributions inclination believe that high
population growth is the effect of poverty rather than the cause of it. Adverse
economic conditions and high mortality rates of children force people to have large
families. In order to reduce the size of families in this section of the population, it is
necessary to first change their economic condition [Furedi (1997)].

One group of Boserupians, which follows human rights perspective, thinks that
exclusion from power and decision making regarding their fertility has resulted in
high fertility rates for women living in poverty. Provision of reproductive health
services along with empowerment could both result in the lowering of fertility rates.
Feminists are strong supporters of this school of thought all over the world.

Another group of Boserupians, who perceive people as problem solvers, believes

that because people do have problem solving skills they would be able to overcome
limitations to growth in the future. This approach is also closely followed by Paul
Harris in his book “The third revolution: population, environment and a sustainable
world” (1993). He believes that market mechanisms would ultimately
establish equilibrium between population growth and resources.

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METHODOLOGY
The study in based on primary source of data. Thus instrument used to conduct the
research is Close Ended Questionnaire. Close Ended questionnaire floated in the city
Karachi in different Recognized Organization’s Offices. (Gatron Industries, Gul
Ahmed Textile (Pvt.) Ltd., Brokes Pharma, Karachi University, Newports Institute of
Communication & Economics etc.).

Sample and Data Collection

The sample was chosen on convenient sampling. The sample size for this study is
200 respondents from different organizations of Karachi. The questionnaire is
designed on LIKERT scale and is analyzed through Correlation and Regression
technique.

Data Analysis Methodology

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Researcher used different analysis from SPSS i.e. Mean, Median, Mode, T-test,
Regression Analysis, Correlation. All these analysis confirmed the data from different
angles and proved very useful.

Mean
The average of a set of figures.

Median
The central item in a group of observations arranged in an ascending and
descending order

Mode

The most frequently occurring number in a data set.

T-Test
A statistical test that establishes a significant mean difference in a variable between
two groups.

Pearson’s Correlation
The Pearson’s Correlation matrix obtained for the four interval-scaled variables. The
Pearson coefficient is appropriate for interval and ratio scaled variables.

Regression Analysis
The threat to internal validity that results when various groups in the study have

been selected on the basis of their extreme scores on some important variables.

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MODEL

Dependent Variable

Steady Economic
Growth

Independent Variable

Population Management

Poverty Reduction

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Income Generation

Social Pressures

HYPOTHESIS
The study examines the following hypothesis.

Ho POPULATION MANAGEMENT LEVEL IS LOWER THEN THE STEADY ECONOMIC

GROWTH LEVEL IS LOWER.

H1 POPULATION MANAGEMENT LEVEL IS HIGHER THEN THE STEADY ECONOMIC

GROWTH LEVEL IS HIGHER.

Ho POVERTY REDUCTION LEVEL IS LOWER THEN THE STEADY ECONOMIC

GROWTH LEVEL IS LOWER.

H1 POVERTY REDUCTION LEVEL IS HIGHER THEN THE STEADY ECONOMIC

GROWTH LEVEL IS HIGHER.

Ho INCOME GENERATION LEVEL IS LOWER THEN THE STEADY ECONOMIC

GROWTH LEVEL IS LOWER.

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H1 INCOME GENERATION LEVEL IS HIGHER THEN THE STEADY ECONOMIC

GROWTH LEVEL IS HIGHER.

Ho SOCIAL PRESSURES LEVEL IS LOWER THEN THE STEADY ECONOMIC GROWTH

LEVEL IS LOWER.

H1 SOCIAL PRESSURES LEVEL IS HIGHER THEN THE STEADY ECONOMIC GROWTH

LEVEL IS HIGHER.

DATA ANALYSIS

Variable Correlation R Square F T-Test

Population Management .095 .009 1.804 8.782

Poverty Reduction .297 .088 19.210 9.403

Income Generation .091 .008 1.669 16.428

Social Pressure .106 .011 2.271 18.505

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