The Politics of Fertility and Economic Development

Abstract

This paper presents a formal model that characterizes the two faces of development-persistent poverty, and industrialization and rising incomes-and establishes that the interaction between politics and economics determines which path a nation travels. We demonstrate that political factors affect fertility decisions so that a one-time disturbance compounds across generations, impacting a country's entire development trajectory. Modeling strategic multiobjective policy-setting by the government, we derive a new concept of political capacity and prove that a sufficient amount of political capacity is necessary to escape a poverty trap and develop the economy. Empirical tests for a sample of 100 countries from 1960 to 1990 provide strong support for the predictions of the formal model. In particular, we show that both political stability and political capacity significantly influence birth rates. We conclude that politics can be either a stimulant or a barrier to economic development.This paper presents a formal model that characterizes the two faces of development-a poverty trap with persistent economic stagnation, and industrialization and rising incomes-and establishes politics as a fundamental determinant of the trajectory taken by a nation. We demonstrate that policy choices at a single point affect a country's development path by impacting fertility decisions across generations. The primary policy implication of our analysis is that sustained economic development has political prerequisites.The model in this paper formalizes and extends a number of alternate approaches to demographic change and economic development. First, we capture insights from the modernization literature that show that rising incomes lead to lower fertility rates~Thompson, 1929;Notestein, 1945; with recent work by

What Accounts for the Emergence of Malthusian Fertility in Transition Economies?

“…Counter to Malthus' prediction, during the past 150 years fertility generally fell rather than rose as incomes grew. Empirical evidence on the inverse relationship between fertility and income per capita has been extensively documented in the literature (e.g., Tamura, 1988;Barro, 1991;Feng, Kugler & Zak, 2000). Much of the recent literature on fertility and economic growth has modeled the transition from the "Malthusian" stage where there is a positive relationship between income and population growth, to the "modern" stage characterized by an inverse relationship between income and fertility (e.g., Becker et al, 1990;Kremer, 1993;Galor & Weil, 1996;Dahan & Tsiddon, 1998).…”

Political and economic determinants of private investment

“…The first data set consists of three different types of government change-major regular government change, irregular government change, and minor regular government change (Feng, 1997). The extension of the data set in Feng et al (2000) does not include minor government change. I apply the latter version of the data set in the empirical section of the paper.…”

“…See Kugler and Arbetman (1997) for a detailed discussion of the methodology underlying the RPC index. The extension of the data set is taken from Feng et al (2000). 17 Feng and Chen (1997) state that uncertainty occurs if assets are allocated to a market under government influence in which the return is a random variable affected by a random impact of policy adjustment.…”

Tunisia’s Development Experience: A Success Story?

“…Yet, political factors and the associated institutional arrangements can be crucial to the behaviour and effects of fertility. Indeed, Feng, Kugler and Zak (2000) show that political factors have a significant effect on fertility decisions and that 'a one-time disturbance compounds across generations, impacting a country's entire development trajectory'.…”