Feedbacks: Economic Stagnation and Decline

Revisionists have long maintained that rapid population growth and high fertility have had their greatest negative repercussions when national institutions have been ineffectual, particularly in the poorest countries of the developing world. Recent research provides deeper insight, suggesting that population growth tends to reinforce a downward economic spiral affecting national institutions and essential assets. In short, non-functioning institutions--poorly developed markets, ineffectual government programs and policies--fail to protect, manage and build basic assets in an environment of growing need. In turn, degradation of assets can, in some cases, cripple emerging institutions when market and policy solutions are needed most. For example, in many developing countries output growth and job formation lag seriously behind the growth rates of their poorly skilled labor forces. And it is often financially and politically difficult for governments to invest in human assets at the levels needed to build workable institutions and healthy, literate labor forces. Yet it is these human assets, not just lower production costs relative to the developed countries, that have attracted foreign investment to the "miracle" countries of East Asia as well as to several in Latin America.⁵³

Recently, several major studies have concluded that the degradation of natural resources is frequently an active component of economic feedback cycles perpetuated by population growth and poorly developed institutions. In sub-Saharan Africa, where traditional land tenure institutions have failed to adapt to changing economic and demographic conditions, increased human density has contributed to the degradation of forest, rangeland and water resources.⁵⁴ Where modern institutions have been too weak to manage resource allocation, scarcities induced by population growth and inequitable distribution have led to local disputes and sometimes violent conflict.⁵⁵ In Haiti, breakdowns of civil society and its policing power over property rights from the late 1980s to the early 1990s permitted the demands for basic necessities of a densely packed and impoverished population to lead to the dismantling of the country¹s forests.⁵⁶

In a series of country case studies of South Asian, African and Latin American countries, researchers concluded that population growth often figures in a complex mix of causal factors driving natural resource scarcities that, when left unresolved by weak institutions, have led to conflicts within nations.⁵⁷ Such civil disturbances allow further depletion of assets, exacerbate divisions in society, inhibit commerce and discourage foreign investment.

Twenty sub-Saharan African nations seem caught in a downward spiral, each with a high fertility rate‹and each with lower average per capita income today than 20 years ago.⁵⁸ Breaking the loop requires additional investment, both in the private and public sectors, that must be wisely targeted and sustained. But very little capital flows into the poorest countries‹for population-related health programs or anything else. While private loans and investment flows to all developing countries grew from $5 billion to $173 billion between 1970 to 1994, three quarters of that sum went to just 10 countries.⁵⁹ By contrast, the poorest countries receive only about one percent of world private investment and conduct less than one percent of world trade. Official development assistance is playing a diminishing role in capital flows to developing countries. This assistance fell by nine percent, in real terms, between 1985 and 1993.⁶⁰