Improving Understanding

Improving our understanding of how institutions operate in modern societies organizes and gives meaning to much of the evidence concerned with population and economic change. The thesis that institutions mediate this relationship helps explain how some developing countries appear to adjust economically to population growth, and why others--usually the poorest countries--do not. It also helps explain the problem of common property that degrades in the face of growing population pressures. Where institutions fail to protectively mediate access to public assets, as in the case of some renewable natural resources, 'more people' is virtually synonymous with 'more use.'

Second, analyses of institutionally mediated feedback systems are likely to play a increasingly visible role in revisionist analyses of population growth. In fact, the hypotheses underlying these analyses have been discussed for some time. Since the 1960s, some analysts have argued that fertility decline leads to economic opportunities for developing countries--through lower dependency ratios, greater investments in children, and increased savings and investment.⁹³ What is new (and revisionist) is the recognition of how critical good policy instruments and vibrant competitive markets are to converting those economic opportunities into economic assets. The fact that the newly industrialized Asian economies, with their proactive policies and history of trade, were first among the developing world to realize these dividends seems consistent with the institutional thesis.

While acknowledging that the revisionists' institutional thesis provides an improved explanation of economic dynamics in the developing world, there is more work to be done. Few economists have joined their colleagues in other social sciences in grappling with the issue of institutional bias. Economists already recognize population's impacts in cases when markets fail to protect assets, and that population growth can exacerbate poorly conceived policies. They also recognize that population growth exerts pressure on institutions to resolve or mitigate scarcities. Taken as a whole, however, economists too rarely recognize that institutional bias and its attendant spillover costs are an integral part of otherwise successful efforts to resolve problems of scarcity relating to population growth. Nor do many recognize that spillover costs tend to exact their greatest toll on the assets of the poor and powerless, along with those of the natural environment, for which representation and information are lacking.

An improved institutional thesis would recognize bias. It would grant that even successful adjustment to population growth has costs, potentially high ones. Recognizing bias, however, does not excuse it. Developing and developed countries alike must, and eventually will, improve their institutions to some extent. Countries can reduce spillover costs associated with population growth by promoting the evolution of institutions that are more broadly representative and more responsive to long-term concerns, and by encouraging a slower growing and ultimately stabilized population.