Why Poor Countries are Poor: People

People are a country’s human capital.

Demography describes the human capacity represented by a country’s population – people’s health and wellbeing, and the way they function together as communities and come together to define the public good.

How many?

This is a loaded question.  Population studies are fraught with all kinds of social, political, and cultural landmines.  Ideally, countries need large numbers of productive people, who have a lot to work with. But they don’t want too many people competing for scarce resources.

Bottom line… overpopulation is a problem for poor countries.  No country has ever been able to significantly improve its standard of living without bringing its fertility rates down.

High birth rates are both a cause and a symptom of poverty – it’s a vicious cycle.

Women with little access to education and employment tend to have more children; women with more children tend to be less able to access education and employment.

Research shows women who have fewer children, on average, invest more in the children they have (including their girls – see the cycle?).  Nutrition, health, safety, and education are generally improved when family resources are not spread too thin.

Communities with high birth rates quickly outgrow their arable land as population density increases – more people on the same square footage.  Parcels of land become smaller with each successive generation.  Agricultural productivity becomes diminished by overuse and environmental degradation.  People become poorer as economic growth fails to keep up with population growth. Competition for scarce resources creates tensions and even conflict.

How old?

High birth rates have the tendency to produce demographic bulges in which a disproportionately large segment of the population is young. The presence of large numbers of youth with few job opportunities can be a recipe for discontent, and even radicalism.  Societies generally function better when there is a fairly even age distribution within the population – young, old, and in-between in fairly similar numbers.

Interestingly, wealthy countries are seeing a different trend, which also isn’t so great for economic growth:  low birth rates that have the opposite impact on age distribution.  In many advanced industrial societies, birth rates have been falling steadily, even below the replacement rate (number of babies born to compensate for number of deaths per year to keep population levels steady). Japan, Russia, and many Western European countries are actually seeing, or will soon see, negative population growth.

Just as high birth rates yield a society with lots of young people; low birth rates create societies with lots of old people.  This becomes a problem as the older population retires, and there are fewer workers to take their places.  You see this in families, and in Social Security and pension systems.  In China, for example (a country that has vastly reduced its birth rates with a One Child policy), one child now typically supports both parents, and even both grandparents.  When birth rates fall below replacement levels, the only way to keep young blood in the economy is through immigration.  Immigrants tend to be working age, and also tend to bring the higher birth rate patterns of their home countries (usually less developed countries) with them.

How healthy?

The health and well-being of your people is critically important for economic growth.  Certain indicators are powerful predictors of poverty: infant, child, and maternal mortality, rates of HIV/AIDS infection top the list – these measurements are all about young people dying; and when young people die, potential is lost and society suffers in dramatic ways, including economically.

High rates of other infectious diseases such as Malaria and TB, and water-borne diseases, also correlate with poverty – even when these diseases do not kill their victims, they disable them, sometimes permanently.  Disability can be as potent as death in systematically removing potential from a society.  It doesn’t do much good for a woman in an LDC to receive a microloan to start a small business if she is too sick to work, or too busy taking care of sick family members to grow her business.

Are they educated?

Again, the statistics can tell the story – literacy rates, levels of primary and secondary school enrollment, graduation rates are all key to economic growth, good governance, high-functioning societies.   More than ever before, you need people with content knowledge, skills, and talent that can really only be imparted through formal education. The more years, the better.  The higher quality of education, the better.  Children of educated parents are more likely to be educated themselves.  (See women, education, and birth rates correlations above).

Where do they live?

Population distribution is also important.  People need to be connected to each other in order to be productive at levels that will lift them out of poverty.   Talent is best put to use when it is pooled and aggregated… in cities, or virtually, via the Internet.  That’s when technological progress is made.  Demand for goods and services must be located near supply – or at least consumers and producers must be connected through basic infrastructure.  People must be connected physically, or through media, in order to effectively monitor their governments, solve basic problems, and build a stake in society.  Poverty thrives in isolated, rural areas where commerce and communication are difficult.

Poverty in rural areas often creates the incentive for people to move to urban areas.  Although urbanization is often cited as a positive force for modernization, rapid urbanization creates new problems when poorly planned cities outgrow their capacity . The UN predicts that cities in Africa and Asia will double in size between now and 2030 – more and more people will settle in slums (or informal settlements on the outskirts of mega-cities where services are usually non-existant).  Poverty also thrives here.

It’s better for economic growth when the population is distributed more evenly – through a combination of small, medium, and large cities, and rural areas that are well-connected.

What kind of diversity of ethnicity and language exists?

Diversity itself is not a liability – the example of the US, the world’s richest economy, is a case in point.  But diversity can be tricky when there is intense competition for scarce resources, and/or when different groups bring historical, political, or social grievances to the table.  Ethnic affinity  is easily manipulated by charismatic leaders in the absence of solid institutions, and in times of crisis and hardship – conditions in which most LDCs routinely find themselves.  Multiple languages, while culturally valuable, can keep people from efficiently communicating and connecting.  You really need, at the least, a lingua franca – one common language that most everyone speaks, in addition to local dialects.


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