Foreign aid, population growth, and the gains from birth control

Summary

In this article we consider a twofold problem: (a) the foreign aid cost of changing a stagnant or ‘trapped’ economy to one which is capable of sustaining its own growth, and (b) the accrued benefits of a family planning programme in achieving this. Specifically, we cite the case of an economy trapped in a so‐called low‐level equilibrium and evaluate the change in the amount of foreign aid that is required to achieve self‐sustained growth when the birth rate declines. By use of a simplified model, we conclude that a general 10 per cent reduction in age‐specific birth‐rates may lead to savings of 2 5–50 per cent in discounted aid requirements.

Notes

Lecturer in Economics at the University of Ghana and the University of Western Ontario. A number of my colleagues at the University of Western Ontario have given helpful criticisms, among them Joel Fried and James Melvin. Valuable comments were also made by David Shapiro, and by Michael Lipton. Remaining shortcomings are my responsibility.