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Family and Economic Development: Harvesting the Seed of Economic Growth Dr. Maria Sophia Aguirre Department of Business and Economics The Catholic University.

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Presentation on theme: "Family and Economic Development: Harvesting the Seed of Economic Growth Dr. Maria Sophia Aguirre Department of Business and Economics The Catholic University."— Presentation transcript:

1 Family and Economic Development: Harvesting the Seed of Economic Growth Dr. Maria Sophia Aguirre Department of Business and Economics The Catholic University of America IV Congreso Internacional de la Familia Universidad de la Sabana Bogot á, Colombia April 25-26, 2008

2 Is the Family Relevant for Economic Development?  Some would argue that the family is key because:  The earth is limited  The family is a hostile place for women and children  Large families threaten countries’ stability  Others argue that the family is key because:  Healthy families are needed for the economy to fulfill its purpose. Therefore it is a reference point for policy  Growth of the population does not equal poverty  The aging population “trap” threatens sustainable economic growth and development

3 How Does the Family Fit in the Economy? Basic Activities Means UsedRole of the Family Purpose ProductionResourcesHuman Capital Basic Needs ExchangeMarketHuman, Moral, Social Capital Profit ConsumptionOptimization and Distribution Appropriate distribution Wellbeing (welfare)

4  There is a positive correlation between human capital, infrastructure and economic growth healthy institutions and economic development health and income per capita  These positive correlations reflect an essential causal link running from human capital to healthy institutions (social capital) infrastructure and technology  Life expectancy is a significant predictor of economic growth We know from economic analysis that in economic development

5 Life Expectancy at Birth Source: Human Development Report, 2007, Table years

6 Socioeconomic Relevance  Children develop best within a family that is functional, i.e., with their biological parents in a stable marriage Marriage Increases likelihood of father having good relations with children. Marriage reduces the probability of children divorcing themselves or becoming unwed parents.  The academic and social performance of a child is very closely related to the structure of the family in which he lives and this is important for the quality of human and social capital Divorce reduces the likelihood of children graduating from college and high school. Divorce increases risk of course failure.

7 The psychological stability and health of a child is closely related to healthy families and this is important for worker productivity and government finances Children enjoy better physical health, on average, than other family forms. Sharply reduces infant mortality. Increases life expectancy, especially for men Associated with reduce abuse of alcohol, and substance abuse for adults and teens. Associated with better health and lower probability of injuries for both men and women. Lower levels of physiological distress and mental illness. Mothers have lower levels of depression than single or co- habiting mothers.

8 Family Relationships and Its Relation to the Frequency of Family Dining (% of Teens) Source: National Center on Addiction and Substance Abuse, Columbia University. 40% 171%

9 Academic Performance and Its Relation to the Frequency of Family Dining (% of Teens Obtaining Mostly A or B Grades in School) Source: National Center on Addiction and Substance Abuse, Columbia University. 38%

10 Substance Abuse and Its Relation to the Frequency of Family Dining (% of Teens Who Have Tried Abuse Substances) Source:National Center on Addiction and Substance Abuse, Columbia University. 142% 73% 191% 169%

11 Quality of Family Dining and Its Relation to their Frequency (% of Teens) Source: National Center on Addiction and Substance Abuse, Columbia University

12 Percentage of Children Whose Families have Family Dining by Family Structure (% of children) Source: Administration for Children and Families, Department of House and Human Services 3.5 times higher

13  The breakdown of the family is a symptom of a sick and weak society Abuse of women is 25 times more likely to occur in an irregular family. Men who have witnessed domestic violence are three times more likely to abuse their own wives and children. Substance abuse and teen-age pregnancy is higher in broken families. Women and children of broken families have a higher probability of living in poverty. Increase of the social welfare expenditures burden. Higher levels of suicide. Boys from single parents have are more likely to engaged in delinquent and criminal behavior

14 Percentage of Families that are in Poverty by Family Structure and Ethnicity, 2006 Source: Annual Demographic Survey, Poverty in the U.S.: US Census Bureau, August 2007, Table POVO2.

15 Percentage of Women who are in Poverty by Family Structure and Ethnicity, 2006 Source: Annual Demographic Survey, Poverty in the U.S.: US Census Bureau, August 2007, Table POVO3.

16 Percentage of Children who are in Poverty by Family Structure and Ethnicity, 2006 Source: Annual Demographic Survey, Poverty in the U.S.: US Census Bureau, August 2007, Table POV21.

17 Developed Countries Welfare Expenditures vs. Developing Countries Debt in 2007 Source: CIA World Handbook, 2008

18 The family faces serious health and poverty problems, especially in the developing world Lack of income and assets to attain basic needs: Human assets Natural assets Physical assets Financial assets Social assets Aging security Vulnerability to adverse shocks are linked to an inability to cope with them

19 Environmental Health, Welfare and Living Conditions in Low Income vs Developed Countries Indicator% access House Connection: water48 / 99 House Connection: sewerage46 / 99 House Connection: electricity62 / 100 Access to Improve Water Sources61 / 100 Access to Sanitation43 / 100 Solid waste disposal: landfill or incinerated31 / 78 Solid waste disposal: other (dump,recycled,etc.)66 / 22 Paved Road19 / 94 Literacy53.6 / 100 Under-five mortality (per 1000)153 / 6 Public Expenditures on Health (%GDP)1.5/ 6.2 Sources: World Bank, UN, 2006

20 Causes of Death in Women and Men, 2005 WHO, World Health Report, 2007, Projected deaths by region, sex and cause for 2005, 2015, million new cases per year 8 million new cases per year million new cases per year

21 One-Year-Olds Fully Immunized Source: Human Development Report, 2007, Table 6 20% Decrease Tuberculosis Immunizations 33% Decrease Measles Immunizations

22 Infant Mortality Rates Source: Human Development Report, 2007; Table % Decrease

23 Low Cost Effective Interventions Cost of Treatment and (annual cost per capita) US Dollars TreatmentCostsEffectiveness Chemotherapy for TB (6 months )$20.00 ($0.60) 95% Contraceptives (HIV)$14.00 ($1.90) 99% (85%-95%) Hydration salts for Diarrhea$0.33 ($1.60) 95% Pneumonia Antibiotics (5 days antibiotics)$0.27High Measles (1 dose of vaccine)$0.26 ($0.50) 98% Malaria Pills / Nets $1 / $0.5 ($0.05/$4.5) 100% Sources: CDS, WHO

24  Cost of malaria to African countries is 1.3% of GDP per year, productivity of the worker is reduced by 60%. Direct and indirect costs of malaria in sub-Saharan Africa in term of overall GDP is equivalent to a loss of $100 billion annually.  75% of TB infections and deaths occur in the year age group (the most productive group). 20%-30% of Income is lost due to TB.  AIDS places seventh among the leading causes of death. The main mode of transmission are homosexual and heterosexual promiscuity and injected-drug-use (IDU) (all high risk behavior).  Majority of maternal deaths are due to poor access to health care (1.9% of female death) Sources: Scaling Up the Response to infectious Diseases, 2002 and RBM 38, WHO, 2005

25 Solutions often Proposed  Outlined in the 8 UN Millennium Development Goals.  Population control Aging population trap  “Safe sex” and antiretroviral drugs. Condoms are not the answer to HIV and increases the risk of contracting AIDS (British Medical Journal (2008), Chin (2007) Not a solution for IUD and Heterosexual transmission Access to family planning increases sexual promiscuity (Kaiser 2000, Paton 2002, USAID 2002)

26 The Population Control Argument  First: rapid growth in population means the spread of poverty and aggravates conditions such as as poor health, malnutrition, illiteracy, and unemployment (Bucharest, 1974)  Second: population threatens government stability in developing countries, and encourages confrontation between developed and developing countries (Memorandum 200)  Third: it pushes future generations to scarcity, and an unsustainable environment carrying capacity (Rio, 1992)  Fourth: it sees population growth to be symptomatic of the larger problem of women's oppression—the more children a woman has, the less opportunity she has for her own self- actualization and development (Cairo, 1994 and Beijing, 1995)

27 Aging Trap  Social security system funding: the family cannot support the elderly  Competition between the younger and older people  Early retirement  To provide for the economic needs of the elderly, there is a reduction of funding allocated to training new generations  The transmission of cultural, scientific, technical, artistic, moral, and religious goods is endangered: "moroseness” results. Add to this immigration.  Saving rates are affected by a society's age structure, mirroring the change in an individual's saving rate over the life cycle.

28 Speed of Population Aging Number of years for % of population aged 65 and over to rise from 7% to 14% Source: US Census Bureau, 2000

29 Allocation of Funds  World Bank budgeted for $500 to combat malaria and for tuberculosis amounted to $560 million.  The WHO funds totaled $309 million in for malaria and tuberculosis.  For HIV/AIDS, the World Bank allocated $1.8 billion in grants, loans, and credits to fight HIV/AIDS  Cost of Antiretroviral regimen has decreased significantly ($12,000 per year to $100)  Annual population assistance levels reached $2 billion a year.  The misuse of funds does not only affect health but also other fundamental elements of economic growth

30 Expenditure on Grant-Financed Development Activities of the United Nations System by Sector (Percentage of Total)

31 Expenditures on Grant-Financed Development Activities of the United Nations System by Sector Source: Compiled from Comprehensive Statistical Data on Operational Activities for Development, years

32 SUSTAINABLE GROWTH REQUIRES Savings Wealth Investment: Physical and Human Capital

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37 Percentage of Head of Households that Report Owning Property and Holding Savings Source: ENEI (2004)

38 Level of Education of the Head of Household per Race and Family Structure Sources: ENEI (2004)

39 Children School Attendance by Family Structure Sources: ENEI (2004)

40 How Government Policies Can Help: Some Examples  Legislation that supports families vis a vis other types of living styles  Programs that support and promote healthy marriages and stable families  Changes in family subsidies/penalties for children  Parental leaves, work structure  Promotion and protection of the family as a means to eradicate poverty, especially the feminization of poverty  Programs directed towards fostering functional societies and markets, where corruption is not a fundamental part of governmental operations.

41 Education Transfer all government aid throughout voucher system Differentiate voucher, targeting more resources to the most needed (with higher cost of education) Spread out info about the key role of family within society and effect on educational outcomes Enhance parents’ owes and rights to educate their children (e.g areas such as sexual education) Allow parents (and or teachers) to get engage in municipal school management

42 Competitive Funds Prevent domestic violence and enhance health family relationships Sexual education programs designed and chosen at school level by parents and teachers Pre-marriage orientation Support programs for couple in crisis Programs aim to prevent alcoholism and drug abuse

43 Conclusion  The family is a necessary good for economic development: it should be promoted and protected if poverty reduction wants to be achieved. Children develop in the best way within a family that is functional, i.e., with his biological parents in a stable marriage. The breakdown of the family: damages the economy and the society since human, moral, and social capital is reduced and social costs increased.

44  The Neo-Malthusian approach is seriously flawed on many levels and policy actions based on such assumptions are inefficient and damage real sustainable development. They lead to: Aging trap: one child policy Weakening of the family Health problems Financial burden for government  Some of the recent reevaluations of family policies in developed countries seem to point in the right direction.

45  Family structure is relevant for wealth. This happens to be the case after other characteristics are controlled by.  The impact of children on family wealth is best within marriage.  Evidence seems to hold across countries. In socialized market economies the negative impacts seem to be mitigated but not eliminated.  Life-cycle theory of savings seems to be supported by empirical evidence.  Healthy family structures support private property.


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