Presentation on theme: "Dr. Maria Sophia Aguirre Department of Business and Economics"— Presentation transcript:
1 Family and Economic Development: Harvesting the Seed of Economic Growth Dr. Maria Sophia AguirreDepartment of Business and EconomicsThe Catholic University of AmericaIV Congreso Internacional de la FamiliaUniversidad de la SabanaBogotá, ColombiaApril 25-26, 2008
2 Is the Family Relevant for Economic Development? Some would argue that the family is key because:The earth is limitedThe family is a hostile place for women and childrenLarge families threaten countries’ stabilityOthers 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 policyGrowth of the population does not equal povertyThe aging population “trap” threatens sustainable economic growth and developmentThe earth is limited -- the more we are, the poorer we will be.The family is a hostile place for woman and children. Therefore it has to be monitored and regulated by international laws and institutions if poverty among women is to be eradicated.Population threatens government stability in developing countriesOthers argue that the family is key because:Healthy families are needed for the economy to fulfill its purpose: Cover basic needs, generate profits, and contribute towards the wellbeing of peopleNumbers in themselves do not equal poverty; rather, poorly structured families and societies as well as economies foster poverty.
3 How Does the Family Fit in the Economy? Basic ActivitiesMeans UsedRole of the FamilyPurposeProductionResourcesHuman CapitalBasic NeedsExchangeMarketHuman, Moral, Social CapitalProfitConsumptionOptimization and DistributionAppropriate distributionWellbeing(welfare)
4 We know from economic analysis that in economic development There is a positive correlation betweenhuman capital, infrastructure and economic growthhealthy institutions and economic developmenthealth and income per capitaThese positive correlations reflect an essential causal link running from human capital tohealthy institutions (social capital)infrastructure and technologyLife expectancy is a significant predictor of economic growth
5 Life Expectancy at Birth 29.8 yearsSource: Human Development Report, 2007, Table 1
6 Socioeconomic Relevance Children develop best within a family that is functional, i.e., with their biological parents in a stable marriageMarriage 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 capitalDivorce 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 financesChildren enjoy better physical health, on average, than other family forms.Sharply reduces infant mortality.Increases life expectancy, especially for menAssociated 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) 40%40%171%Source: National Center on Addiction and Substance Abuse, Columbia University.
9 Academic Performance and Its Relation to the Frequency of Family Dining (% of Teens Obtaining Mostly A or B Grades in School)38%Source: National Center on Addiction and Substance Abuse, Columbia University.
10 Substance Abuse and Its Relation to the Frequency of Family Dining (% of Teens Who Have Tried Abuse Substances)73%169%142%191%Source:National Center on Addiction and Substance Abuse, Columbia University.
11 Quality of Family Dining and Its Relation to their Frequency (% of Teens) 188.8.131.52Source: National Center on Addiction and Substance Abuse, Columbia University.
12 Percentage of Children Whose Families have Family Dining by Family Structure (% of children) 3.5 timeshigherSource: Administration for Children and Families, Department of House and Human Services
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 Developed Countries Welfare Expenditures vs. Developing Countries Debt in 2007Taiwan population is 22.5 million. Debt in China is $149.4 billion.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 assetsNatural assetsPhysical assetsFinancial assetsSocial assetsAging securityVulnerability to adverse shocks are linked to an inability to cope with themHuman Assets: basic labor, education, health, skillsNatural assets: inputs of productionPhysical access: infrastructureFinancial assets: access to savings and creditSocial assets: institutions that are functional and not corruptedAging Security: lack of a social security system
19 Environmental Health, Welfare and Living Conditions in Low Income vs Developed Countries Indicator% accessHouse Connection: water48 / 99House Connection: sewerage46 / 99House Connection: electricity62 / 100Access to Improve Water Sources61 / 100Access to Sanitation43 / 100Solid waste disposal: landfill or incinerated31 / 78Solid waste disposal: other (dump,recycled,etc.)66 / 22Paved Road19 / 94Literacy53.6 / 100Under-five mortality (per 1000)153 / 6Public Expenditures on Health (%GDP)1.5/ 6.2Sources: World Bank, UN, 2006
20 Causes of Death in Women and Men, 2005 5 million new cases per year8 million new cases per yearmillion new cases per yearWHO, World Health Report, 2007 , Projected deaths by region, sex and cause for 2005, 2015, 2030.
21 One-Year-Olds Fully Immunized 20% Decrease Tuberculosis Immunizations33% Decrease Measles ImmunizationsSource: Human Development Report, 2007, Table 6
22 Infant Mortality Rates 95.9% DecreaseNumber per 1,000 Live BirthsSource: Human Development Report, 2007; Table 10
23 Low Cost Effective Interventions Cost of Treatment and (annual cost per capita) US DollarsTreatmentCostsEffectivenessChemotherapy 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)Pneumonia Antibiotics (5 days antibiotics)$0.27HighMeasles (1 dose of vaccine)$0.26($0.50)98%MalariaPills / Nets$1 / $0.5($0.05/$4.5)100%Sources: CDS, WHO
24 Cost of malaria to African countries is 1 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)Africa Malaria Report 2003, WHOSources: 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 controlAging 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 transmissionAccess to family planning increases sexual promiscuity (Kaiser 2000, Paton 2002, USAID 2002)Reduction for women is not as high as for men (85%) because of physical differences and because they are the recipient during the sexual intercourse.In a 1996 study conducted in four countries, the Conjunct Program of the United Nations on HIV/AIDS found that the use of condoms increased the risk of contracting AIDS because most contraceptives use a chemical substance, nonoxinol-9, which tends to have an irritating effect that causes lesions increasing the risk of contracting HIV. (UNAIDS 1996 and NACHHD 1999)Eugenics is the key to the production of healthy offspring. At present premarital blood tests and newborn baby health check-ups are offered to the public in order to improve the genetic stock.Neither solution address the real problems
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 TrapSocial security system funding: the family cannot support the elderlyCompetition between the younger and older peopleEarly retirementTo provide for the economic needs of the elderly, there is a reduction of funding allocated to training new generationsThe 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 FundsWorld 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/AIDSCost 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 SavingsWealthInvestment: Physical and Human Capital
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 ExamplesLegislation that supports families vis a vis other types of living stylesPrograms that support and promote healthy marriages and stable familiesChanges in family subsidies/penalties for childrenParental leaves, work structurePromotion and protection of the family as a means to eradicate poverty, especially the feminization of povertyPrograms 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 outcomesEnhance 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 FundsPrevent domestic violence and enhance health family relationshipsSexual education programs designed and chosen at school level by parents and teachersPre-marriage orientationSupport programs for couple in crisisPrograms aim to prevent alcoholism and drug abuse
43 ConclusionThe 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 policyWeakening of the familyHealth problemsFinancial burden for governmentSome of the recent reevaluations of family policies in developed countries seem to point in the right direction.
45 Family structure is relevant for wealth 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.