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2015-06-22

Endogenous economic growth and China's one child policy

Comments on James Morley "Economic theories that have changed us: endogenous growth", 22/06/2015

While the exposition of endogenous growth in this article is useful, the use of China's one child policy as an example for lowering economic growth is, unfortunately, problematic and misleading.

It does not accord well with the story of Chinese economic growth both before and after that one child policy was introduced. China's economic transformation after that policy was introduced is regarded as phenomenal and the argument that it would/could have been more rapid if the one child policy had not been in place is hardly convincing.

While China's economic growth before that policy was not too bad, there is a qualitatively and quantitatively difference between the growth in that period and the period since then. There is no need to say which period had better growth.

The introduction of that policy, rightly or wrongly, was based on the thinking that the natural population growth (without the intervention using family planning) was too much relative to economic growth, so not only that the living standard was not improving rapid enough, but also that it may not be able to feed everyone.

One of the key factors in endogenous economic theories is not how large the population is, per se. Rather it is the quality or skills of the population.

Just consider a country with a very large population like China or India before their respective rapid growth started. Why had they low growth and why were they poor, given their very large population if large population would naturally be linked to higher growth?

One of the objectives of the child policy in China was to improve the quality of the population. To that objective, that policy has probably had a positive effect.

Further, a developing country's catch up may not necessarily be dependent, to a very significant degree, on  endogenous growth in the sense they produced new ideas or new technologies/techniques. It is their successful application of the existing technologies in the economically more advanced countries, as well as more rapid accumulation of physical capitals.

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