Birth Control and the Argument of Saving and Investment

Abstract

This paper critically analyzes the thesis that birth control is a valid means of increasing saving and investment to stimulate growth in underdeveloped countries. It is postulated that those arguments based on the Harrod-Domar model lack empirical evidence in the context of the Latin American economies. Indeed, the main assumption underlying those arguments is that capital is scarce in Latin America, and that a growing population tends to reduce the capital per capita; a second underlying assumption is that to increase development it is necessary to increase greatly the proportion of the gross national product based on investments. In this work, it is shown that, first, there is not a scarcity of capital in Latin America, but rather a great underutilization of capital; that is, capital appears scarce because it is being considerably underused. Second, part of this underuse occurs because control of capital is limited to the high-income sector of the population, as a result of a highly skewed distribution of income in those countries. Policies based on investment are aimed at maximizing still further this unequal distribution of income. Investments made in these sectors absorb very little of the labor force, increasing still further the unemployment situation in Latin America. The situation is overpopulation, then, growing in the same degree as capital accumulation. The strategy of birth control, aimed especially at those who are unable to save, will obviously increase neither investment nor saving. The so-called savings on education and public health are bound to be minimal because in the present distribution of resources these sectors consume very little of the national product. In this analysis it is thus concluded that the assumptions underlying the argument of population control do not hold for Latin America and do not have a scientific basis.