Citation
Evoluationary demographic transition theory

Material Information

Title:
Evoluationary demographic transition theory comparative causes of prehistoric, historic and modern demographic transitions
Creator:
Iverson, Shepherd
Publication Date:
Language:
English
Physical Description:
vi, 142 leaves : ; 28 cm.

Subjects

Subjects / Keywords:
Agriculture ( jstor )
Child psychology ( jstor )
Cultural evolution ( jstor )
Demographic transitions ( jstor )
Demography ( jstor )
Employment ( jstor )
Fertility ( jstor )
Population growth ( jstor )
Women ( jstor )
Womens studies ( jstor )
Demography -- History ( lcsh )
Fertility, Human -- History ( lcsh )
Genre:
bibliography ( marcgt )
theses ( marcgt )
non-fiction ( marcgt )

Notes

Thesis:
Thesis (Ph. D.)--University of Florida, 1992.
Bibliography:
Includes bibliographical references (leaves 120-141).
General Note:
Typescript.
General Note:
Vita.
Statement of Responsibility:
by Shepherd Iverson.

Record Information

Source Institution:
University of Florida
Holding Location:
University of Florida
Rights Management:
Copyright [name of dissertation author]. Permission granted to the University of Florida to digitize, archive and distribute this item for non-profit research and educational purposes. Any reuse of this item in excess of fair use or other copyright exemptions requires permission of the copyright holder.
Resource Identifier:
024006958 ( ALEPH )
AJU5040 ( NOTIS )
29176610 ( OCLC )

Downloads

This item has the following downloads:


Full Text









EVOLUTIONARY DEMOGRAPHIC TRANSITION THEORY:
COMPARATIVE CAUSES OF PREHISTORIC, HISTORIC
AND MODERN DEMOGRAPHIC TRANSITIONS
















By

SHEPHERD IVERSON


A DISSERTATION PRESENTED TO THE GRADUATE SCHOOL
OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS FOR THE DEGREE OF
DOCTOR OF PHILOSOPHY

UNIVERSITY OF FLORIDA


1992













ACKNOWLEDGMENTS


I wish to thank my Ph.D committee: Drs. H. Russell Bernard, Ronald Cohen, Abe

Goldman, Tim Hackenberg and Marvin Harris. I extend my appreciation to Dr. Goldman

(geography) and Dr. Hackenberg (psychology) for joining my committee from outside my

department. I also wish to thank Dr. W. Penn Handwerker. His book on the causes of the

demographic transition in Barbados has had a large impact on me. Ms. Gwendolyn

Wynne, Ms. Elizabeth Miller, and especially Dr. Jack Blatherwick have been a constant

support. I also want to mention my closest friend during these graduate school years, Haba

Musengezi (from Zimbabwe). It is largely due to his diverse knowledge of Africa and his

friendly promptings that I chose to conduct field research in Zimbabwe and selected Sub-

Saharan Africa as my geographic region of expertise. The three anthropologists on my

committee, Drs. Bernard, Cohen, and Harris, are recognized as tireless educators and

productive scholars; the creative wisdom and genuine love of discovery of Dr. Bernard, the

rigorous and insightful queriousness of Dr. Cohen, and the intellectual integrity and

passionate humanitarianism of Dr. Harris have made an indelible impression upon me (and

many other young anthropologists). It is an honor to have such distinguished gentlemen on

my Ph.D committee. It is with my deepest gratitude and admiration that I thank my advisor,

friend, mentor, and chair of my Ph.D committee, Dr. H. Russell Bernard. His unwavering

belief in me confirms once again the power of the Pygmalian Effect. Finally, none of this

would have been possible without the unconditional support and encouragement of my

mother, Ms. Inga lone Iverson. Her loving independent spirit, reasonableness, and

sensibilities have deeply influenced my life. This work is dedicated to her.













PREFACE


Theories of demographic transition have been forwarded almost exclusively by

social scientists trained in the field of demography. Some theoretical and empirical work

has been offered by psychologists, sociologists, biologists, historians, economists, and

anthropologists. Demographers form their theories of fertility transition by adopting

different combinations of these perspectives. This interdisciplinary interest has greatly

advanced our scientific understanding.

Within anthropology, an array of subfields contribute to demographic knowledge.

These include biological anthropology, archeology, ethnology, cross-cultural studies, and

cultural evolutionary theory. What binds these specialties together and best describes the

anthropological perspective is their comparative cross-cultural method and evolutionary

framework.

Unfortunately, the anthropological perspective has not gained the intersubjective

recognition it deserves within the social sciences in general and among demographic

transition theorists in particular. In spite of this, new contributions to demographic

transition research and theory made by trained demographic anthropologists are

accumulating. The growing consensus that demographic theory should be incorporated into

evolutionary theory is the inspiration for this book.













TABLE OF CONTENTS
page
ACKNOWLEDGMENTS ii

PREFACE iii

ABSTRACT v

CHAPTERS

1 INTRODUCTION 1

2 EPISTEMOLOGY AND DEMOGRAPHIC KNOWLEDGE 4
Etic Behavioral & Emic Mentalist Models 5
Consciousness and Fertility 15
Cultural Materialism, Behaviorism, Evolutionism and Fertility 20

3 THEORIES OF DEMOGRAPHIC TRANSITION 26
Modernization and Westernization Theories 27
Wealth Flows Theory -__ 33
Resource Access Hypothesis ---......__ 35
Evolutionary Demographic Transition Theory 40

4 PREHISTORIC AND HISTORIC EVIDENCE 49
Prehistoric Demographics__ _--- 50
The First Demographic Transition 53
The Second Demographic Transition 57
Comparative Causes of Demographic Transition 62

5 MODERN EVIDENCE-,-- 68
Education and Fertility ____69
Employment and Fertility_ 74
Transition in Zimbabwe 78
Transition in Barbados 84
Transition in Mauritius 86
Transition in Kuwait 92
Summary__ .__............__........ 101

6 DISCUSSION 106

7 CONCLUSION 117

BIBLIOGRAPHY 120

BIOGRAPHICAL SKETCH 142












Abstract of the Dissertation Presented to the Graduate School
of the University of Florida in Partial Fulfillment of the
Requirements for the Degree of Doctor of Philosophy

EVOLUTIONARY DEMOGRAPHIC TRANSITION THEORY:
COMPARATIVE CAUSES OF PREHISTORIC, HISTORIC
AND MODERN DEMOGRAPHIC TRANSITIONS

By

SHEPHERD IVERSON

December 1992



Chairman: Dr. H. Russell Bernard
Major Department: Anthropology

The objective of this work is threefold: 1) to show how epistemological assumptions

influence fertility research methods, theory, data analysis, and population policy; 2) to

present a unified theory for understanding the causes of fertility behavior; and, 3) to show

how this theory can explain the underlying causes of demographic transition from

prehistoric to present times.

Reviewing the literature on reproductive decision-making, it is shown how emic

mentalist and etic behaviorist epistemological approaches lead to divergent explanations in

fertility research. Cultural idealist and cultural materialist fertility theories are contrasted;

assumptions about consciousness and deliberate fertility control are discussed. It is argued

that etic behavioral and cultural materialist approaches avoid the biases of modernization

and westernization theories that are often associated with emic mentalist and cultural idealist

approaches.








The rise of demographic transition theories is presented, beginning with

modernization and westernization theories, followed by Caldwell's "wealth flows theory"

and Handwerker's "resource access hypothesis." Finally, the synergism of cultural

materialist, radical behaviorist, and punctuated evolutionist theories is formulated as the

basis for "evolutionary demographic transition theory."

Evidence from the first and second demographic transitions is presented;

corresponding changes in modes of production and reproduction are explained and

changing costs and benefits of childbearing are analyzed. Assumed causes of modem

fertility decline, i.e., western style education, modem health care, family planning, and

employment opportunities, are subjected to the scrutiny of the research literature. Only

increased employment opportunities for women outside the household stands as an

independent cause of fertility decline. Zimbabwe, Barbados, Mauritius, and Kuwait are

selected as country examples of changing material forces leading to demographic transition.

It is concluded from the Pleistocene to the present, in developing and developed

countries, reproductive behavior is an adaptive response to material conditions; fertility

outcomes reflect women's struggle to make the best of their lives given a set of external

circumstances completely beyond their control. The most important causal factors in

modem fertility decline are 1) economic conditions or employment opportunities that

conflict with childrearing and 2) women's access to material resources independent of men

and children.












CHAPTER 1
INTRODUCTION


Since Ehrlich's The Population Bomb (1968) and Meadows' The Limits to Growth

(Meadows et al 1972), there has been a growing popular perception that rapid global

population growth is endangering the natural ecological systems of finite earth. Almost

twenty years later, Ehrlich has appropriately redirected his blame to the high

consumption/pollution patterns of the one-forth of the worlds population who live in

industrialized countries (Ornstein and Ehrlich 1989). If population growth is no longer a

global danger, why are social scientists still concerned about the causes of high fertility?

The answer is that rapid population growth is still endangering finite natural human-

ecosystems in certain parts of the developing world. The fate of the earth may not be in

immediate danger by population growth in developing countries, but the local livelihood,

health and welfare of many millions of people is in danger. Many more populations are

politically and geographically circumscribed today than ever before. In cases of

circumscription, rapid population growth eventually leads to environmental depletions;

standards of living decline and levels of malnutrition increase. This, in turn, may lead to

political instability and eventually to a civil revolt in which many more people suffer.

In spite of these developments, the very notion that overpopulation exists is

controversial. Rapid population growth has been viewed by some as a prerequisite to

market development and entrepreneurial initiative. Others are convinced that a focus on

overpopulation as the cause of environmental degredation, declining living standards,

malnutrition, civil unrest, etc., is like "blaming the victim." It is argued that these








developing world problems are not caused by overpopulation but are caused instead by

local and international economic exploitation and sanctioned by corrupt political regimes.

Why study the causes of fertility decline and demographic transition if the real problems are

political and economic?

The answer is that political, economic and demographic factors are interrelated and

interdependent; a better solution to any one will help in the solution to the others. New

interdisciplinary approaches to knowledge (such as this one) are more keenly aware of the

dynamic causal relationships between material (and nonmaterial) factors in cultural

evolutionary change. Also, since millions of dollars of international development aid is

disbursed annually, any research that can enhance its intended positive impact on people

(and minimize possible unintended negative impacts) is of value. Finally, for me there is a

personal excitement of discovery and satisfaction in formulating a new solution to an old

question that I feel has not yet been convincingly answered.

This manuscript is divided into seven chapters. Chapter one is the introduction. In

chapter two, I focus on the epistemological basis for understanding theories of reproductive

decision-making and demographic transition; I describe the epistemological underpinnings

for two different models of reproductive decision-making and describe materialist and

behaviorist perspectives in greater detail. In the third chapter, I describe the leading

demographic transition theories beginning with the generalist modernization/westernization

theory, followed by Caldwell's wealth flows theory and Handwerker's resource access

hypothesis; in the final section of this chapter I introduce evolutionary demographic

transition theory. In chapter four, I review and compare empirical evidence from prehistoric

and historic demographic transitions. Chapter five is a review of research which pertains to

modern demographic transition, the causal relationships between education, employment,

and fertility, and a description of several recent demographic transitions in terms of these





3


factors. In chapter six, I discuss the implications of an etic materialist approach to

understanding the causes of demographic transition and the possible applications of

evolutionary demographic transition theory for domestic and international aid and

development policy. Chapter seven is the conclusion.













CHAPTER 2

EPISTEMOLOGY AND DEMOGRAPHIC KNOWLEDGE


One common research assumption is that knowledge of micro phenomena will lead to

an understanding of macro phenomena. On the basis of this assumption it is believed that

understanding the causes of reproductive decisions will lead to an understanding of

demographic transition. However, it has also been argued that the underlying basis for

reproductive decisions is culture-specific, and therefore, data derived from one culture

cannot be applied to understanding how reproductive decisions are made in another culture.

Others argue that while there are clear differences in fertility preferences, values and beliefs

cross-culturally, reproductive outcomes are determined by various external material

conditions which act similarly on all individuals.

In this chapter, I will describe two different approaches to reproductive decision-

making and demographic transition model building beginning with their epistemological

assumptions. I will show how these approaches lead to divergent explanations of fertility

transition and explain why the epistemological assumptions of one approach lead to a more

rigorous cross-cultural and evolutionary basis for understanding the causes of reproductive

behavior. Also, I will show how this approach avoids ethnocentric and western-centric

assumptions about the causes of sociocultural change.








Etic Behavioral and Emic Mentalist Models

Efforts to model reproductive decision-making have taken two very different

approaches--mentalist and behaviorist. Mentalist models stress subjective, unpredictable,

consciousness driven reproductive decisions. Behaviorist models stress reproductive

selection-by-consequences with objective material conditions. These two models originate

from very different epistemological positions.

Epistemology is often overlooked, yet a fatal flaw to many a cleverly constructed theory

begins at the level of epistemology. Indeed, epistemology largely determines methods,

theory, and interpretation. As Lett (1987:36) writes, "Epistemology is the common ground

in all debates, whether the debate involved commensurable or incommensurable theoretical

positions. Eventually, all unresolved substantive issues boil down to a disagreement about

epistemology." Therefore, understanding epistemological differences is critical to judging

the value of methods, theories, interpretations and analysis.

A working definition of the difference between emic and etic approaches will help

illuminate the epistemological differences between mentalist and behaviorist models (also

see Headland et al. 1990). This distinction is made necessary by a situation unique to

human scientists; we are at once observers and participants--the object and subject of

inquiry--usually with deeply enculturated biases and views.

Emic operations have their hallmark in the elevation of the native
informant to the status of ultimate judge of the adequacy of the
observer's descriptions and analyses. The test of the adequacy of the
emic analyses is their ability to generate statements the native accepts
as real, meaningful, or appropriate. In carrying out research in the
emic mode, the observer attempts to acquire a knowledge of the
categories and rules one must know in order to think and act as a
native (Harris 1979:32).

The mentalist orientation of an emic approach is evident; what is important is how or

what the native respondent thinks. Research on fertility decision-making that uses an emic

mentalist approach tends to rely on what native informants say or believe about themselves.








For example, to find out why some women have eight children or why others stop after

having two, it is important to learn about indigenous cultural value systems, the diffusion

of information, and to simply ask why they had two or eight children. On the other hand:

Etic operations have as their hallmark the elevation of observers to
the status of ultimate judges of the categories and concepts used in
descriptions and analyses. The test of the adequacy of etic accounts
is simply their ability to generate scientifically productive theories
about the causes of sociocultural differences and similarities. Rather
than employ concepts that are necessarily real, meaningful, and
appropriate from the native point of view, the observer is free to use
alien categories and rules derived from the data language of science
(Harris 1979:32).

The behaviorist orientation of the etic approach is evident in its mistrust for what people

might say about the reasons for their reproductive behavior. What is important in the etic

approach is not how or what the native respondent thinks, but rather, what external

conditions influence their fertility behavior. Etic behaviorist approaches rely on

observations of fertility behavior vis-a-vis external conditions; it is material circumstances

which motivate the fertility decision-making process. With this approach, to find out why

some women have eight children and why others have two children, it is important to

understand the external material factors which reward and/or punish women for having two

or eight children.

Mentalist models of reproductive decision-making are expressly emic in orientation.

They model what is going on inside the mind of the individual or the group-mind of the

culture. Thus, emic mentalist explanations rely on unobservable private thoughts, i.e.,

goals, motives, and meanings. On the other hand, behaviorist models of reproductive

decision-making are expressly etic in orientation; they model the effects external conditions

have on behavior. Thus, etic behavioral explanations rely on observable public behavior in

the context of material and environmental conditions.








From an emic mentalist perspective, it is important to ask people how they make

reproductive choices and to delve into the social context in which their decisions are made;

changing values and culturally motivated behavior is of paramount interest. For instance,

Knodel and van de Walle (1979) stress that the diffusion of information on contraception

and the communication of normative beliefs were influential agents for the spread of

fertility limitation in Europe. On the other hand, from an etic behavioral perspective, it is

important to observe fertility behavior in the context of essential physical needs; changing

contingencies and materially motivated behavior is of paramount interest.

The differences between emic and etic approaches and mentalist and behaviorist

perspectives are epistemological; as paradigms of understanding, they are incommensurable

(see Kuhn 1970; Lett 1987:31-37). Emic mentalists are cultural idealists; etic behaviorists

are cultural materialists. Emic research approaches do not combine well with behaviorist

perspectives; etic approaches do not combine well with mentalist perspectives. These

differences will become more apparent as we look at their theoretical offspring.

One of the first etic models of reproductive decision-making was introduced by Nobel

laureate Gary Becker in 1960. In his "new home economics" theory (the Chicago-

Columbia theory), Becker assumed a rational consumer and believed that the preference

ordering of consequences is the most important determinant of decisions and behavior

(Becker 1960; 1981; also see Boulding 1966). He was the first to apply this microeconimic

framework to demographic theory. Essentially, Becker proposed that fertility decisions are

guided by the same materialist principles that guide economic decisions in the household.

Becke's reasoning is that since children contribute utility, but at a price, fertility decisions

should be based on the same basic principles as consumer decisions. Crosbie explains:

Becker argued that children were a household commodity and that the
desire for children should be subject to the economic laws of
demand. More specifically, he argued that households would be
rational in their reproductive decision-making, and thus, the demand







for children and reproduction would increase as the price of children
decreased or as household income, the taste for children, or the
prices of other household goods increased (1986:32).

Mincer (1963) expanded Becker's model to include the value of a woman's time.

According to Mincer, women would be less likely to have children when their time is

valuable to them (opportunity costs) and more likely to have children when it is not. Also, a

woman should be more likely to have children when children can reduce her time spent on

household and food production duties, and when children can benefit households

economically.

These propositions were substantiated by a series of time-allocation studies and more

detailed micro-economic research of domestic economies (see Becker 1965; Ben-Porath

1974; Schultz 1974; Nerlove 1974; Mueller 1982). One important finding from micro-

economic research is that children in many developing countries make a variety of valuable

contributions to the household from a very early age (White 1975; Mueller 1976; Cain

1977; 1980; Rosenzweig 1978; Nag et al. 1978; Ho 1979). It is not surprising to find that

early household contributions made by children in these countries correlates strongly with

high fertility.

Another refinement of the new home economics model is commonly referred to as the

"quantity-quality tradeoff." Becker and Lewis (1973) hypothesized that if parents expected

greater advantage investing limited resources in fewer children (quality) than in many

children (quantity), they would have fewer children (also see DeTrey 1973). The material

basis for this hypothesis can also be applied to differential investments in male and female

offspring where there are expectations of greater advantage investing limited resources in

one sex (see Chowdhury and Chen 1977; Miller 1981; Chen et al. 1981; Greenhalgh 1982;

1985; Scheper-Hughes 1984).

Recognizing that parental reproductive preferences may vary, Ben-Porath has argued

that conjugal pairs be viewed as self-interested individuals in the marriage contract rather








than as a single entity. In his "transactions framework", Ben-Porath (1978) asserts that the

short and long term cost and benefits of children are not the same for both parents (also see

Ben-Porath 1980; Cain 1981; Nugent 1985). For instance, there is little incentive for men

to have fewer children when they can pass on the costs of child support to wives or an

extended family (see Boserup 1985). Fapohunda and Todaro explain the family

transactions framework:

Perceived child-related benefits and costs are assumed to depend on
the characteristics of the following three implicit family contracts: the
parent-child contract, the husband-wife contract, and the spouse-
extended family contract. The evolution of these implicit family
contracts is assumed to determine the benefit flows from children, the
resources available to support parental reproductive decisions, and
which parent bears the cost of children (1988:575).

From a materialist perspective, Fapohunda and Todaro (ibid:579) continue, "The locus

of the fertility decision-making process is determined by who controls and allocates the

economic resources within the family. A change in intrafamilial asset control could

precipitate a change in decision-making prerogatives leading to altered fertility behavior."

In addition to altered fertility behavior, it is not surprising that socio-economic forces that

affect the value of children also affect the social construction of fatherhood. Bledsoe (1990)

found that in rural areas of Liberia, where fatherhood is often in doubt, men carefully

weigh the material cost of benefits ofparantage before claiming it. About her research,

Bledsoe writes:

In traditional areas, where labor is crucial to subsistence production
and outside resources are scarce, men are eager to claim fatherhood
to children they believe to be their own biological offspring as well as
those whose paternity is in doubt. But an increasing loss of
subsistence farmland in the modern sector to cash cropping and
private ownership is undermining the economic importance of young
children and making them expensive to raise. Therefore, men are
reluctant to claim fatherhood until it is clear that the child has
survived and shows promise as an economic investment (1980:41-
42).








As economic growth occurs, the relative values of land, labor, and capital change.

Also, new expenses associated with urban industrial living change the costs of raising

children at the same time new employment opportunities for adult children alter economic

power relationships and change intergenerational benefit flows. Fapohunda and Todaro

assert:

The size of net intergenerational benefit flows from children to
parents is positively related to parental control of valuable physical
assets, primarily land. The rising price of children, induced by
reversed intergenerational benefit flows, is therefore a reflection of
the rising market value of human capital investments and the
diminished relative importance of parentally controlled physical
wealth (ibid:575).

In his "relative economic status hypothesis", Easterlin (1975) posits that as household

income increases, there will be an increased demand for all goods, including children.

Easterlin believes that increased availability and consumption of consumer goods (within a

limited budget) will progressively reduce reproductive investments since children now

become one of many goods. However, what explains the fact that in the United States, the

baby boom occurred in tandem with expanding consumerism?

In Easterlin's "experienced living standard" concept, the increased availability and

consumption of consumer goods will produce fertility decline over time as values inherent

in this process are passed down to children (Easterlin 1969; 1976abc; Easterlin, Pollack

and Wachter 1980). Also, as health improvements increase child survival and fecundity, an

excess supply of children reduces demand and increases motivation for fertility control

(Easterlin and Crimmins 1985).

In his "lifestyle-norm/time constraint" approach, Donaldson contends that lifestyle

changes and shifts in normative values and time constraints during modernization lead to

changes in fertility; once a lifestyle standard is set, fertility will be altered to protect it.








Donaldson observes:

Overall, the broad span of modem history shows that societies strive
to maintain achieved standards, and that they control population in
the process of doing so. Not every subsector of the society is
successful in maintaining standards; but overall, once advance is
reached, it is protected (1991:36).

The theories outlined above share the common assumption that external economic and

material conditions are the original causal factors that determine aggregate fertility behavior;

the role of internal values and cultural beliefs is secondary. Though it is often assumed that

personal preferences, values and beliefs cause behavior, impersonal factors from outside

the individual determine the content of these preferences, values and beliefs. Thus,

impersonal factors from outside the individual ultimately determine family values and

fertility behavior.

However, many of these theorists assume a degree of proactive consciousness in their

models of rational choice. Though a degree of proactivity is always present, there is no

need to assume that people are conscious of the short-term or long-term costs and benefits

of their behaviors to find that they adapt to external contingencies in predictable ways. With

reference to large agrarian families, for instance, Epstein (1977:224) writes, "Their large

number of children were not the result of anything remotely approaching cost/benefit

considerations but were rather the result of a necessary part of the process of adaptation to

environmental conditions." An epistemological discussion of the role of consciousness

(and proximate factors) in fertility outcomes is discussed more fully in the next section.

In spite of some overlap on the issue of the role of consciousness, etic and behavioral

methods and theories of reproductive decision-making have run counter to theories rooted

in emic and mentalist approaches. For instance, criticizing time allocation studies, Pedersen

(1985:20) writes, "To assume such calculations seems to imply too strongly that people all








over the world act just like the IBM when they make their choices." Critics of utility models

of fertility assert that the rational basis of life is quite different in the developed and the

developing world. Working from an emic mentalist epistemological perspective, Pedersen

asserts:

Even though the etic model of utility may show a net value of
children, people do not necessarily codify this in the same way as the
observer. That is, they may not take the observers variables into
account, they may not use the same model of utility or they may have
a definition of work different from that of the observer (1985:20).

It is thought that in pre-capitalist economies, free choice is less rational and less

optimizing; preferences and tastes are more whimsical and less predictable. H. Simon

(1980:75) observes, "Actual human choices depart radically from those implied by the

axioms (of rationality), except in the most transparent situations. Humans are unable to

choose consistently in the face of even moderate complexity or uncertainty." Crosbie

(1986:57) asserts, "Current rationality models of reproductive decision-making are

deficient for they do not consider the full complexity and fallibility of the human decision

maker" (cf. Wallsten 1980).

For instance, in "subjective expected utility" theory it is argued that anticipated

consequences add a cognitive dimension of uncertainty to fertility decision-making

outcomes (Beach et al. 1976; Townes et al. 1980). In a similar model that relies primarily

on subjective states of mind, the "value of children" theory posits that the value of children

cannot be reduced to simple economics or any other single variable, and that reason is less

important than emotion in the reproductive decision-making process (Fawcett 1972; 1973;

Fawcett and Arnold 1973). Fawcett (1983:435) contends that, "As children become less

valuable economically, they become more valued emotionally; and, as economic

development proceeds, children are in competition with other sources of satisfaction."








Leibenstein (1977; 1981) has argued that psychological factors, i.e., personality and

individual identity, determine reproductive outcomes. Fawcett notes:

No single conceptual or theoretical framework guides research on
perceptions of the satisfactions and costs of children. Research on
this topic is eclectic, analyzing the perceived value of children
descriptively and incorporating this subjective orientation in various
frameworks to explain fertility (1983:429-430).

These emic mentalist theories share the assumption that subjective social and/or

personal factors are primary determinants in fertility decisions. Mentalists who claim they

hold a more eclectic approach to understanding reproductive decision-making argue that

reason itself is growing more inter-subjective. In the "theory of reasoned action",

expectations and reflective normative standards explain contraceptive and reproductive

decision-making (see Davidson and Jaccard 1975; 1979; Fishbein et al. 1980). Crosbie

explains:

According to this theory, a person's behavioral and normative beliefs
about some behavior jointly determine the person's intention to
perform the behavior; this behavioral intention, in turn, serves as the
sole and direct determinant of the behavior itself. The more positive
the behavioral and normative beliefs, the greater the intention, and the
more likely the behavior is to be performed (1986:38).

It is argued that behavioral and normative beliefs are products of family and society.

Robinson and Harbison (1980:221) contend that high birthrates may be used to satisfy the

overriding social goal of group (family, tribe, nation) survival. Donaldson (1991:7)

observes, "When reproductive behavior is viewed over the long run from the perspective of

the family's and society's well being, the individual appears to be orchestrated toward

conformity in this fundamental sphere of life." Blake asserts:

Fertility is determined by the characteristics of family and the general
norms and values attributed to the concept of family in the given
society, and the more fundamental changes of fertility are caused by
the changes in the institution of family; therefore a theory of
reproductive motivation is at the same time a theory of the family and
society (1968:24).








In McNicoll's (1980) "institutional determinants" theory of fertility change he

postulates that desirable fertility behavior is institutionalized in a society; social norms

replace individual norms. Similarly, Caldwell (1983:473) claims that, "all aims are

ultimately social." Citing the conforming effects of the past and current teachings of

missionaries, colonial administrators, secular schoolteachers, national school systems, the

mass media, and new national elites, Caldwell ibidd) asserts, "For fertility decline, the rapid

establishment of a global society is probably more important than the creation of a global

economy."

In his theory of"social influence groups," Leibenstein (1974) contends that normative

standards and motivations for fertility and family size diffuse between social influence

groups, i.e., people of lower socioeconomic status emulate the fertility behaviors of people

of higher socioeconomic status. Along similar emic normative and diffusionary lines of

reasoning, an "international demonstration effect" is believed to take place, whereby

fertility norms in developed countries are emulated by developing countries (Teitelbaum

1975:423).

Demographic theorists who specialize in the understanding of subjective states of mind,

socialization processes, and the diffusion of normative beliefs have made valuable

contributions to fertility decision-making research. However, as we will see below, to be

satisfied with this level of understanding "quits early." Thus, many demographic theorists

and researchers ignore the underlying material forces acting upon and changing individual

and cultural preferences, values, and beliefs. Even some economically oriented

demographic experts have underestimated the diversity and effects of these material forces.

Yet the discovery of original causes of fertility behavior is critical to the design of

international aid and development policies which seek to affect fertility outcomes.








An anthropological perspective is especially well suited to consider the effects of

diverse material conditions--original causes--on individual fertility behavior and cultural

evolution. I believe the next major contribution in fertility research will be in this area. Once

the effects of material circumstances on the development of fertility preferences, values,

and beliefs are understood, development policies can be designed to affect both material

and ideological changes which further lower fertility objectives.


Consciousness and Fertility

As noted in the previous section, an important and perplexing epistemological problem

related to the etic behaviorist and emic mentalist debate has to do with the notion of

consciousness. It is an a priori research assumption of cultural idealists that

consciousness, i.e., attitudes, preferences, values and beliefs, determines behavior.

Researchers who work from etic research strategies may also believe that behavior is the

result of conscious choice. For example, Becker assumes that individuals make conscious

fertility choices in his demand-related economic theory of fertility. Only cultural materialists

and behaviorists claim that knowing an individual's mental state is untrustworthy in

determining the causes of their fertility behavior. This is why they use etic behaviorist

research strategies. This is also why cultural materialists and behaviorists do not speculate

about states of consciousness. This is explained further in the next section.

Related to the assumption of conscious choice is the notion of natural fertility.

Demographic theorists have assumed the existence of "natural" versus "targeted" fertility.

Henry defined "natural fertility" as fertility which "exists or has existed in the absence of

deliberate birth control" (1961:81). It is estimated that natural fertility can reach a biological

maximum of about 15 births per woman (Bongaarts 1978). Bongaarts and Menken

(1983:31) expanded the notion of natural fertility to include: "The fertility that prevails in








the absence of deliberate attempts to limit the number of surviving children." This takes into

account the proximate effects of prolonged breastfeeding and postpartum abstinence which

lower fertility while increasing rates of child survival. Bongaarts and Menken (ibid:28)

explain natural fertility as, "a function of a set of behavioral and biological proximate

determinants."

The proximate or intermediate variables approach to fertility was first introduced

independently by Henry (1953, cited in Bongaarts and Menken 1983) and Davis and Blake

(1956). Bongaarts (1978; 1982) later operationalized this approach by focusing on the

causal significance of a smaller set of intermediate variables linking social, psychological,

cultural and economic factors with total fertility rates. From analysis of data of 41 present-

day and historical populations Bongaarts (1982) found that 96 percent of the variation in

fertility is explained by four intermediate variables: proportion married among females,

contraceptive use and effectiveness, prevalence of induced abortion, and duration of

postpartum infecundability. It is argued that social, psychological, cultural and economic

factors operate through these intermediate variables to determine fertility.

There is no doubt that changes in these intermediate factors does affect fertility and

child survival. Research in this area has been of great value. However, changes in

intermediate factors will not result in demographic transition. Because natural fertility has

been seen as a function of a set of behavioral and biological proximate determinants, the

causal role of the perceived or actual costs and benefits to women of having children is

often overlooked. The status of deliberate intent and etic material causes is muddled

because it is assumed that some combination of social, psychological, cultural and

economic factors determines fertility through these intermediate variables.

Some researchers speculate there was little or no individual conscious choice in

premodern societies and there are higher degrees of conscious choice in developed than in








developing societies. For instance, while asserting that there is no individual choice in a

premodem society is too strong, Easterlin nonetheless believes evolution to a modem

society has entailed a change from social control to a more self-conscious individualized

control of fertility. Easterlin is trying to account for the differences in fertility behaviors

between traditional and modem cultures. Easterlin (1975:62) contends his "broader

economic framework", "lends itself to greater recognition of such demographic concepts as

natural fertility, and to the formulation of alternative hypotheses frequently voiced by

sociologists, anthropologists, and other noneconomists."

Demographers have assumed that couples do not deliberately control their fertility until

the end of a fertility transition, when women begin to use modem methods of contraception

and abortion to limit their childbearing capabilities. As the term "natural fertility" suggests,

it has been presumed that "precontracepting" people are simply behaving naturally and are

not aware of the means by which to control their fertility. The model assumption is that

targeted fertility and fertility control is a new invention of modem consciousness, evolving

along with "higher" forms of rationality (see Weber 1958). Indeed, Wrigley (1969)

describes new fertility patterns in terms of a change from unconscious rationality to

conscious rationality.

This cultural idealist assumption about the changing nature of consciousness is

incorrect. Demographic theorists who use this distinction are unfamiliar with

anthropological contributions to the knowledge of human and cultural evolution, and with

the many anthropological insights into fertility research. The assumption that modem

humans (and people in developed countries) are more conscious, and therefore are more

inclined to consciously control their fertility than earlier peoples (and people living in

developing countries) is unfounded at best, and wester-centric at worst. The underlying

assumption is not only unprovable, but is reminiscent of the nineteenth-century version of








the evolution of "civilized" consciousness. Implicit in this psychic evolutionary schema is

that there are "progressive" and "backward" peoples. Such propositions are challenged by

archeological evidence, behavioral data, and historical fact. Harris and Ross assert:

The origin of this assumption lies in ethnocentric and especially in
Eurocentric idealizations of the behavior of "progressive" post-
demographic societies in comparison with the reproductive behavior
of "backward," pre-demographic societies. Only post-demographic
transition contracepting societies are viewed as having the capacity to
make rational calculations concerning the rearing of optimum
numbers of children. Hence, evidence of the use of an array of
culturally patterned procedures which demonstrably have the effect of
controlling fertility in non-contracepting societies--abortion,
abstinence, lactation--is categorically demoted to the status of
behavior whose "goal" had nothing to do with fertility control, and
which therefore could not be true fertility control in the full noble
idealist sense (1987:16).

Unquestioned acceptance of this notion has contributed to the design of ineffectual

international programs designed to reduce fertility. Cultural idealist demographers and

sociologists were convinced that the transmission of rationalisticc" western knowledge and

family planning would enlighten "backward" people and lead to fertility decline in the high

fertility regimes of the developing world. This was the basis of knowledge from which

family planning programs were originally designed and administered. This emic mentalist

approach led to the belief that modern education in family planning and contraception

would change the preferences, values, and beliefs of "pre-contracepting" peoples according

to new fertility goals and desires; with new information they would begin to take deliberate

steps to limit fertility.

Mamdani was one of the first to criticize these cultural idealist assumptions of western

trained social scientists. Mamdani was involved in the Khanna Study, the first longitudinal

study (1954-1969) of a birth control program to have a control as well as a test population.

The findings of the study were either inconclusive or showed that the birth control program








had no effect on fertility. Mamdani observed that the emic mentalist model used by his

colleagues led them to believe:

if only the "right" information can be given to the people they will be
convinced; if only the leaders can be contacted and convinced, they
will use their influence with the people to change their behavior. The
underlying assumption is that the behavior of the population, given
the environment and its constraints, is not rational (Mamdani
1973:40).

However, Mamdani found the fertility behavior of these people was quite rational

considering their desperate economic circumstances. Mamdani asserts:

The failure of the birth control program was not a failure in
execution, but a failure in understanding. No program would have
succeeded, because birth control contradicted the vital interests of the
majority of villagers. To practice contraception would have meant to
willfully court economic disaster (ibid:21)... people are not poor
because they have large families. Quite the contrary: they have large
families because they are poor ibidd: 14).

In a restudy of the same Indian village a decade later, Nag and Kak (1984) documented

widespread attitude and behavior changes with regard to controlling births. They found that

economic development and technological changes in agriculture in the region since the

previous study had changed the opportunity structure of the people. Caste systems of

institutionalized inequality were in the process of breaking down. Skills and perspectives

developed in formal education were increasingly rewarded with higher paying jobs. If the

economy wasn't growing fast, the state was. It was now "rational" for parents to invest in

fewer children in order to pay for their education, which, in turn, was expected to benefit

families in the long run.

The lesson to be learned from this example is that women who have access to family

planning services but choose not to use contraceptives are no less rational, individualized or

conscious of their fertility behavior than are women who use contraceptives. If women in

developing countries have less control over their fertility it is because of inferior








contraceptive technologies, not because they are ignorant. If they have more children, it is

not because their culture tells them what to do; it is because having more children is in their

personal best interest. If they have fewer children, it is not because western education and

family values convinced them to have fewer children; it is because having smaller families

is more beneficial.

As soon as the benefits of small families outweigh the costs, people all over the world

are quite willing to have fewer children; until then, they are not. As the failure of so many

well intentioned family planning efforts attests, people are not duped into behaving contrary

to their material interests. A cultural materialist, etic behavioral, and evolutionary approach

to understanding fertility transition would have avoided these past policy errors, and

indeed, is a prerequisite to the design and implementation of effective development and

fertility reduction programs in the future.


Cultural Materialism, Behaviorism, Evolutionism, and Fertility

An etic, behavioral and diachronic approach to fertility research uses methods and

theories derived from materialism, behaviorism and evolutionism. Unlike cultural idealist

and historical-interpretivist approaches, cultural materialist, behaviorist and evolutionist

approaches to knowledge acquisition are explicitly scientific. As formulated by Harris:

Cultural materialism shares with other scientific research strategies an
epistemology which seeks to restrict fields of inquiry to events,
entities, and relationships that are knowable by means of explicit,
logico-empirical, inductive-deductive, quantifiable public procedures
or "operations" subject to replication by independent observers
(1979:27).

Cultural materialist knowledge claims must be founded on the following conditions:

1) operationalizable; 2) parsimonious; 3) empirically testable, replicable, and falsifiabile;

4) logically coherent and interpenetrating; 5) retrodictive and predictive. Beyond the

scientific method, the need for a clear data language lies at the heart of attempts to create a








social science about human beings. For this reason the epistemological basis of cultural

materialism also relies on the distinctions between mental and behavioral fields and between

emics and etics. In opposition to emic mentalist and other non-positivistic approaches,

Harris (1964) argues for the development of an observer-oriented (etic) analysis of

behavioral events that precludes the need to know the actor's mental state (emics).

Similarly, in Skinner's (1963) behaviorist psychology, the only scientifically acceptable

data are public events accessible to observation. The fundamental tenet of behaviorism is

that individuals are conditioned by their environment through contingencies of

reinforcement. Individuals do not have absolute free-will to determine their behavior

independent of environmental conditions; behavior is selected for by consequences in an

environment. Indeed, Skinner asserts:

The discovery that the environment, in acting upon the organism,
could be regarded as a causal agent in the direction and control of
behavior, and the realization that it was therefore possible to dispense
with fictitious inner controls marked the beginning of a science of
behavior (1947:26-27).

For Harris and Skinner, behavior speaks for itself and is predictable from events and

contingencies taking place outside the skin. Mental processes, including preferences,

values and beliefs, are responses to external stimuli, not the causes of overt behavior.

Thus, observing behavior in a material context is more likely to predict preferences, values

and beliefs than eliciting preferences, values and beliefs is to predict behavior. Indeed,

research on informant accuracy has clearly shown that people do not always do what they

say or think they do; behavior is often understood through various biases and memory

lapses (Bernard et al. 1984). This is true whether an individual is conscious or unconscious

of the intentional or unintentional consequences of their behavior.

Accuracy is not the only problem with informant reports; sometimes they misrepresent

the truth. Informants often tell researchers what they want to hear in order to stay on their








good side. This is exactly what happened in the Khanna study referred to above.

Researchers were puzzled that fertility remained high though women reported they were

using the contraceptives given them. Mamdani (1973) later found that women were simply

telling the researchers what they thought they wanted to hear so that no feelings were hurt.

In a more recent example of researcher confusion, in interpreting the World Fertility

Survey, Scott and Chidambaram (1985:21) puzzle over the fact that "the consistent finding,

in almost every country, of large numbers of women, who, while expressing the desire for

no more children, are doing nothing to restrain their fertility even when contraception is

readily available." Instead of questioning whether these women are telling the truth or not,

the behaviorist and cultural materialist would investigate the incentives for fertility and the

reinforcements present which might lead women to express a desire for no more children

while behaving in a contradictory manner.

Because of the impossibility of relying on what informants say or think, cultural

materialists and behaviorists posit a unified behavior stream. Skinner writes:

Science often talks about things it cannot see or measure ... An
adequate science of behavior must consider events taking place
within the skin of the organism, not as physiological mediators of
behavior, but as part of behavior itself. It can deal with these events
without assuming that they have any special nature or must be known
in any special way (1963:953).

Behaviors that are rewarded will increase, those punished will decrease. Behavioral

change is often concomitant with changes in the mental state of the individual, but need not

be. Since mental states do not determine the external material contingencies of

reinforcement and punishment, they do not determine behavior.

An etic behavioral and evolutionary understanding of fertility decisions predicts that

people adjust their fertility behavior to the contingencies and metacontingencies of

punishment and reinforcement. At the individual level of analysis, some individuals may

adjust their fertility behavior more or less quickly and appropriately to the etic (versus








perceived) contingencies and metacontingencies of reinforcement and punishment. But in

the aggregate and in the long run, i.e., the evolution of a culture or species, it is the

contingencies and metacontingencies of reinforcement and punishment that mold cultural

and biological evolution.

Cultural materialists have taken these behaviorist assumptions about the causes of

individual behavior and used them to explain the probable determinants of reproductive

behavior for aggregates of individuals, i.e., cultures. As Skinner argues that individuals do

not have absolute free-will to determine their behavior independent of material conditions,

neither do cultures. Cultural behavior is also selected for by the consequences of interacting

with material conditions. The reason for taking this lesson from behavioral psychologists

became clear from an anthropological understanding of biological and cultural evolution.

Behaviorists have shown that most individuals seek positive stimuli and optimal

lifestyles. Similarly, ecologists and anthropologists have shown that hunters and collectors

maximize the rate of caloric return for their efforts (Charnov 1976; Smith 1983).

Anthropologists have also explained why aggregate reproductive rates correlate with the

costs and benefits of childbearing for individuals living in different modes of production

(Handwerker 1983; 1986a). From an anthropological focus on prehistorical and historical

cross-cultural phenomena, analogous processes of individual and cultural evolution were

evident.

However, in spite of an underlying allegiance to behaviorist psychology, and

grounding in the individual, it is not the intention or goal of cultural materialist and

evolutionary approaches to explain individual fertility behavior. The goal of cultural

materialism and an etic behavioral research strategy is to understand the probabilistic causes

of behavior stream events (such as reproduction) for aggregates of individuals conditioned

by the various material circumstances in which they live.








Therefore, reproductive decision-making and demographic transition must be

understood from an etic behavioral epistemological perspective in a nomothetic,

comparative and evolutionary context. Indeed, Skinner (1981; 1984) asserts that parallel

processes of selection-by-consequences occurs in biological, behavioral and cultural

evolution. Skinner (1953:430) writes, "In certain respects operant reinforcements

resembles the natural selection of evolutionary theory. Just as genetic characteristics which

arise as mutations are selected or discarded by their consequences, so novel forms of

behavior are selected or discarded through reinforcement."

In agreement, Harris and Ross paraphrase Skinner's observation:

Sociocultural systems evolve in conformity with the consequences
for individuals and groups who do or do not adopt innovations. We
invite those who find it difficult to comprehend how such systems
can embody a rational or optimizing calculus in the absence of
conscious calculation to examine the occurrence of optimizing
relations established through selection-by-consequences in the
evolution of species, in the behavior patterns of a single species of
organism, and in the behavior of communities of diverse species
organized into ecosystems (1987:14).

Etic behaviorist, cultural materialist and evolutionary models of reproductive decision-

making and demographic transition assert that prehistorical data is not irrelevant, cross-

cultural understanding is not impossible, and that an emic mentalist understanding is not

necessary. Selection-by-consequences implies that optimizing behaviors can be

independent of conscious awareness; selection occurs in all realms of life whether we

realize it or not.

On the other hand, emic mentalist epistemological approaches obscure the etic material

basis of reality by assuming that the level and the contents of conscious apprehension

determines behavior. Not only does the difficulty of getting inside another person's head

make this approach untenable from a research standpoint, but such an approach also leads

to a mistrust of scientific research strategies and more parsimonious causal explanations.








Mentalists seek to invalidate theories and approaches that do not conform to idealist tenets

because they believe utility calculations are dehumanizing. In doing so, they deny objective

reality and reject the material necessities that unite all of humanity under one set of

contingencies. Moreover, cultural idealist and mentalist models of the causes of

reproductive behavior tend to range from being overly complex to espousing the futility of

modeling itself. Thus, they tend to be unproductive from a policy standpoint.

If reproductive behavior was not determined or lawful in any way, then research would

be unnecessary and prediction and control would be impossible. But this is simply not the

case. Strong correlations exist between reproductive behavior and objective material

conditions in the archeological record, in recorded history, and in contemporary cross-

cultural comparative data. Indeed, this makes etic behaviorist epistemologies and cultural

materialist, behaviorist, and evolutionary theoretical approaches a necessity if we are to

predict and control demographic patterns in the future.













CHAPTER 3

THEORIES OF DEMOGRAPHIC TRANSITION


Earlier in this century, the exponential growth of the earth's population was thought to

be proof of the growing happiness and progress of mankind. In 1915, an eminent

American demographer concluded his presidential address to the American Economic

Association:

Both the increase of happiness and increase in numbers show a better
adaptation to environment, and where numbers have increased we
may infer the increase of human happiness. If this argument is
sound, the increase of the earth's population in less than two
centuries by about two thirds of a billion persons is the only
quantitative test and proof of the progress of mankind (cited in
Demeny 1986:27).

This blind optimism that the growth of human happiness and the progress of

humankind are correlated with rapid population growth was soon disgarded.

Environmental depletion and increasing starvation became the quantitative test and proof of

the regress of mankind. In the 1940s and 1950s, as malnutrition and mass poverty was

becoming evident in certain parts of the world, social scientists began to look for the

determinants of high fertility and the factors that influence its decline. High fertility was

assumed to be a response to high infant mortality. A decrease in child mortality was one

product of modern medicine. This pair of observations laid the groundwork for the first

causal theory of demographic transition.







Modernization and Westernization Theories

From the 1940s, demographers who believed in the "modernization theory" of fertility

behavior held that demographic transition from high to low birth and death rates was

caused by western imports--such as professional health care, universal western education,

mass media and communication systems, urbanization, consumer goods and services, and

an increase in per capital income (Notestein 1945; Davis 1963). Reductions in mortality

were thought to lead to fertility decline after a short lag. This lag represents the time it took

people to begin to trust that their children would survive, thus, relieving them of the need to

bear more children than they actually desired. In the early 1960s, Freeman explained the

dominant view of fertility transition:

Most sociologists and demographers would probably agree ... the
basic cause of the general [fertility] decline are: (a) a shift in functions
from the family to other specialized institutions, so that there was a
decrease in the number of children required to achieve socially valued
goals; and (b) a sharp reduction in mortality which reduced the
number of births necessary to have any desired number of children
(1961-1962:53).

Modernization was synonymous with the western notion of progress. From a policy

standpoint, there were two conflicting views on fertility transition in the early 1960s:

(1) fertility decline is the natural result of modernization, i.e., urbanization, better health

practices and lower mortality, universal education, industrialization and occupational

change. Therefore, government birth control policies are unnecessary; and, (2) because

modernization reduces mortality much faster than fertility, this rapid transitional population

growth impedes progress. Therefore, there is a need for deliberate programs to reduce

fertility (Coale and Treadway 1986). Neither group doubted that modernization would

reduce fertility. The underlying debate was about the legitimate promotion of contraception

and abortion on a world-wide basis.








Before 1963 scholars formed their views of demographic transition from

impressionistic generalizations of fertility declines associated with modernization in

Europe, North America, Australia, New Zealand, and Japan. However, a vital new source

of data was discovered. For over one-hundred years, European states had collected

socioeconomic and demographic data in more than six hundred provinces. The European

Fertility Project (also known as the Princeton Fertility Project) set out to analyze this

abundance of unanalyzed data. In summing up the results of the European Fertility Project,

Coale and Watkins write:

The demographic transition in Europe, then, was a transition from
approximate balance of birth and death rates at moderately high levels
to approximate balance at low levels.... Couples married late, or
postponed the next pregnancy for self-interested reasons, such as
waiting until attaining the economic position to form a viable
household or extending the birth interval until the survival of the
most recently born would not be jeopardized.... Marital fertility fell
as agricultural and industrial production increased, and improved
environmental conditions and better medical knowledge and facilities
drastically reduced the incidence of fatal infectious disease....
Nuptiality had been far from constant; but the dominant reason for
attainment of low fertility was the universal adoption of parity-related
limitations of births--the effective employment of contraception and
abortion in order to have no more than the small number of births
each couple wishes (1986:28-29).

Essentially, Coale and Watkins conclude that the dominant reasons for lower marital

fertility (demographic transition) in Europe are as follows: 1) better medical knowledge led

to reductions in mortality, which, in turn, led to fertility decline (a standard modernization

postulate of demographic transition); and, 2) during a period of growing agricultural and

industrial productivity more people wanted to limit births and were successful in doing so

through increased contraception and abortion (a standard westernization postulate of

demographic transition).








The causal legitimacy of the former postulate is very much in doubt, as we will see,

while the latter postulate is descriptive and of little value to population policy. While the

conclusions drawn by this generation of research have significantly contributed to the

advancement of knowledge, there are new signs of progress made in demographic research

which dispute many of its knowledge claims.

Within the general paradigm of modernization and westernization there has also been a

proliferation of contrasting theories of demographic transition. Simmons notes:

This situation encourages extended debate about policy alternatives,
where both alternative value structures and alternative theoretical
perspectives vie with empirical evidence in the complex process of
decoding research priorities and policy options. This reality heightens
our need for an understanding of the role of theory and of the specific
theoretical alternatives which have been proposed in the literature
(1985:10).

This accumulated puzzle-solving has created a large body of analysis and theory, most

of which has been produced by demographers relying on aggregate data sources such as

those used in the European Fertility Project. Demographic puzzles have been "solved"

through statistical correlation vis-a-vis the expectations of modernization theory; arrows of

causation have often been imputed rather than proven.

As we will see, research at less remote levels of analysis has provided evidence of

numerous cross-cultural anomalies in modernization/westemization theories of fertility

decline. However, intent on finding the cause of demographic transition within the

modernization paradigm, the response to these anomalies among demographic theorists has

been has been to expand the number of interacting variables and to propose threshold

effects. This has made standard demographic transition theory less parsimonious and less

useful from a policy perspective.








For instance, in a recent public policy paper written for the United Nations, Faroog and

DeGraff( 1988:18-19) provide a laundry list of factors responsible for fertility decline in

developing countries:

1) the rise in urbanization and the increasing costs of raising children,
particularly education costs, associated with an urban life style;
2) the declining production value of children with compulsory education,
child labor laws and increasing demand for skilled labor;
3) increasing education and age of women at marriage;
4) changing roles of women in society and greater economic opportunities
for women outside the home;
5) a shift in religious and cultural values;
6) the shift in dependence from local, largely self-contained institutions
(e.g. the extended family system) to larger social and economic units,
allowing for greater individual control of fertility decisions, etc;
7) lower infant and child mortality;
8) the institutionalization of old-age support systems and insurance
schemes; and
9) the greater availability of family planning technology, information and
services, etc.

The necessary and sufficient conditions leading to fertility decline are not clearly

defined by Faroog and DeGraff in this large and complex model. Also, numerous attempts

to isolate some of these variables and measure their impact have not stood the test of cross-

cultural comparison. Moreover, some of these factors supposed to be "responsible" for

fertility transition have antecedent causes or are mutually inclusive.

For instance, urbanization cannot be a sufficient condition because it has proven

virtually unrelated to the fertility transitions that occurred in France, the United States and

Japan. And while there is considerable evidence that religious and cultural change result

from changing material conditions, there is no conclusive empirical evidence which

suggests religious and cultural values independently cause fertility decline. Indeed,

religious prohibitions to family planning seem to have no affect on contraceptive use cross-

culturally. Catholics now have fewer children than Protestants in the United States. Italy,

an almost entirely Catholic nation, has high levels of contraception, abortion, and below

replacement level fertility.








The availability of contraception is also in doubt as a cause of fertility decline. On the

relationship between the availability of birth control and fertility in the United States, Harris

(1981:89) asserts:

The idea that the baby boom collapsed because of the introduction of
the 'pill' can be easily dismissed, since the bust began in 1957 while
the pill was not released for public use until June 1960. As late as
1964, when fertility was falling at unprecedented speed, only 10
percent of married women of childbearing age were using the 'pill'.

In developing countries a number of studies have shown that contraception is used to

replace traditional mechanisms of birth spacing and has little or no affect on limiting family

size (see Giorgis 1988:8.1.7.; Bongaarts 1981; Ware 1976:480). In Kenya and Lesotho,

Mhloyi (1986) found that the availability of family planning services did not translate into

acceptance or use of such services. Indeed, Kenya introduced one of the first national

family planning services available in Africa over 20 years ago but presently has the highest

population growth rate in the world--estimated at close to 4 percent.

However, access to birth control technology humanizes the process by which births are

avoided. It also adds to the quality of life women may enjoy when they are reasonably

certain they will not become pregnant from sexual relations. In addition, by assisting

women to avoid high risk pregnancies (those which are too closely spaced and among

teenagers), family planning can help reduce morbidity and mortality levels among mothers

and their children.

In spite of much data to the contrary, one of the most consistently cited causes of lower

fertility is improvements in health care which results in declining infant mortality. This

conclusion is very much in doubt. Transition to low fertility has been observed to precede

infant mortality decline in certain areas of France and Hungary in the nineteenth century

(Caldwell 1976; 1982). There are historical examples of frontier regions in the United

States, Canada, Chile, Australia, New Zealand, and the Russian Empire where fertility








decline preceded mortality decline (Donaldson 1991:13). High levels of fertility have also

been shown to coincide with low levels of infant mortality in developing countries (Coale et

al 1979). Knodel and van de Walle (1979:224) write, "At this stage, no definitive

conclusion can be reached on the role of declining mortality in the fertility transition of the

West." Van de Walle (1986) has shown that there is no systematic association between

fertility and infant mortality levels of various historical European populations before,

during, and after demographic transition. Using modem aggregate data from Africa,

Cantrelle et al (1978) failed to find a relationship between total fertility rates and infant

mortality. Analyzing a sample of 98 contemporary developing countries, Hess (1988:132)

concludes, "There is little empirical support for declining infant mortality's contributing

directly to reducing fertility." Indeed, high infant mortality and demand for family planning

services have been shown to coexist (Schuler and Goldstein 1986). Scrimshaw (1978) has

even found that under adverse material conditions infant mortality is a response to high

fertility rather than a stimulus to it.

However, the costs and benefits of childbearing have changed dramatically. Raising

children has become more expensive with new health, education, food and clothing

standards and with the increased costs of urban living. At the same time, the production

value of children has declined with urban residence, compulsory education, child labor

laws, new labor-saving technologies and the increased demand for adult skilled labor.

Further, greater economic opportunity outside the home causes young women to stay in

school longer, adopt fertility control measures sooner, marry later, expect less from their

children, and to cease reproducing earlier. These factors are central to the next three causal

models.








Wealth Flows Theory

In the early 1980s, Caldwell (1982) introduced a more parsimonious westernization

theory of the causes of demographic transition. In his "wealth flows theory", Caldwell

posits:

In pretransition societies (i.e., before the onset of fertility decline),
the net value ofintergenerational wealth flows (labor and services,
goods and money, and present and future guarantees, including old
age support) is upward, whereas in posttransitional societies it is
downward (1983:459).

Caldwell argues that cultural (emic mentalist) factors create moral changes in

intergenerational attitudes that lead to a reversal of economic family obligations (1976;

1978). He claims that western education creates new attitudes toward the family. This in

turn leads to a reversal of wealth flows within the family and subsequent adaptive changes

in fertility behavior (1980:231). Caldwell argues that fertility transition is a function of the

diffusion and assimilation of western attitudes, tastes, preferences, and values through

schooling and the mass media (1982).

This shift in moral responsibility corresponds with the emotional nucleation of the

family, the rising costs of education, and increased individualism. Caldwell posits that in

nuclear families, conjugal partners are no longer morally obliged to consider the wishes of

their extended family. Wealth begins to flow away from parents toward children. In

addition, since more education is required to gain employment in the modern sector of the

economy, parents are obliged to invest more in fewer children.

Ironically, these moral and economic changes also encourage children to strike out on

their own once they become free of parental supervision. Traditional patterns of high

fertility which emphasized quantity of children are no longer cost effective for parents who

may not expect their children to support them in old age (which was the normative moral








responsibility in the past). Each of these factors makes childbearing a more expensive and

economically speculative proposition.

Unfortunately, the Caldwells are not always consistent or clear about causation. For

instance, Caldwell and Caldwell (1987a) contend that this process of westernization is

delayed by deeply rooted African religious values which support the power of the elders

and ancestors. They assert, "a discussion of prosaic material considerations understates the

essentially religious underpinning of high fertility" (ibid:421). In the same year the

Caldwells also presented an article which states, "Educational opportunities and subsequent

occupational opportunities are by far the most important factors in limiting family size"

(Caldwell and Caldwell 1987b: 11).

It is difficult to resolve the frequent contradictions in the Caldwells' writings. Is it

"religious underpinnings", "educational and occupational opportunities", or both factors,

which determine fertility behavior? The intended causal sequence the Caldwells suggest is:

(1) educated children become (2) secularized adults, and therefore, (3) have weaker ties to

traditional pronatalist beliefs. This is usually true. But is not the expectation of more old

age support one incentive for parents to educate their children? Therefore, is it not because

of "prosaic material considerations" that parents invest more in their children's education,

thereby encouraging their children's break with traditional religious pressures for high

fertility?

Parents may in fact be consumers and investors without being conscious of how their

productive and reproductive behaviors relate to consumption and investment. Based on this

understanding, Handwerker has proposed that people get an education, have children, and

exploit each other to gain access to resources.








Resource Access Hypothesis

The "resource access hypothesis" is logically consistent, parsimonious, and does not

rely on mentalist or western ideological assumptions. The resource access hypothesis, as

formulated by Handwerker (1983; 1986a; 1986b; 1987; 1989), is founded on materialist

causal variables as they relate to women's power--"specifically the opportunity to pursue

goals independently of their childbearing capacity" (Handwerker 1990:3). Handwerkers

explicitly structural, political-economic and anti-patriarchal orientation is a feminist

approach to demographic transition theory. Handwerker writes:

The resource access hypothesis thus conceives fertility transition and
the revolution in social relationships that precipitate it as one effect of
a fundamental change in the costs that attach to resources and to the
means women can use to gain access to resources, and thus as one
effect of a fundamental change in women's power (1989:22).

Handwerker's theory is rooted in the following four relationships:

1) Fertility transition occurs when women are freed from economic
dependency on their children;
2) women may achieve this freedom by direct government manipulation of
resource access costs, as recently in China and Singapore;
3) women may also achieve this freedom once well-paying employment
opportunities open up to them as well as to men, and
4) these employment opportunities open to women when economic
power is decentralized and creates competition that selects
employees more on the basis of personal skills and competence than
on the basis of personal relationships with employers (1989:22).

Handwerker agrees with the materialist aspects of Caldwells' wealth flows theory, i.e.,

the importance of the direction of intergenerational income flows. Handwerker (1986b:3)

asserts, "The adverse effect of this reversal of the intergenerational wealth flow on parental

material well-being provides the incentive for the sharp limitation of family size that has

been the singular feature of the modem demographic transition."

However, contrary to Caldwell and Caldwell's (1990) cultural idealist assertion that the

primary causes of high fertility in sub-Saharan Africa are kinship patterns and the

traditional socioreligious emphasis on replacing the lineage, Handwerker argues that high








fertility is a response to limited access to strategic resources. On a similar material basis,

contrary to Caldwell's idealist belief in the education model, Handwerker asserts that

education alone will not fuel fertility transition; transition only proceeds "when changes in

opportunity structure and the labor market increasingly reward acquired skills and

perspectives" (Handwerker 1986a:400). Thus, Handwerker asserts:

The relative importance of kinship and other personal relationships
can change only when alternative lines of access to strategic
resources proliferate. Formal education and skill training, which
become of widespread importance only in the context of the industrial
system, offers for the first time in human history a criterion that can
be used independent of kin and other social relationships to gain
access to strategic resources. However, such proliferation cannot
occur unless this novel line of access to key resources yields greater
returns more reliably than the use of personal relationships.
Educationally-acquired skills and experiences can yield such returns
only with changes in the opportunity structure and the labor market.
Such changes in opportunity structure and the labor market have the
effect of constraining the income flows accessible solely through
children and the personal relationships (to kin, friends, and patrons)
they can create.
Hence, fertility transition should not follow from the onset of mass
education, as Caldwell claims, but from the conjunction of mass
education with changes in opportunity structure that increasingly
reward educationally-acquired skills and perspectives (1986b: 15-16).

According to Handwerker, this depends on fundamental structural economic change

which creates more nonagricultural economic opportunities (especially for women) and

selects for more democratic hiring practices. This results in more egalitarian power relations

between the sexes and more opportunities for women to pursue goals independently of

their childbearing capacity. Increasing meritocratic access to economic opportunities creates

the material incentives for women to stay in school longer and to achieve economic

independence from children and men.

The industrial mode of production relies on an expanding base of technicians, workers

and consumers. New educational, career, and employment opportunities offer women and

their young adult children greatly expanded access to economic resources. Under these new








cultural-material conditions, achieved status increasingly replaces ascriptive status as

education and technical skill are rewarded. Kinship and other personal relationships which

traditionally were used to secure access to resources are increasingly replaced by alternative

means. In Barbados, Handwerker points out:

Prior to 1960, the Barbadian economy was characterized by an
uncompetitive and oligopolistic resource structure the primary effects
of which was to allocate opportunities largely on the basis of
personal relationships, and these on the basis of sex, class, and
color.... Between 1955 and 1965, the Barbadian economy
underwent a major structural discontinuity marked by the decline in
the importance of sugar and the ascendancy of industrial
manufacturing and tourism. The economic well-being of these
sectors was subject to selection on the basis of quality and cost
factors set in international markets; they opened up new resource
access channels for both men and women, and, by the 1980s,
Barbadian women were able to chart their own course in life in ways
that had been denied to their mothers and grandmothers (1990:8).

The introduction of western style education, modem health care, and family planning

programs were not responsible for this new freedom; women's independence came after

structural economic developments opened new resource channels which offered women

new socioeconomic roles. New freedoms were not the result of an aggressive equality

movement among women who self-consciously struggled for their rights. Barbadian

women did not plan the economic and social revolution; impersonal factors selected for

these changes. Selection was based on quality and cost factors set in international markets.

Barbados' close geographical proximity to the United States also contributed, as we will

see below.

Handwerker is critical of demographic transition theories which posit interdependent

processes of"modemization" (Bulatao and Lee 1983; Easterlin and Crimmins 1985) and

the "westernization" of family values by mass education (Caldwell 1982). Handwerker

claims that most indices of development and modernization, e.g., improvements in public

health care, the availability of new goods and services, and growth in per capital income,








are factors whose putative linkages with fertility are either spurious or inconsistent.

Indeed, in summing up his research of demographic change in Barbados--where total

fertility fell from around 5.0 in the mid-1950s to a low of about 2.0 in 1980 (Handwerker

1989:202)--Handwerker writes, "The Barbadian fertility transition was completed in only

20 years, and it occurred demonstrably independently of changes in the level of women's

education, rising standards of living, women's worker participation rates, urbanization,

westernization, or the existence of the Barbadian Family Planning Association" (1990:8).

Beyond his criticisms of cultural idealist explanations of demographic transition,

Handwerker questions the essential assumptions of contemporary social thought--which he

believes were profoundly influenced by Adam Smith. Criticizing Smith's image of people

and society, Handwerker writes:

This image, of people who competitively pursue their own interests
and improve the well being of a society in the process, has given rise
to the presumption that human history is decided by purposeful,
rational thought and action. This view has become an essential
assumption of contemporary social science and the modernization
hypothesis it uses to interpret social and demographic change in the
contemporary world (1989:212).

Handwerker has two major complaints with Smith's thesis. First, Smith's description

of social processes assumes a state of equilibrium and cannot be used to describe changes

in system states, the circumstances of change, or the direction change may take; second, it

is unrealistic and utopian to conceive of human history as the product of foresight,

intentions, and rationality when it is clear that people muddle affairs, mistake best interests,

and when human rationality cannot effectively sort through problems of even moderate

complexity (e.g., Hogarth and Reder 1987). Also, the complexities of power relationships

makes it impossible to plan and direct the course of human events (e.g., Skocpol 1979).

Handwerker cites the influences of Charles Darwin's evolutionism and Karl Marx's

materialism as most important to his development of resource access theory. According to








Darwin (1859), the direction of change is independent of foresight, intentions, rationality,

and purpose; the forces of nature are impersonal. The driving force of biological evolution

is found in the interaction between mutation and changing natural conditions. Similarly, the

driving force in social evolution is found in the interaction between human innovation (see

Barnett 1953) and changing material conditions. Selection eliminates innovations and

behaviors that interfere with the process of resource acquisition and favors innovations and

behaviors that improve or optimize resource access. Arguing that the interaction between

innovation and material selective criteria drives cultural evolution, Handwerker asserts:

Selection must favor any property that improves or optimizes
resource access, that selection will concentrate conceptual and
behavioral innovations that do so, and that selection will build
relatively advantageous means of acquiring resources and will
eliminate innovations that interfere with the process of resource
acquisition.... The changes in social relationships and reproductive
behavior that mark this moment in human history thus must reflect
specific power relationships grounded on specific resource access
cost structures (1989:20-21).

Handwerker contends that Marx's central conclusions about the causes of historical

changes in power and resource access are correct--that beliefs, behaviors, and social

relationships are determined by how people can best access resources. Handwerker notes:

Technical innovations in energy use, transportation, information
processing and dissemination, agriculture, construction, and
manufacturing (see Braudel, 1979; Barnett, 1961) radically changed
the cost structure of resource access and thus constitute the core of
the contemporary world social revolution (1989:215).

Handwerker (1989:215) observes, "The distinctive qualities of the contemporary world

social revolution reflects fundamental change in the costs that attach to resources and to

means women can use to gain access to resources." Thus, according to Handwerker,

modern demographic transition is associated with a revolution in social relationships;

specifically, changes in women's power relationships with men, their children, and their

parents.








Evolutionary Demographic Transition Theory

As the title suggests, evolutionary demographic transition theory has much in common

with Handwerker's resource access hypothesis; it is merely an addition and expansion.

Added to the contributions of Darwin and Marx are the modem insights of Harris, Skinner,

and Eldredge and Gould. The theoretical cornerstones of evolutionary demographic

transition theory are cultural materialism, radical behaviorism, and punctuated

evolutionism. No other theory of fertility behavior and demographic transition is explicitly

grounded on the synergism of these three scientific research traditions.

In chapter two I introduced the epistemological similarities of cultural materialism and

behaviorism, and their relationship to evolutionism. Evolutionary demographic transition

theory holds that reproductive decision-making and demographic transition must be

understood from an etic behavioral epistemological perspective in a nomothetic,

comparative, and evolutionary context. Joining Skinner's radical behaviorism and Harris'

cultural materialism, it is asserted that fertility behaviors and outcomes are selected by their

consequences in material reality.

What is meant by material conditions and causes in these statements? Marx's form of

materialism has already been referred to as one of the theoretical foundations of

Handwerkers resource access hypothesis. However, Marx was a political-economist and

his notion of materialism was adopted to explain the causes of political and economic

change. Marx blatently ignored Malthusian demographic processes (Malthus 1817); he also

underestimated the potential of technology (see White 1949; 1959) to raise the standards of

material living for the masses, thereby transforming the desperate proletariat into a satisfied

middle-class. Environmental determinants of political culture change (see Wittfogel 1957)

were also inconvenient to Marx's political theories. Finally, Marx was a Lamarkian;

principles of Darwinian selection (Darwin 1859) were incompatible with his notion of








historical determinism. Thus, Marx's understanding of the material causes of change were

narrow and limited.

On the other hand, Harris is a cultural anthropologist and his notion of materialism is

guided by his attempt to explain a much broader phenomenon--the causes of cultural

evolutionary change. Thus, in cultural materialism, Harris includes a broader set of material

causal factors of change. In addition to Marx's economic factors of material change, the

descriptive components of Harris' materialism include demographic, technological, and

environmental causal factors. These four factors comprise the infrastructure. Cultural

materialism describes the causes of cultural evolutionary change in terms of demo-techno-

econo-environmental probabilistic determinism.

These conclusions formulated by Harris and other cultural materialists are derived from

critical analysis of cultural evolution from the Pleistocene to the present; of the dynamic

cultural changes wrought by materialist forces such as ecological catastrophes,

technological innovations, demographic transitions, and economic patterns of exploitation;

and of the causal relationship between these material factors and structural phenomena such

as class stratification, sociocultural integration, and political centralization.

In spite of their different versions of materialism, cultural materialism and dialectical

materialism share similar theoretical principles. For example, both Marx and Harris view

social and political processes as structural and/or superstructural characteristics of material

causes. Especially relevent to Harris' formulation of cultural materialism is Marx's now

famous assertion:

The mode of production in material life determines the general
character of the social, political, and spiritual processes of life. It is
not the consciousness of men that determines their existence, but on
the contrary, their social existence determines their consciousness
(1970 [1859]:21).








Cultural materialism is indebted to Marx on this point. Harris writes:

The cultural materialist version of Marx's great principle is as
follows: The etic behavioral modes of production and reproduction
probabilistically determine the etic behavioral domestic and political
economy, which in turn probabilistically determine the behavioral
and mental emic superstructure (1979:55-56).

The fundamental theoretical principle of cultural materialism is this principle of

infrastructural determinism. It is argued that modes of production and reproduction--

infrastructure--should be given highest priority in efforts to formulate and test theories of

sociocultural causation. Demographic, technological, economic, and environmental change

is infrastructural change; changes in these material conditions result in structural and

superstructural change.

The etic behavioral mode of reproduction is defined by Harris (1988:135) as, "The

technology and the practices employed for expanding, limiting, and maintaining population

size." The etic behavioral mode of production is defined by Harris ibidd) as, "The

technology and the practices employed for expanding or limiting basic subsistence

production, especially the production of food and other forms of energy, given the

restrictions and opportunities provided by a specific technology interacting with a specific

habitat." For example, infrastructural change is represented by the increasing technological

exploitation of the natural environment and new economic practices and demographic

strategies associated with the evolution from foraging to agricultural to industrial modes of

production. These infrastructural changes have resulted in structural and superstructural

changes.

The etic and behavioral components of structure are defined in terms of the organization

of the domestic and political economy. In short, this includes the domestic and political

organization of order and control, the division of labor, the organization of socialization,

enculturation and education, and the roles ascribed to age, gender and class. By these








definitions, the "structural discontinuities" Handwerker refers to in his Barbadian example

are caused by infrastructural economic changes, e.g., a world market selecting for

manufactured products over raw sugar. Unfortunately, Handwerker does not use the

theoretical framework of cultural materialism and does not employ infrastructure as an

explanatory category. In evolutionary demographic transition theory, infrastructural change

is critical to understanding the dynamic causes of demographic change.

The strategic priority of infrastucture--modes of production and reproduction--is based

on the fact that human beings cannot change ecological, chemical and physical laws, but

can only strike a balance between production, reproduction, and consumption of energy.

These relationships are universal material absolutes that affect each individual, consciously

or unconsciously, and all cultures, past, present, and future. Lett (1987:91) asserts,

"Cultural materialists have demonstrated incontrovertibly that sociocultural systems adjust

themselves in patterned and predictable ways to ecological and demographic constraints."

A fundamental tenet of cultural materialism is that cultures behave creatively and

rationally, but always in response to material opportunities and constraints. Thus, cultural

evolution is probabilistically determined by material conditions. For example, cultural

selection follows the same cost-benefit principles as biological selection. Illustrating the

primacy of infrastructure and of materialist (in this case, ecological) evolutionary selection,

Harris (1979:137) asserts that "ecological conditions embodied in the infrastructure raise

and lower the bio-psychological costs and benefits of innovative responses .. Certain

innovative behaviors rather than others are retained and propogated .. because they

maximize bio-psychological benefits and minimize bio-psychological costs."

Anthropologists have successfully accounted for cultural evolutionary change from the

Pleistocene to the present using the causal heirarchy introduced above. In evolutionary

demographic transition theory, prehistoric data adds comparative strength to historic data,








while a focus on the material causes of fertility behavior offers more explanatory power.

Not only are etic behavioral and evolutionary approaches to understanding the causes of

demographic transition more scientifically grounded than emic mentalist and historical-

interpretive approaches, but they offer an empirically testable theory within a larger

temporal frame of reference. As Harris and Ross (1987:4) assert, "A proper understanding

of history and prehistory cannot be achieved by reading arbitrary slices of time, but only by

reading forward from the paleolithic or from the junction between major types of social

formations."

Evolutionary demographic transition theory also avoids the cultural idealist biases

inherent in modernization and westernization theories. From materialist and behaviorist

foundations, evolutionary demographic transition theory asserts the causal priority of etic

material conditions and contingencies and metacontingencies of reinforcement and

punishment over emic mentalist factors. Instead of causal references to tastes, preferences,

values, cultural ideals, and other mental or culturally specific superstructural processes,

evolutionary demographic transition theory refers to the dynamic causal interaction between

economic, technological, environmental and demographic factors. As outlined above, these

infrastructural factors determine structural and superstructural change.

Therefore, according to evolutionary demographic transition theory, fertility behavior is

determined by how individuals can best optimize their material well-being within limited

and changing material conditions, not by the mimicking of western attitudes and behavioral

norms. Ethnocentric notions of evolving states of consciousness, reasoning and

individualism are discarded; misleading and westem-centric notions of natural fertility and

precontraceptive peoples are abandoned.

Evolutionary demographic transition theory holds that mentalist approaches are

unproductive in explaining the causes of differences and similarities in fertility behaviors








because they ignore the material incentives and disincentives which underlie behavior and

value formation. All available prehistoric, historic, and contemporary data suggest that

material opportunities and constraints determine reproductive outcomes. This is not true for

educational, health care or family planning efforts.

However, this is not to say that the provision of better access to education, health care,

and family planning should not be a critical goal of development efforts. Evolutionary

demographic transition theory merely predicts that these humanitarian development projects

will not independently reduce fertility and family size. Such a statement should not be

misconstrued; it merely attempts to clarify the role of those factors which have indirect

affects or are dependent on other factors of change. Indeed, in high fertility regimes in the

developing world today, women access health care and family planning programs in order

to have more, not fewer, children. Evolutionary demographic transition theory would

predict that the employment opportunities created by the introduction of broad-based

educational, health care, and family planning programs would dramatically change the

fertility goals and behaviors only for those women who work outside the home providing

these services. This is because large families conflict with their employment positions.

Family size is determined by the direct and indirect (opportunity) costs and benefits to

women of having children. Thus, family size is smaller when higher fertility conflicts with

access to material resources. For example, family size was small during the Pleistocene

when children contributed little to food production and were a burden because survival

depended on constant migration; and in historic and modem times, when children become

more expensive and are a burden for women who seek economic (material) opportunities

outside the household.

On the other hand, family size is larger when higher fertility enhances access to material

resources. For example, under agricultural modes of production family size increased








because children became less of a material burden and more of a material asset; they were

easier to feed and valued for their productive labor, for politically motivated marital

alliances, and for defense of property if necessary.

A fundamental tenet of evolutionary demographic transition theory is that individuals

(and cultures) behave practically and creatively, but always in response to material

opportunities and constraints. Thus, fertility behavior and demographic change are

determined by material conditions. As we will see in the next chapter, new fertility patterns

correspond with changes in the way humans access material resources.

Cultural selection of reproductive behaviors follows the same cost-benefit principles as

biological selection. Demographic changes from the Pleistocene, through the Neolithic, to

the present, suggest a pattern of punctuated equilibrium, similar to Eldredge and Gould's

(1972) theory of biological evolutionary change (also see Simpson 1944; Gould and

Eldredge 1977).

The theory of punctuated equilibrium is a refinement of neo-Darwinian evolutionary

theory that has gained a large consensus of support within the scientific community over

the past twenty years (Mayr 1992). Many consider it a new paradigm for evolutionary

thought (Ruse 1992). Somit and Peterson (1992:4) explain: "At its most basic, punctuated

equilibrium involved two key propositions: first, that species undergo long periods of little

or no evolutionary change; second, that these lengthy intervals of stasis (i.e., equilibrium)

are broken (i.e., punctuated) by relatively rapid speciation events." Essentially, it is argued

that biological evolution does not always proceed in a gradual manner, but that catastrophic

environmental events have led to sudden changes in natural selective criteria. This would

explain large gaps in the fossil record and the process of speciation.

Eldredge (1992:111) queries, "To what extent are these changes in paleontological

thinking relevant to a consideration of the histories and evolution of social systems in








general and to the study of human history and archaeology in particular?" These questions

have just recently been asked and are being discussed in a diversity of fields, including,

economics, sociology, psychology, psychobiology, political science, archeology, and

physical and cultural anthropology (Somit and Peterson 1992).

Somit and Peterson believe that the theory of punctuated equilibrium already has

considerable metaphorical and heuristic value (if not eventually hard scientific validity).

They assert, "Theories as metaphors or models can also be substantial aids for advancing

our comprehension of social reality" ibidd: 11). Under this auspices, the theory of

punctuated equilibrium has been used to explain changes in American electoral behavior

(Carmines and Stimson 1989), to model political socialization (Ra 1988, cited in Somit and

Peterson 1992), and to speculate on changes in the relationship between the biosphere and

the sociosphere (Boulding 1992).

How does the theory of punctuated equilibrium relate to human behavior and

demographic processes? When dramatic environmental change creates a punctuation point

in biological evolution, survival is suddenly contingent upon a different set of biological

abilities. Organisms that already have biological make-ups which allow them to live (to

produce and reproduce) in these new conditions survive; organisms that do not, perish.

Similarly, when dramatic environmental change created a punctuation point in human

cultural evolution, survival suddenly was contingent upon a different set of productive

abilities and reproductive behaviors. Human groups that adopted new productive and

reproductive strategies survived; others groups perished.

By analogy, when dramatic infrastructural change creates a punctuation point in cultural

evolution, the success of individual survival strategies is contingent upon a new set of

productive and reproductive behaviors. As the costs of childbearing begin to outweigh the

benefits, some women become demographic innovators and cultures become more








antinatalist. This can occur gradually or dramatically, depending on how gradual or

dramatic the infrastructural change. Punctuation points in human cultural evolution reflect

dramatic changes in productive and reproductive behaviors.

As we will see below, there have been two major punctuation points in demographic

history and prehistory. The first occurred during the Paleolithic after an ecological

catastrophe forced humans to adopt (invent) a new strategy for survival--the domestication

of plants and animals. Population growth rates which had reached equilibria at low levels

during foraging modes of production suddenly rose to new heights. The second major

punctuation point occurred after humans learned to harness energy from fossil fuels. Under

the agricultural mode of production population growth rates reached equilibria at high

levels, then suddenly dropped with the onset of industrial modes of production.

As recent country examples suggest, once the material incentives for demographic

transition are present it can occur in a generation or two. Incorporating the theory of

punctuated equilibrium into evolutionary demographic transition theory emphasizes the fact

that once the necessary material conditions are present, demographic transition will proceed

rapidly in spite of traditional pronatalist cultural institutions and beliefs.













CHAPTER 4

PREHISTORIC AND HISTORIC EVIDENCE


From an evolutionary perspective, there have been two major well documented

demographic transitions since the emergence of Homo sapiens sapiens 100,000 years ago;

the first toward increasing and the second toward decreasing population growth. New

fertility patterns followed dramatic changes in survival strategies which were made

necessary by fundamental changes in the way humans could access material resources.

Productive and reproductive (demographic) transitions represent punctuation points in

cultural evolution. The first demographic transition corresponds with the Neolithic

Revolution, when humans domesticated plants and animals. This innovative new food

production technology created an abundance of new food resources which could be

harvested without migrating. The second demographic transition corresponds with the

Industrial Revolution, when humans captured enormous new energy reserves in fossil

fuels and used them in conjunction with machines to produce work. This innovative new

production technology created abundant food resources and an almost unlimited array of

commodities for human consumption.

Revolutionary changes in human reproduction coincide with revolutionary changes in

production. This "coincidence" has led to research examining the affects of basic resource

characteristics on reproduction. This chapter looks at the dynamic feedback between modes

of production and modes of reproduction. Surrounding these two periods of reproductive








transition and productive revolution there are three periods of relative productive and

reproductive stasis or equilibrium--the foraging, agricultural, and industrial production

periods. These periods are also referred to as the prehistoric, historic, and modem periods.


Prehistoric Demographics

During the Pleistocene, population growth was slow, but steady, as homo sapiens

populated the earth. These early human pioneers were organized in nuclear families and

small bands of 20-50 individuals. They survived by cooperatively hunting wild animals

and gathering food from plants. Population densities among paleolithic hunter-gatherers

seldom rose above one person per square mile.

Thomas Hobbes supposed the lives of these prehistoric peoples were "solitary, poor,

nasty, brutish, and short." Similarly, without empirical evidence, demographers have

assumed that high fertility and mortality accounted for low population growth rates during

most of human history. This assumption was based on three popular, but erroneous,

speculations about the conditions of prehistorical humankind: 1) the Hobbesian notion that

prehistorical peoples were inherently aggressive "killers" living in a world of "all against

all"; 2) the Rousseauean notion that prehistoric peoples lived in a "state of nature" where

birth and death rates occurred naturally, without active regulation; and, 3) the Malthusian

notion that pre-historical peoples were preconscious, promiscuous, and uncivilized. These

notions are contrary to diverse sources of anthropological evidence.

It is now believed that adequate nutrition (though periodically deficient in calories) and

a relatively low incidence of infectious disease helped keep child and infant mortality down

during most of the Pleistocene (Truswell and Hansen 1976; Segraves 1977). Judging from

archeological evidence of healthy bones and teeth, mortality may not have been higher

30,000 years ago than it was in presently developed countries immediately before the








introduction of modem sanitation and medical practices (Angel 1975). The general well-

being of modem hunter-gatherer populations support this archeological finding (Lee 1968).

Indeed, Sahlins' (1972) calls our Pleistocene ancestors the "original affluent society."

Assuming low to moderate mortality (in order to account for low population growth)

fertility also must have been low. Johnson and Earle (1987:28) cite biological (intermediate

factors--see Bongaarts 1982) and environmental factors to account for moderate to low

fertility and low population growth among hunter-gatherers:

First, a chronic caloric deficiency lowers fertility rates; because of
seasonal cycles in food availability and limited capabilities for
storage, periods of food shortage were common. Second, a long
nursing period delays renewed ovulation; since most wild foods are
apparently not well suited to ween young infants, nursing among
foragers typically remains a child's main food source for the first
two or three years. Third, the intense physical exercise required for
mobile foraging may lower female fertility (Frisch et al. 1980).
Fourth, because closely spaced children are an economic hardship
in a mobile society, infanticide may have been used to space births
(Birdsell 1968).

Poor nutrition during periods of breastfeeding prolongs postpartum amenorrhea, hence,

infecundability (Wilmsen 1981; 1986). In addition, dietary stress probably increased the

incidence of infanticide (Harris and Ross 1987:21-35; Scrimshaw 1978; 1983). There is

also evidence that the composition of the paleolithic diet may have created lactational

afertility. Based on the high protein consumption and the postpartum practices of hunter-

gatherers, Harris surmises that:

prolonged and intensive lactation was an important means of
fertility control throughout much of the paleolithic. The
effectiveness of the lactation method for spacing births appears to
be related to the balance between protein calories and carbohydrate
calories in the diet (Frisch and McArthur 1974; Frisch 1975;
Trussel 1978; Frisch 1978). A diet high in protein and low in
carbohydrates is optimal for the lactation method because it
prevents the accumulation of body fat, the putative signal for the
resumption of postnatal ovulation, while sustaining the health of
the mother through the strain of producing milk for three or four
years at a time (1979:82).








Some researchers dispute this "fat hypothesis" (see Bongaarts 1980; Menken et al.

1981), but it is probable that lactation-induced amenorrhea was an important factor in

spacing and reducing births during the Pleistocene. Handwerker notes:

We now have abundant evidence that lactation-induced amenorrhea is
a singularly important determinant of birth spacing, that, together
with relatively minor misadjustments of coital frequency and timing
relative to ovulation, can account for natural fertility levels in the
neighborhood of four to six live births (1983:17).

Birth rates probably were also reduced somewhat because of interruptions in coital

frequency when men went on long hunting trips. When the whole family moved,

dependent children were a burden to care for and carry (Sussman 1972). Also children

offered little return to parents for many years; returns from children of modem hunter-

gatherers per unit of energy expended are low (Hayden 198 lab).

Cooperative social relations among hunter-gatherer groups also limited the social and

political value of children. Handwerker writes:

The flexibility of kin ties, residential rules, criteria for group
membership and sharing among foragers meant that it was not
important for children to provide care and food for parents, and
children were not assets that could be used to extend political power,
or to expand control over a specific resource base (1983:16).

Indeed, total fertility among living foraging groups is low; the mean TFR is 4.716 for

five groups for which data are available (Howell 1979; Jones 1963; Brainard and Overfield

1981, cited in Handwerker 1983; Harpending and Wandsnider 1981). By the end of the

paleolithic, Dumond (1975) and Hassan (1978:78) estimate there were only 5 million

people on the planet. Cohen (1977:54) estimates there were no more than 15 million.

The above data suggest that low to moderate fertility, small families, and low to

moderate population growth was the norm during the paleolithic. This helped foragers

maintain an equilibrium between population and resources (Dumond 1975:714). These

conditions lasted until they were disrupted by climatic change and ecological catastrophe.








At the end of the paleolithic, improved hunting technologies also led to massive

predation of large-bodied food resources. Hayden (1986:178-9) describes these vulnerable

K-selected large-bodied plants and animals with five important attributes: (1) take a long

time to mature; (2) have very low biological productivity (as populations, they do not

produce much edible tissue in a year); (3) exhibit low overall densities; (4) have low

biomass; and, (5) produce relatively few offspring. Thus, the food supplied by these large-

bodied species could easily be depleted.

Over-predation combined with global warming and a subsequent ecological catastrophe

led to the final extinction of the Pleistocene megafauna (see Martin 1984). The collapse of

the food resource base which supported the foraging mode of production, in turn, set the

stage for the invention of the agricultural mode of production in both the old and new

world. This new mode of production is associated with a new mode of reproduction and

represents a punctuation point in human cultural evolution.


The First Demographic Transition

Agriculture was independently invented in different parts of the world and spread over

thousands of years; it was practiced in the Middle East 10,000 -12,000 B.P. and in North

America 5,000 years ago. Where people lived under an agricultural mode of production,

population growth resulted. Carneiro and Hilse (1966) estimate a thirtyfold population

increase in the Middle East between 10,000 6,000 B.P-- from 100,000 to 3.2 million.

Deevey (1960) estimates that human population multiplied about sixteen times during this

period.

People settled and began to domesticate small-bodied plants and animals. Hayden

(1986:184) describes five special characteristics of these r-selected small-bodied plants and

animals: (1) they are short lived (usually less than a year); (2) they produce prodigious








numbers of offspring, sometimes in the hundreds or thousands per parent; (3) they have

very high potential biological productivity (the amount of edible tissue they are capable of

producing is enormous); (4) in some areas they occur in extremely numerous and dense

concentrations; (5) with potentially very high biomass. The new potential food supply from

these small-bodied plants and animals was enormous.

Population increased with settlement and domestication principally because infant

mortality declined (Harpending and Wandsnider 1981; Brainard 1980, cited in Handwerker

1983:19). Infant mortality and infanticide declined because new resource abundance

substantially improved nutrition. Handwerker (1983:21) has calculated that, "a mere 10%

reduction in infant mortality (from 231-208) alone would result in an intrinsic rate of

increase of. 1% per year, the conventional estimate of the population 'explosion'

experienced in the Neolithic." Although there is no clear evidence, fertility may also have

increased because abundant food combined with more sedentary lifestyles would reduce the

fertility inhibiting affects of biological factors.

Parents also came to view children differently than their Pleistocene ancestors because

children provided more economic and political benefits to settled agriculturalists. Securing

access to strategic resources such as land and labor became a dominant survival strategy.

Large families were a benefit on both accounts. Children provided household and

agricultural labor at an early age and offered security to parents in old age (Polgar 1964;

1972; Dumond 1975). Growing territorialism increased the risk of social conflict. Through

the marriage of children, parents formed political and economic alliances with other families

to help them in land disputes and with seasonal labor demands. Weighing these large

benefits against the small costs of feeding and caring for children among settled

agriculturalists, it was advantageous to have large families.








However, population did not increase unabated in a Malthusian fashion. Long-standing

stationary populations existed in the environmentally and politically circumscribed states of

historical India (Davis 1951; Clark 1967:75-76), China (Bielenstein 1947), and Egypt

(Butzer 1971; Butzer and Freeman 1976). Once population densities reached the limits of

environmental carrying capacity, standards of living declined; mortality and infanticide

probably increased, fertility decreased, and population growth leveled off.

Social ideologies conformed to the political climate set by the prevailing demographic

and material conditions. Harris and Ross (1987:79-84) cite positive associations between

antinatalist tolerance of infanticide and non-reproductive sexual behavior (e.g.,

homosexuality) with abundant slave-labor in ancient Rome and Greece; and conversely,

pronatalist intolerance of infanticide and homosexuality with high mortality and demand for

warriors during the disintegration of the Roman Empire. This suggests that death and

fertility control mechanisms were becoming more institutionalized in early state systems;

fertility behavior was increasingly influenced by the new prerogatives of political

hegemony over land and economic control over labor.

Global population rose steadily because agriculture could be practiced far beyond the

domains of early city-states. Agriculturalists migrated when political-economic pressures

rose or when population-resource conditions declined. The agricultural mode of production

led to the rise of the first state systems in Mesopotamia, Egypt, India, China, Mexico, and

Peru, the first claims to land as private property, and the beginning of a stratified

socioeconomic and political order based on the control of land, labor, and capital.

Between the fall of the Roman Empire and the rise of Westem European feudalism,

populations spread across the open European frontier; hundreds of craft-oriented small

towns were established and centralized political and religious authorities reemerged.

Western Europe experienced dramatic economic expansion and population growth between







the 12th century and the onset of the Black Death in 1347-1351 and 1385. Close to one-

third of Europe's population perished in the Plague; thereafter, standards of living

improved and population grew until the end of the 16th century. About this next period,

Harris and Ross write:

It is the beginning of a period that marks a critical and turbulent era in
Europe between late feudalism and the capitalist epoch, during which
time rural populations in particular were subjected to severe economic
and social pressures. It was an era of mercantile expansion overseas
and the first real assertion by the European bourgeoisie of its claims
to economic and political authority at home. In England, one sign
was the increased pace of the commercialization of agriculture. It was
marked by new enclosures and the wholesale dispossession of
peasants (1987:95).

These dispossessions were not without protest and persecution. Harris and Ross

(1987:96) note that the "Church and State made a general use of witchhunts to dampen

political opposition." They estimate that witchcraft persecutions after 1500 may well have

been responsible for the death of over half a million women (ibid:97). This slaughter of

women may have been one result of increased reproductive pressure.

The closing of the agricultural frontier in Europe and the rise of an increasingly

urbanized class-based capitalist society altered demographic patterns. Levels of fertility and

mortality become increasingly differentiated by socioeconomic conditions.

North America was the last exit into a frontier. The populating and eventual closing of

the frontier in North America was the result of the last great migration of agriculturalists. In

total, it took over five centuries for agricultural modes of production to appear across the

globe; it has taken only 200 years for industrial modes of production to reach every

continent.

The use of steam, the factory system, and the manufacture of iron and cotton textiles

began in England in the 1770s. Technological revolutions in transportation and trade,

agricultural productivity, and mechanized manufacturing spread from England to the rest of








the industrializing world. The second demographic transition is associated with the
industrial mode of production and represents another punctuation point in human cultural
evolution.


The Second Demographic Transition

The second demographic transition began with an unprecedented outburst of population

growth in the late eighteenth century in most countries in Europe and among European

descendants in North America and Oceania, followed by an equally dramatic decline in

population growth occurring between 1870 and the First World War.

The initial spurt of population growth is associated with declining levels of mortality

without declining fertility. A similar phenomenon is experienced in developing countries

today during the early stages of demographic transition. The subsequent decline in

population growth was the result of rapidly declining fertility. Table 4.1 represents the

estimated date of fertility decline by more than ten percent among European countries

(based on 1900 boundaries):

TABLE 4.1
FERTILITY DECLINE IN EUROPE
(1) France 1827 (10) Norway 1903
(2) Belgium 1881 (11) Europe* 1903
(3) Switzerland 1887 (12) Austria 1907
(4) Germany 1888 (13) Greece 1913
(5) Eng/Wales 1892 (14) Italy 1913
(6) Scotland 1894 (15) Hungary 1920
(7) Netherlands 1897 (16) Spain 1920
(8) Denmark 1898 (17) Ireland 1922
(9) Sweden 1902 (18) Euro-Russia 1922
*median province date (Source: Coale and Treadway 1986:38)

After France's precocious fertility decline,

French speaking Belgium, the French speaking cantons of
Switzerland, Catalonia, and some provinces in Hungary followed in
the next few decades [after 1830]. Before 1880 fertility had fallen in
only a few other provinces in Germany, Denmark, Latvia, Serbia,
the Swedish island of Gotlands, and St. Petersburg in Russia...







Most provinces did not start fertility transition until after 1880. All
but a few had begun the transition before 1930. About 60 percent of
the provinces began their fertility declines in the interval between
1890 and 1920. Late declines occurred in Ireland, and in the southern
and eastern periphery of Europe, in Russia, Romania, Albania,
southern Italy, Spain, and Portugal (McGreevey 1985:27-28).

The demographic transition in France is of particular interest because it was the first and

because it was a broad-based rural movement; it occurred before the modernizing forces of

urbanization and industrialization had much of an impact. Since most developing countries

are predominantly rural and lack a large industrial base, the determinants of French fertility

decline may be particularly relevant in a developing context.

Birth rates and death rates were high but stable in France until the mid-1750s because

of frequent plagues, famines, and epidemics. Ambiguous data make it difficult to assess the

exact sequence of declining birth and death rates. Bourgeois-Pichat (1965:482) argues that

birth and death rates began to decline simultaneously in the mid- 1770s. However, Henry

(1965:447) argues that lower death rates between 1750-1790 created a slight bulge in the

natural rate of population increase until fertility began to decline in the 1870s. Bourgeois-

Pichat assumed that migration was negligible, that the registration of deaths was complete,

and that mortality estimates were accurate. Thus, Van de Walle (1974:136-144) complains

that Bourgeois-Pichat over-estimated the speed of fertility decline in the early nineteenth

century, overlooked the possibility of under-registration, and exaggerated earlier trends.

However, with the scant empirical evidence available to Bourgeois-Pichat and Henry, no

conclusions can be made about the causal relationship between mortality and fertility.

However, it is clear that fertility began to decline in the 1770s. Falling birth rates

between 1800-1830 are associated with a drop in marital fertility ibidd 974:172). Birth

intervals lengthened substantially between the second and third, and especially the third and

the fourth child (Weir 1982, cited in McGreevey 1985).








Fertility decline was regionally uniform throughout French society (Newell 1977:137).

This suggests the presence of an overarching cause, independent of rural or urban

residence and socioeconomic status. Aries (1980:647) notes that the decline in marital

fertility is associated with the upward social mobility of French children through education.

McGreevey asserts that the French Revolution:

promoted upward social mobility; it brought new aspirations to the
fore, including emphasis on the education of children; it reduced
allegiance to religious norms and legitimized individual choice....
the Napoleonic code changed inheritance customs by ending the
practice of promogeniture (all lands to the eldest son) thus forcing
rural families to reduce fertility to assure that landholdings could pass
intact to the next generation.... a remarkable feature of it was its
spread beyond the educated and urban to permeate French rural life
(1985:27).

France did not experience the common stage in demographic transition of a long period

of falling death rates and high birth rates. Consequently, France never had a strong surge in

population growth as in other European countries. Though the agricultural labor force

declined slowly it grew at about the same pace as population from 1775-1850. As a result,

France did not have a large landless labor force. Clapham claims, "There were of course

everywhere some landless individuals.... but the real rural laboring class, the proletariat,

the 'wage slaves' of Marxian economics, did not exist" (1936:162). Thus, the high fertility

commonly associated with landless rural laborers did not exist.

These economic-demographic factors explain why French immigration to North

America was less numerous than from other European countries during the late nineteenth

and early twentieth centuries. Since nearly every rural denizen owned at least some land,

there was less incentive to migrate. Similarly, low fertility was effected by material

conditions. Small private farm ownership is usually associated with lower fertility. Also,

without land available to expand cultivation, the value of child labor and inheritance is

reduced--both factors that positively correlate with lower fertility.








Indeed, the rapid increase of agricultural productivity between the end of the

Napoleonic Wars in 1815 and the Franco-Prussian War in 1870 was because of the spread

of mixed farming, not the expansion of cultivated land. Clough (1939:91) has shown that

the number of small holdings in rural France increased substantially after the revolution.

Wright contends that, "If there was any dominant trend during this period, it was toward a

steadily increasing subdivision of the soil" (1964:6). Newell (1977:162) agrees that, "The

exceedingly low potential for expansion of cultivated land for France as a whole may help

explain its unique demographic behavior--both the early start of the demographic transition,

and the low rates of natural increase."

Though fertility declined slowly in France between 1770-1880, between 1880-1910

marital fertility declined sharply along with other European countries (Van de Walle 1974).

Caldwell (1981a; 1983:469-470) believes that the long, slow decline in fertility was the

result of declining economic advantages of children in a circumscribed agricultural

economy; the rapid decline in marital fertility was the result of women's increased ability to

determine their own fertility in a growing industrial economy.

The demographic transition in Sweden best fits the standard demographic transition

model. The death rate started falling in the 1830s, but the birth rate did not begin to decline

until the 1860s. This time lag resulted in a period of rapid population growth and increased

agricultural circumscription.

Like France, fertility decline in Sweden corresponds with rapid increases in agricultural

productivity based on mixed farming, not the extension of farmlands. With increasing

population and opportunities for profit, private farm ownership increased dramatically

between 1870-1930. Land prices rose and it became increasingly difficult to set up a rural

household. It is estimated that marriage age increased and marital fertility declined 2.5

percent per year between 1900-1930 (Mosk 1983). Increased rural reproductive pressure








was largely responsible for the great outmigration to North America; in the 1880s seven

percent of Scandinavia's population emigrated to the United States.

As defined by Harris and Ross (1987:33), "Reproductive pressure refers to adverse

cost benefit ratios, as distinct from population pressure, which is usually taken to mean

population growth. Reproductive pressure may increase in the absence of population

growth, as a result of depletions and diminishing returns." Or in this case, economic

factors created reproductive pressures.

Increasing reproductive pressures also affected England and Wales. For three centuries,

the age at marriage in England and Wales changed, but fertility in marriage stayed the same

(Coale and Treadway 1986). Marital fertility was high and did not decline until the 1890s

(Coale and Watkins 1986). Lower fertility occurred earlier in some areas because of

delayed marriage and high rates of spinsterhood (Flynn 1982). But Haines (1989) has

shown that control of fertility within marriage was more important than later marriage in

reducing fertility. Whether delaying births within marriage or delaying marriage itself, both

strategies are used to optimize the costs and benefits of rearing children.

Changing economic opportunities and constraints affect people differently by class,

occupation, residence, etc., but the resulting decline in fertility was fairly uniform in

England. As in France, though different levels of marital fertility existed between

occupations and social classes in Victorian England, a decline in marital fertility occurred in

all occupations and social classes simultaneously (Woods and Smith 1983; Woods 1987).

As in France and Sweden, fertility transition in England and Wales was the result of

infrastructural change associated with reproductive pressure and technological innovation.

Broad-based structural economic change and fertility decline occurred as a result of these

infrastructural changes.








Comparative Causes of Demographic Transition

During the long period of hunting and gathering, fertility was moderate, mortality was

low, and population grew slowly. During the transition period of increased settlement and

domestication, mortality initially declined and population grew fast. Toward the end of the

Pleistocene-Holocene transition, mortality and fertility increased. Fertility outpaced

mortality, resulting in population growth. After the agricultural revolution, increasing

population growth lasted until the industrial revolution, when mortality and fertility levels

declined and population growth slowed. Eventually mortality and fertility levels reached

equilibrium at low levels, and populations became stable in developed countries.

During this long demographic evolutionary process it is clear that material opportunities

and constraints altered demographic outcomes. Ecological catastrophe caused demographic

pressure and resource depletions. A changing resource base required (selected for) new

productive innovations and adaptive survival strategies. Technological innovations and

behavioral adaptations became necessary to maintain standards of living. Modes of

production changed along with modes of reproduction.

After ecological catastrophe and over-predation at the end of the Pleistocene, people

who were located near and who were able to exploit new food resources survived. Small-

bodied species of wild plants and animals replaced the extinct large-bodied species. Broad

spectrum hunting and gathering was adopted to exploit this new resource base. People

settled for the first time. Eventually wild species were domesticated. Agricultural

production greatly increased the food supply. Children were no longer a burden to carry

and feed in settled households with abundant food resources. Children contributed to food

production at an earlier age. In addition, because land and labor became critical resources,

children became important social and political advantages and provided parents with








security in their old age. More children resulted in a better life during agricultural modes of

production.

These cultural and material conditions changed with the advent of the industrial mode of

production. New agricultural technologies replaced the need for farm labor at the same time

non-farm employment opportunities were expanding. The declining value of child labor on

the farm and the increasing value of women's work in the modem industrial sector led to

massive urban migration, later marriage, delayed childbearing, and lower total fertility.

Increased costs of feeding, educating, clothing, and providing health care made children

more expensive; the declining economic and social value of children decreased the benefits

of large families to parents. The costs of large families increasingly exceeded benefits,

resulting in lower fertility and declining population growth rates.

The onset of demographic transition throughout Europe corresponds with agricultural

productivity and/or articulated sectorial development. Except for France, agricultural and

manufacturing productivity grew together, displacing people from rural areas about as fast

as increased food production could support urban food consumption.

Private landownership and urban markets encouraged agricultural investment. An

inability to increase landholdings encouraged mixed farming and the use of labor-saving

technologies. In turn, increased agricultural productivity created cheap and abundant food

for the growing urban population. Manufacturers could therefore pay lower wages to their

employees, and sell their products for less, but at a higher profit. This encouraged

increased commodity production and consumption and urban-industrial growth. The

articulation of rural and urban sectors maximized feedback benefits.

For four countries (Great Britain, Norway, the United States, and
Canada) the trend of per worker product in agriculture was identical
to country-wide per worker product. In the Netherlands, Denmark,
and Australia, productivity in the agricultural sector increased at a rate
somewhat faster than economywide productivity. In France,
Sweden, Italy, the USSR, and Japan, agricultural productivity grew







at two-thirds or more the speed of economywide productivity
(Kuznets 1966:113-127, cited in McGreevey 1985:33).

Demographic transition occurred in both rural and urban sectors throughout Europe.

However, in every country, fertility was higher in rural than in urban areas and lower

among landowners than among peasants. Across Europe, landowning families (who were

already reducing their fertility) remained in the countryside, while the rural poor (who had

the highest reproductive rates) migrated to urban areas or overseas in search of land and

employment. The high reproductive rate of the rural poor was the result of new

opportunities for children to migrate and provide remittances from urban employment.

In urban areas, this landless class stratified into a new lower and middle-class based on

skill, education, and employment status. The birth rate of the new urban middle class was

lower than landowning agriculturalists, while the birth rate of the new urban poor was not

significantly higher than landless farm workers. Thus, aggregate fertility differences in

Europe are correlated with the changing magnitude and proportion of rural landed versus

rural landless and urban middle class versus urban poor. The age of marriage also rose

because of migration and the problem of finding urban employment and setting up a

household.

But what factors caused these demographic changes? Mosk (1983) argues that

increased agricultural productivity and new alternatives to family-farm work led to the

dissolution of the patriarchal family system and the beginning of fertility transition. Shorter

(1975:269-280) has shown that parent/child, spousal, and extended family

interdependencies weakened throughout Europe during this period. McGreevey asserts:

The timing and swiftness of fertility declines varied with the extent to
which women stopped working at home and children stopped
working at all.... Even as the agricultural age was drawn to a close
by the rise of industry, change in life on farms, particularly the lives
of women and children, proved to be a critical determinant of the
timing and pace of the demographic transition (1985:29).








McGreevey continues:

The patriarchal system was undermined by the expansion of
education, which offered job certification independent of the
patriarch, and by the growth of labor markets, which offered
alternatives to children and diminished the patriarch's control.
Schooling, and jobs gotten independently, changed the relative
bargaining positions of patriarch, wife, sons, and daughters.
Innovations in farm techniques led to greater per worker productivity
in agriculture and diminished the need for farm family labor. Overall,
the new alternatives for children, and the reduced demand for their
services by parents, reduced the economic advantages of children.
Fertility decline was a predictable response to these changed
conditions (ibid:30).

Intergenerational obligations changed because the mode of production changed. The

growing industrial mode of production created new material relationships which had

historic reproductive repercussions. Women became less dependent on men, children, and

extended families for economic resources, perhaps for the first time in human history.

More economic independence allowed for greater individual autonomy. Since early

childbearing and large families would restrict these aspirations for women, they

increasingly delayed childbearing and restricted family size (Flinn 1982). Also, the

advantages of having a few (expensive) educated, wage-earning, urbanized children

outweighed the advantages of having a lot of (inexpensive) uneducated children.

Hayden writes:

Under advanced industrial conditions the individual rather than the
family (or lineage, or clan) becomes the competing economic unit.
This represents the crossing of a new rubicon of reproductive
behavior, for the fundamental relationships of reproduction
characterizing the previous 2,000,000 years will have been altered. .
.. we have finally reached the top of the sigmoid curve of population
increase begun when hunter/gatherers first began making effective
use of small-bodied resources, some 20,000 years ago (1986:177;
also see Tabah 1980:361-2).

Population growth remained low among Paleolithic foraging people, not because they

wanted fewer children, but because of biological factors and because they couldn't afford

them. Mortality declined and population grew during the Pleistocene-Holocene transition,








not because people wanted more children, but because they could afford (feed) them.

Fertility and population growth increased after the agricultural revolution, not because

people decided to have more children, but because they could not afford to have fewer

children. Fertility and population growth declined after the industrial revolution, not

because people wanted fewer children, but because the costs of large families to parents

outweighed the benefits.

An evolutionary approach to demographic transition shows that aggregate fertility

behavior is a response to the practical problems of earthly existence. New environmental

conditions create new constraints and opportunities for technological innovation and new

modes of production, which in turn, select for certain fertility outcomes over others. Modes

of production and reproduction have changed together in a dynamically interacting feedback

loop, reflecting technological possibilities and environmental variation throughout cultural

evolution.

Human cultures have existed for more than a thousand generations. For tens of

thousands of years the population growth rates of paleolithic cultures remained relatively

stable, as did their basic technology and mode of production. The number and variety of

human artifacts suggests that a great acceleration in the rate of demographic and cultural

change began with agricultural modes of production. Recent historical evidence suggests

even a faster rate of demographic and cultural change. Boulding observes:

With the rise of science, of course, know-how expanded at an ever-
increasing rate for five hundred years, although the impact of science
on technology, that is, the translation of know-what into know-how,
hardly began until the middle of the nineteenth century.... As a
result, the total ecosystem of the earth, including both biological and
human artifacts, has almost certainly changed more in the last one
hundred years than in any one hundred years in the earth's history
{except for catastrophic extinctions) (1992:181).

To understand the determinants of changing fertility behavior, demographic theory

must be placed in the more encompassing framework of evolutionary theory. Evolutionary








insights show that fertility outcomes are determined by changing material conditions which

affect fertility behavior in predictable ways. In the long run, demographic change is not

caused by cultural, moral or religious beliefs or by the whim of human free-agency, but

rather by practical adaptations to changing material conditions.

The top of the sigmoid curve has been reached in the industrial world. Populations are

even declining in a few countries. However, populations continue to grow in many

countries at disastrously high rates. In these countries, economic growth has not kept pace

with population growth, and reproductive pressure has resulted in further lowering

standards of living.

Development policies based on cultural idealist theories and emic mentalist

epistemologies have had little demographic impact, while policies which have not taken

demographic impacts into consideration have seeded their own failures. Development goals

to raise per capital standards of living are seldom met in rural or urban areas because they

have not been able to create conditions which select for lower fertility along with

development. As a result, poverty and desperation increase.













CHAPTER 5

MODERN EVIDENCE


Increases in modem education is frequently cited in the demographic transition literature

as one of the causes of fertility decline in the developing world. Aggregate cross-cultural

data shows strong correlations between high levels of education, contraceptive prevalence

and lower fertility. Cultural idealists, like the Caldwell's, emphasize the westernizing

influences of education; on the other hand, materialists, like Handwerker, assert that

education will only lead to fertility decline if it is rewarded with modern sector

employment. Without modern employment opportunities there may be little incentive for

educational advancement. Parents may not support the education of their children.

Employment rewards for educational achievement are not always assured in developing

countries. This is especially true in small labor intensive agricultural economies, where

most of the employment opportunities that would reward an education are provided for by

the government. What if the government can not provide enough jobs for school-leavers?

Women and men may leave school earlier to begin a family. When women leave school

early because there are few employment opportunities for educated adults, they may also

have higher total fertility than if such opportunities existed and they choose to remain in

school to follow a career path. Also, without employment rewards for their children,

parents may be unwilling to pay school fees and associated expenses.








The causal role of education, like that of access to birth control, may be unimportant in

fertility reduction unless parents and their daughters have material incentives to take

advantage of educational opportunities. This understanding reverses the assumed causal

arrows, and stresses the primary causal role of economic change in fertility decline. The

belief that education independently causes changes in fertility attitudes and behaviors

toward western fertility norms is increasingly discredited.


Education and Fertility

For some time it has been commonly accepted in the demographic literature that

education spreads rationality, secularizes populations, and contributes to the diffusion of

information and techniques that alter the social values and cultural norms responsible for

high fertility (Stolnitz 1964; Knodel 1974; Bogue 1969; Caldwell 1982). Programmatic

social psychological and emic mentalist approaches emphasize that education changes

attitudes, preferences, values, opinions and beliefs according to new goals and desires

brought about by modernization (Fawcett 1983; Fawcett and Arnold 1973). Caldwell

asserts:

Education appears to cause the most changes. It challenges traditional
authority, gives females an absolute criterion or value for comparison
with males, teaches girls new aims and destinies that almost always
include some move toward a more egalitarian Western family
structure, and changes husbands' appreciation of their wives, wives'
appreciation of themselves, and children's appreciation of their
mothers. In families with educated women, wives become more
expensive and so do children, partly because mothers appear to be
more likely to stress the dependence of children and the primacy of
the nuclear family (198 lb: 114).

Most aggregate level research on historic and modern populations points to a strong

negative relationship between education and fertility (in Switzerland, Van de Walle 1986; in

Germany, Knodal 1974; in the United States Vinovskis 1976; also see Bogue 1969 and








Petersen 1975). Analyzing time-series data from 5 developed countries and 18 developing

countries, Tan and Haines claim to have found a threshold effect:

Prior to the attainment of primary gross enrollment ratios of about 70
or 80 percent, there appeared to be little relationship between levels
or change in primary school enrollments and fertility. There were
exceptions, but overall a fairly high level of educational development,
as indicated by the level of primary enrollments, seemed to be
important for a decline in fertility to take place (1984:24).

Referring to 46 study populations in the World Fertility Survey (WFS), Cleland and

Rodriquez (1987:6) note, 'There is only one instance when fertility is higher among

couples where the wife has secondary schooling than among wives who completed primary

school." Reviewing the same data set, Faroog and DeGraff write:

On average, when not controlling for other factors, women with
seven or more years of schooling gave birth to three fewer children
than did women with no schooling, while the differentials in
surviving children across education levels were smaller. This
negative relationship between fertility and education remained
significant in about 40 per cent of the countries studied, after
controlling for duration of marriage, urban/rural residence, wife's
occupation and husband's education. In addition, in both bivariate
and multivariate analyses the relationship between desired family size
and education was consistently monotonically negative, and that
between contraceptive use and education was similarly positive
(1988:33-34).

It is generally assumed that education leads to contraceptive use. Comparing fertility

change, education and family planning in a global sample over two time periods, 1962-

1972 and 1972-1981, Hess found that:

Nearly 60 percent of the total variation in the percentage change in the
total fertility rate for the sample of 49 LDCs is accounted for in the
first period. The key influence again appears to be the change in the
female secondary school enrollment rate.... In the second period
over 70 percent of the variation in fertility change is accounted for by
the model, and the most important factor is family planning program
effort (1988:6).

In another global sample, Wheeler (1985) found secondary school enrollment rates for

females and family planning efforts to be highly significant in explaining the percentage








change in fertility during the 1970s. The delayed reaction of fertility decline in this study is

explained in part by the time it takes for family planning to be accepted and widely adopted

(Mauldin and Berelson 1978). Increases in adult literacy has also been found to negatively

correlate with fertility in a global sample of contemporary developing countries (Boulier

1985).

As previously noted mentalist and materialist analysis of similar data usually lead to

different causal interpretations. Following mentalist epistemological assumptions,

demographic transition theorists usually interpret negative correlations between fertility and

female secondary education to mean that education causes lower fertility. The causal role of

education in reducing fertility is imputed, and rarely doubted. For example, citing negative

correlations between fertility and female education in Latin America and Asia, while

ignoring findings which show no correlation between fertility and increases in female

secondary education in Africa and the Middle East, Hess (1988:141) concludes that

education causes fertility decline "given the strong negative effects of secondary school

enrollments on fertility found in this and other studies." Ignoring the effects of a quarter-

century of material change, Hess ibidd: 137) writes, "In Latin America the key factor

generating the fertility declines over the last 25 years seems to be gains in secondary female

enrollment rates. For the more egalitarian nations of Asia, early and strong family planning

programs are the driving force."

Contrary to the pervasive mentalist analytical bias, research into the effects of education

and family planning on fertility have been far from conclusive. Data which disputes the

causal effects of family planning on fertility decline have been provided above (see chapter

3). Positive and negative correlations between education and fertility have been found in

historical and contemporary data (for an overview, see Hawthorne 1970; Graff 1979;

Cochrane 1983).








Inconsistencies were first discovered in research at micro levels of analysis, e.g.,

households, which called into question findings derived from aggregate measures (such as

those used in the WFS). After comparing findings from different research designs, Graff

(1979:132) has observed, "The higher the level of aggregation and the further the data are

removed from the level of individuals, families or households, the higher the degree of

association."

In more narrowly designed historical studies of United States fertility behavior (at the

household or individual level of analysis), education has been shown to be a less important

predictor of fertility decline than traditional wisdom has expected (Easterlin 1976b; Leet

1976). T. Paul Schultz (1973) has found a positive correlation between fertility and

education in Taiwan. Indeed, what explains the post-World War II baby boom in the West

where fertility and educational levels (for both men and women) reached new heights?

Research in developing countries has indicated there may be a nonlinear relationship

between education and fertility. Levine (1984) has shown that women with some primary

schooling display shorter birth intervals and higher fertility than those without primary

school experience (also see Cleland and Rodriguez 1987). Gueye and van de Walle

(1988:3.3.5) have recently observed that, "there is increasing evidence in sub-Saharan

Africa that unmarried high school students are more likely to get pregnant than their

uneducated counterparts." Hess (1988:63) also found that, "For sub-Saharan African

nations, higher enrollment rates in secondary education for women were associated with

higher fertility."

The reason for this is probably that women with some education tend to engage in

better health practices, enter into more stable marital unions, ignore traditional prohibitions

on sexual intercourse, and are more knowledgeable about food supplements. By weaning








their babies earlier these women shorten the duration of postpartum ammenorhea and

therefore are exposed to the risk of pregnancy sooner than less educated women (see Nag

1980). However, during the course of a lifetime, it is clear that African women with at least

secondary school education who go on to gainful employment have fewer children than

their uneducated counterparts (see p.82).

Statistical analysis provides correlations between variables, not answers to questions of

causation. It is theoretically and empirically challenging to determine what causes

something to happen, and what the new happening itself causes. This is especially difficult

when economic change, increasing levels of education, contraceptive use, urbanization,

improvements in health care, female employment outside the household, domestic equality,

etc., occur simultaneously with fertility transition.

Fortunately, some causal explanations are more credible than others. For example,

people in developing countries don't migrate to urban areas because there are better

schools, they migrate because there is the possibility of a better life---better jobs! Parents

don't send their children to school to become more educated farmers and seamstresses,

they send their children to school so they can get a higher paying job in the modem sector,

which in turn, is expected to materially benefit the family. Women don't use contraceptives

because education made them less religious or more rational, they control fertility because

childbearing is incompatible with their desire to complete school and to pursue the

employment opportunities their advanced education will offer them.

Women weigh the opportunity costs of their reproductive careers against opportunities

in their productive careers in developing countries just as women do in developed

countries. According to evolutionary demographic transition theory, Pleistocene women

also weighed the costs and benefits of reproduction. Attitudes, values, opinions and beliefs








may vary, but fertility behavior is contingent upon material costs and benefits to individuals

(especially women). The most important factor, in this regard, is how people are able to

survive, or earn a living.


Employment and Fertility

Female labor participation was first considered a fertility determinant in the early 1960s

(see Colliver and Langlois 1962). But female labor participation has been found to be an

unreliable cause of fertility decline. High fertility regimes coincide with high female labor

participation rates in preindustrial and protoindustrial populations, such as those in

historical England or contemporary Africa (Handwerker 1989:23-24). Female labor

participation is not a necessary condition for fertility declines in Asia or a sufficient

condition in West Africa (Birdsall 1977; 1983). After surveying the data on female labor

participation and fertility cross-culturally, Faroog and DeGraff (1988:42) agree that, "no

conclusive relationship between women's work participation and fertility is evident for

developing countries."

Some research has suggested that increased income from employment that does not

interfere with childrearing may actually increase fertility (Ware 1977; Bindary et al. 1973;

Goldstein 1972; Pinelli 1971). Neither employment or fertility is restricted for women who

can rely on child care provided by their extended family (Mueller 1982:82). But extended

family time interchanges diminish and kinship groups shrink as economic and geographical

mobility increases (Oppong 1982). Thus, economic changes which create incentives for

migration and more employment opportunities for women to work outside the household

also selects for the nuclearization of the family. The cost of children increases for women

who are unable to depend on child care provided by their extended family.







In Puerto Rico and Japan, Jaffe and Azumi (1960) found that fertility was equally high

for women working in "cottage industries" and those "economically inactive"; only women

who worked away from home had lower fertility. In Thailand, Chalamwong (1983) has

also found higher fertility among women engaged in "home industry" and lower fertility

among women working outside the home. These data suggest that women's employment

participation and level of income may not lower fertility independent of the effects of

working away from home. Indeed, there is increasing evidence which suggests that there is

lower fertility when childrearing is incompatible with employment.

The opportunity cost of children is low for women doing agricultural work; it is high

for women engaged in work that is incompatible with child care. In a cross-sectional

analysis of sixty developing countries, controlling for urbanization, industrialization and

education, Kasarda (1971) found an inverse relationship between fertility and the

employment of women outside the home. In an Indian village, Gupta (1978) found that

fertility declined with the expansion of urban, industrial, technical, and white-collar

employment opportunities outside the village. Conversely, studies suggest fertility will

increase when woman are excluded from wage-labor or have little job occupational mobility

(Tien 1967). Several studies have found a fertility inhibiting relationship in formal sector

work outside the home before marriage (Standing 1978; Rosen and Simmons 1971; Zarate

1967).

These studies suggest that women's employment away from the home lowers fertility.

This is because modem employment (away from the home) is more time/money oriented

and inherently less compatible with child care than traditional work roles (in and around the

home). In addition, sociocultural influences, competitive consumer attitudes and non-

traditional norms about marriage and family are more prevalent in a modem urban work








group atmosphere. If this is true, it is important to understand how constraints to these

opportunities effect fertility.

Besides the pervasive constraint of a stagnant economy, there are at least two other

primary factors that limit women's work participation outside the home: 1) child labor; and,

2) job and educational discrimination.

Entrepreneurs hire persons who are least likely to cause labor problems. For the

entrepreneur in developing countries, there is no incentive to hire one person over another

for many unskilled positions; keeping payrolls low is the primary concern. Thus, children

are often the preferred worker. Children got paid as much as adults in England during the

1820s. This encourages parents to let children leave school at a young age to work for

wages. In turn, this decreases the number of jobs unskilled adult women might find in the

labor market.

Standing (1983:532) asserts, "The substitution of women for child workers could be

expected to reduce fertility in two ways: by raising the costs of children and by raising the

opportunity costs of women's inactivity." It can be inferred that the institutionalization and

enforcement of child labor laws would impact on the availability of employment outside the

home for women, thus, creating conditions that select for lower fertility.

On the second point, Standing (1983:529-530) observes, "Discrimination against

women in the labor force has received relatively little attention in the fertility literature.

However, it can have a significant affect because it alters the opportunity costs of

childbearing and childrearing." Employment discrimination also leads to educational

discrimination because parents invest more in the education of children they expect will

earn more in the labor market. Thus, economic opportunities impact on female educational

attainment (see Greenhalgh 1985).








In Pakistan, Sather et al. (1988:420) observe, "Whereas the effect of women's

education on fertility diminishes when other independent factors are controlled, the

opposite applies in the case of women's occupation." This may be because education loses

value for women under conditions of employment discrimination. Employment

discrimination will persist as long as there are no productive incentives to hire women

instead of children and men. Therefore, without economic changes that result in increasing

rewards for skilled workers, the education and employment of women will be discouraged

and fertility decline will be inhibited. Handwerker writes,

To bear on fertility, increasing levels of education must be
accompanied by increasing economic rewards. There will be
increasing economic returns from education only in the presence of
competition that selects for both employer and employee
productivity.... Female labor participation rates have no bearing on
fertility transition in the absence of economic and social processes
that create new and competitive resource access channels (1989:23-
24).

As we have seen, in an analysis of the economic aspects of historical demographic

change in Europe, McGreevey (1985) found that fertility decline was associated with rising

agricultural productivity and a shrinking farm labor force. He argues that economic and

demographic transition was caused by the introduction of labor-saving farm technologies,

which made child labor redundant, and by the expansion of non-agricultural employment

opportunities, which gave women jobs outside the household. McGreevey notes:

Women left unpaid family labor on farms to work in offices,
factories and shops; this shift depressed fertility as jobs interfered
with child care. Jobs for children were fewer in urban than in rural
settings, so more children attended school, and most parents decided
to have fewer but better-educated children. The Europeans thus
escaped the Malthusian trap (1985:vii).

The research cited above suggests that infrastructural economic change may be a

prerequisite to demographic transition. Just as during the first demographic transition, new

modes of production bring new modes of reproduction. Productive employment that is








incompatible with childrearing changes the costs and benefits of childbearing. Increasing

demand for skilled versus unskilled labor changes the costs and benefits of hiring women

versus children; these labor demands encourage parents to invest in the education of their

children in hopes that one day they will have the qualifications for employment in the

modem sector. Parents are also less likely to advance the education of their sons at the

expense of their daughters. Under these new contingencies of reinforcement, women are

more likely to share equally with men in educational opportunities, stay in school longer

and use contraception in order to avoid the costs of an unwanted pregnancy. Also, adult

women will increasingly weigh the costs and benefits of their reproductive careers against

their employment careers. This is precisely what is occurring around the world in countries

that are experiencing fertility decline.


Transition in Zimbabwe

More than one-third of Zimbabwean women between the ages 40-49 have given birth to

ten or more children (ZDHS 1989:33). This will not be true for women presently entering

their reproductive years. Indeed, World Bank (1989a) data shows that the total fertility rate

(TFR) of Zimbabwe has declined dramatically since the late 1960s, down from 8 to 5.7

during this period. Zimbabwe is the first sub-Saharan African country to experience

sustained fertility decline. The overwhelming tendency today in Zimbabwe is toward more

anti-natal cultural perspectives and behaviors.

The onset of fertility transition in Zimbabwe corresponds with war migration and rapid

industrialization between 1965-1974. "Economic growth in Zimbabwe averaged about 7

percent per year between 1965-1974" (PFD 1985:82). United Nations sanctions on the

government of Rhodesia during this period forced Colonial Zimbabwe into a development








policy of import substitution. Funded by South African banking interests, the industrial

sector of the economy grew dramatically, offering more jobs to whites and blacks, men and

women. Today, behind South Africa, Zimbabwe is the most industrialized country in sub-

Saharan Africa.

After independence in 1979, the maintenance of fertility transition corresponds with a

continued expansion of economic opportunities, a dramatic growth in educational

opportunities, rapid urbanization, and increased contraceptive use. Except for a four year

period, during the height of the war, the Zimbabwean economy has continued to diversify

and grow rapidly. Between 1976 and 1986 there was an almost four fold increase in the

GDP, from $2.1 billion to $7.5 billion dollars (QDS 1989:14). Zimbabwe's GDP is

composed of agriculture (16%), mining (8%), manufacturing (22%), infrastructure and

producer services (20%), and government expenditures (34%) (GOZ 1986:5). This

diversified economic growth has translated into substantial increases in skilled employment

opportunities for both men and women.

Comparing 1982 Census data (Population Census 1982) with the 1986/87 Labour

Force Survey (LFS 1989:6), there has been an increase in the labor force of nearly 800,000

people, 40 percent of whom were women. In 1982, women constituted 52 percent of all

sales workers, 40 percent of professional and technical workers, 34 percent of clerical

workers, and 32 percent of service workers (GOZ 1986:126). The number of women

employed by the public sector (mostly as teachers) increased from 3,243 in 1980 to 10,228

in 1983 (Kazembe 1987:397-398). Women are now being encouraged to train as

agricultural extension workers and officers, and to become more active in trade union

activities and economic cooperatives. Increased opportunities for women in rural areas have

spurred changes in fertility and economic production. "Maize production quadrupled after







women's access to land, agricultural training and credit was improved. And this is one

reason Zimbabwe has one of the highest rates of family planning usage and the lowest

infant mortality rates in Africa" (UNFPA 1988:57).

These economic incentives have had a dramatic effect on educational enrollment and

achievement. In 1979, 890,000 students were enrolled in primary and secondary schools,

but by 1982, school enrollments more than doubled to 2,160,000. Among all Zimbabwean

women between the ages 15-49, 14 percent have no formal education, 56 percent have at

least some primary education, and 31 percent have reached secondary school. These

figures are changing rapidly. Today, over 28 percent of women in their forties have never

been to school, but fewer than 3 percent of their 15-19 year old counterparts have not;

about one-half of the women under age 25 have reached secondary school compared with

only about 10 percent of their mothers (PFD 1985:35-46). Urban women are three times

more likely than rural women to have obtained at least some secondary education (33.1%

versus 10.7%).

The dramatic growth of educational involvement after independence reflects a general

optimism that jobs would increasingly be available on an equal basis to all citizens if they

had the educational qualifications to fill them. In order to stay in school, more Zimbabwean

women delay childbearing; the age at first birth has risen by about one year during the past

generation.

But women began controlling their fertility before mass education and modem

contraceptives were readily available. In response to increased demand for modem methods

of birth control, the first national family planning body was formed as early as 1965; by

1976, it was estimated that 5,500 new clients asked for contraceptives each month and that

80,000 to 90,000 Zimbabwean women were involved in family planning in some capacity

(Weinrich (1982:121).








Recently, there has been a dramatic increase in contraceptive use. Since the Zimbabwe

National Family Planning Council (ZNFPC 1985) survey, completed in 1984, there has

been a 16 percent increase in "ever use" of modem methods; currently nearly one-third of

all women, and 43 percent of married women are using some form of birth control. This is

the highest rate of contraceptive use in continental Sub-Saharan Africa.

Statistically, educational status and fertility have an inverse relationship. The children

ever born to women who never attended school is 7.0, for women with primary education

it is 6.0, and for women with a secondary education it is 3.8. The difference in

contraceptive use between women with no formal education and those with secondary or

higher education is 23 percentage points (ZDHS 1989:5).

However, among teenagers, "The proportion currently pregnant with the first child

varies little with educational level" (ibid:38). Contraception is increasingly being used by

women with little or no education. Between 1984 and 1988, the contraceptive use of all

methods among women who never attended school increased from 25 percent to 32

percent; the increase was from 16 percent to 25 percent for modem methods (ibid:57). In

the 1989 Zimbabwe Demographic and Health Survey it was discovered:

there is almost no difference in the mean number of children ever
born between the two lowest educational groups, and the difference
in the mean number of women who never attended school and the
women with some secondary education is only slightly more than
two children. This suggests that the fertility decline in Zimbabwe
began with women who had at least some secondary education and
only recently spread to women with less education. The current
downward trend in fertility appears to be shared fairly equally by all
educational groups, with the relative decrease in the TFR between
1982-1984 and 1985-1988 periods being only slightly smaller for
women with no education (16 percent) as compared to the other
groups (20 percent) (ZDHS 1989:28-29).

In addition to being correlated with educational achievement, fertility control is strongly

correlated with settlement type. The urban population grew approximately 5.6 percent per








year between 1969-1982 (PFD 1985:23). Today, about one-fourth of the population of

Zimbabwe lives in urban areas where more skilled employment opportunities encourage

parents to support their daughters education and young women to delay childbearing and

stay in school longer. In urban areas 51 percent of all women have reached secondary

school as opposed to only 20 percent of their rural counterparts; the difference in

contraceptive use between women living in urban versus rural areas is 12 percent (ZDHS

1989:57).

With aggregate data, it is difficult to tell whether settlement type (and employment

opportunities) or level of education is more causally important in reducing fertility.

However, since employment opportunities are largely responsible for urban migration, and

urbanization is correlated with increased education and contraceptive use, a strong case can

be made for economic causal factors in fertility decline.

In a recent small sample (n= 103) study in urban Harare, I asked respondents questions

rating childbearing desires versus career goals. I concluded:

Education clearly plays some role in lowering total fertility. It gives
women expectations for a better life and skills with which to get the
better jobs that provide a better life. Nevertheless, the hypothesis that
education plays a paramount role in reducing fertility is not supported
by my data. Indeed, independent of level of education, women in my
sample who value career over childbearing are more likely (p<.05) to
desire 4 or fewer children than are women who value having children
over career or women who value career and childbearing equally
(chi-square p=.02) (Iverson 1990:14).

Increased opportunities for female employment increases career incentives and reduces

fertility. The opportunity costs of childbearing to women who have modem sector

employment skills are much greater than for those women with no such skills or

opportunities.








The results of an important longitudinal study (1984-1988) of 1183 Zimbabwean

women support these propositions. In that sample of women, 84 percent had attained

secondary education, 73 percent were employed (81 percent of the employed were engaged

in clerical positions and 19 percent in technical, professional, and managerial positions).

Among the women in this sample, the TFR was 3.38, about half the national rate of 6.52

(TIPPS Project 1988).

Ironically, women who complete secondary education had their first child earlier than

those who do not complete secondary school. This is consistent with data from other

African countries (see p.72). But by 24 years of age, the TFR is about equal; by age 29,

the employed cohort in the sample had already given birth, on average, to over one fewer

child. This difference continues to grow as the population gets older. By age 39, the

gainfully employed women had more than two fewer births; by age 49, at the end of their

reproductive period, these employed women had given birth to about 3.5 fewer children

than women in the general population.

Without data from a control group of women who are educated but were not employed,

it is impossible to determine the independent effects of education and employment on

fertility from this study. However, the changing age cohort data suggests that modem

sector employment (outside the home) has a significant effect on fertility. In a small sample

survey, Mazur found that urban women, age 30 and up, who worked at home, had about

two more children on average than those who worked away from home (Mazur and Mhloyi

1988:25).

Since the dramatic fertility decline that began in the mid- 1960s, Zimbabwean women

have increasingly sought to limit births. The above data indicates that fertility decline began

in the 1960s, before modern methods of contraception were introduced in the 1970s, and

before mass education in the 1980s. Fertility decline is correlated with infrastructural








change and greater economic opportunities for men and women. The colonial policy of

import substitution resulted in rapidly increasing employment opportunities in the industrial

sector. Increased private and public sector demands for skilled workers and technicians led

to new educational and employment opportunities for men and women immediately

following independence. Fertility declined as Zimbabwe passed through these

infrastructural economic changes, and has continued to decline in the present.


Transition in Barbados

Fertility transition in Barbados has been even more dramatic than in Zimbabwe. The

total fertility rate in Barbados fell from around 5.0 in the mid-1950s to a low of about 2.0

in 1980, where it has remained to the present. Handwerker (1989) has shown that

historical declines in fertility correspond with the decline of the sugar industry and a

dramatic growth in industrial manufacturing and tourist spending.

The sugar industry had been the backbone of the Barbadian economy since the

Eighteenth Century. However, when the United Kingdom ceased acting as clearing house

for West Indian sugar in 1951, Barbadian producers found themselves under increased

competitive pressure from world markets. Between 1950 and 1980, sugar production

factories declined from 34 to 8, and sugar's share of the gross domestic output dropped

from 40 percent to 6 percent; sugar accounted for less than 10 percent of national

employment by 1980 (Handwerker 1989:97).

In response to the decline in the sugar industry, Barbados began to actively pursue an

export-driven development policy. The export-driven development model was pioneered by

Tiawan and other East-Asian countries (which, incidently, have also undergone

infrastructural economic transformation and dramatic fertility declines). Protective tariffs










and incentive legislation at home, combined with a readily accessible wealthy consumer

market for its products in the United States, propelled Barbados into the manufacturing

age.

In the 1950s and 1960s, the export-driven manufacturing sector grew to include

garments, furniture, ceramics, pharmaceuticals, phonograph records, wood processing,

paints, and a variety of construction materials; in the 1970s, the manufacturing sector

expanded further to include petroleum refining, paper products, data processing and

electronics components assembly (ibid:98-99).

During this period ofinfrastructural economic change, new jobs were created which

demanded new skills of the Barbadian work force; the labor market increasingly rewarded

acquired skills and perspectives, thus minimizing the value of child labor and improving the

employment opportunities for skilled women (also see Handwerker 1986a:400).

Handwerker writes:

Growth in manufacturing did not change the female work
participation rate. However, it radically changed the work
opportunities available for women. Whereas in 1946 female
employment in manufacturing was 14.4% of the labor force (and
even then it was employment only in cottage industry crafts), by
the late 1970s women held more than 50% of the jobs in the
manufacturing sector (1989:99).

The establishment of a tourist marketing board in the 1950s, fiscal incentives, and its

close proximity to the wealthy United States tourist market contributed to a dramatic growth

in the tourist industry in Barbados. The growing tourist industry added more service, white

collar, professional, and managerial jobs. Women were favored over children and could

compete on a more equal basis with men for these positions. The correlation between

economic change and antinatalist values and behaviors is evident in table 4.2.







TABLE 4.2
MEASURES OF FERTILITY, ECONOMIC GROWTH, EDUCATION
AND WOMEN'S FERTILITY VALUES IN BARBADOS: 1955-1980
1955 1960 1965 1970 1975 1980
Period Total Fertility 4.9 4.8 4.4 3.9 3.1 2.3
Growth of Industrial
Manufacturing (100=1980) 38 41 61 68 87 100
Growth of Tourist
Spending (100= 1980) 8 15 29 70 61 100
Women Who View Childbearing
as an Investment Activity* (%) 70 67 53 43 25 17
Women aged 20-24 who
Completed Secondary School (%) 4 19 20 32 33 52
*This index measures women's desire to put childbearing ahead of career.
(Source: Compiled from Handwerker 1989:27, 98, 100, 104, 117, 15-22)

More nonagricultural economic opportunities based outside the home and on skill and

performance (instead of on paternalism) resulted in more egalitarian power relations

between the sexes and more opportunities for women to pursue goals independently of

their childbearing capacity. Increasing meritocratic access to economic opportunities created

the material incentives for women to achieve in school and to practice fertility control. With

economic independence from children and men, women could chart the course of their lives

in new ways. Increasingly, women are valuing productive over reproductive careers, and

selecting to have fewer children.


Transition in Mauritius

Mauritius has experienced social and political change similar to Zimbabwe's. Though

Mauritius did not undergo a prolonged civil war as did Zimbabwe, political liberation in the

spring of 1968 was largely the result of opposition to the socially and fiscally conservative

economic policies of the past. As in Zimbabwe, political liberation created expectations for

more economic and educational opportunities.








Mauritius has experienced strikingly similar economic and demographic change to

Barbados. Twenty years ago, Benedict (1972:248) wrote, The island is entirely

dependent on agriculture, and one crop, sugar, accounts for more than 97 per cent of all

exports." Today, Mauritius is in the midst of changing from a sugar-based plantation

economy to a diversified modem economy. As sugar production and export stagnated in

the late 1950s and early 1960s, Mauritius began to focus on other sectors of the economy

for growth potential. The diversification of the Mauritian economy and the promotion of

tourism, led to the creation of skilled jobs in the modem sector of the economy and to a

decline in agricultural employment. Table 4.3 shows changing employment trends since

1970.

TABLE: 4.3
MAURITIUS: EMPLOYMENT TRENDS: 1970-1990
(thousands) EXPORT HOTELS
PROCESSING AND
YEAR AGRICULTURE ZONE RESTAURANTS
1970 61 ---- 1
1975 64 10 2
1980 58 22 3
1985 53 50 4
1990 46 91 6
(Source: Bowman 1991:115)

The Mauritian economy grew rapidly after independence because of three principle

factors: 1) generous trade preferences granted by developed countries; 2) a ready supply of

cheap and relatively skilled labor encouraged foreign investment; and, 3) beautiful beaches

provided wealthy European and South African tourists with a unique Holiday environment.

Trade preferences gave Mauritius a competitive advantage in markets in the developed

world; the largest importers of Mauritian textiles and other products were European

Economic Community (EEC) countries and the United States. These trade preferences

stimulated the development of Export Processing Zones (EPZ) and the dramatic increase of








light manufacturing businesses. The EPZ began functioning in 1971. Between 1971 and

1988, the number of EPZ firms grew from 9 to 591; total exports increased from 4 million

rupees to over 8 trillion rupees (Bowman 1991:127).

This EPZ growth created a dramatic increase in modem sector employment. By 1976,

85 new enterprises provided skilled and semi-skilled jobs to over 17,000 employees

(mostly to female textile workers). In the early 1970s, the government created about

20,000 public sector jobs. Between 1971 and 1975, GNP grew 10 percent per year and

modern sector employment grew 5.5 percent per year; in total, between 1971 and 1977,

64,000 new jobs were created ibidd: 114-116).

Rapidly growing tourism also brought foreign currency into the national market and

created skilled employment opportunities. In 1968 only 15,553 tourists visited Mauritius,

but after the opening of a new international airport capable of handling jumbo jets, by the

late 1970s over 100,000 tourists visited Mauritius annually. In 1989, almost 300,000

tourists arrived in Mauritius ibidd: 134).

The growth of light industry and tourism led to a dramatic increase in employment

opportunities in the modern sector for both men and women of all ethnic backgrounds.

Less than twenty-five years ago the Titmuss Commission and the Meade Report

complained that there was a lack of social and economic mobility (Titmuss and Smith 1961;

Meade 1961). Both studies concluded that social and economic resources were wasted

because ethnicity was a more important criteria than ability (Benedict 1972:257). These

problems have been minimized by economic changes which have selected for skilled labor;

increasingly ability has replaced ethnicity and gender as a criteria for employment.

This trend has continued to the present. Today, Mauritius is called the 'little tiger" in

deference to the "four tigers" of East Asia (Taiwan, South Korea, Singapore, and Hong








Kong), and there is much speculation that Mauritius hopes to become the 'Hong Kong' of

the Indian Ocean. A comparison of economic change and demographic transition for these

four countries reveals strikingly similar trends. It was observed in a recent World Bank

report:

Examination of the accelerated sectoral shifts of employment in recent
years provides ample evidence of the extent to which the Mauritian
economy is approaching the status of a newly industrializing country.
The share of employment provided in the agricultural sector dropped
from one-quarter to one-fifth within the space of four years [1984-
1988], while employment in the two major export crops sugar and
tea continued to record significantly declining trends. In contrast,
over 20 percent of the increase in jobs took place in the transport,
trade, hotel and restaurant sectors which perhaps are among the most
directly affected by the expanding exports of manufacturers and the
burgeoning tourist industry (World Bank 1989b:58).

In addition to ethnic minorities, the largest benefactors of this sectoral redeployment of

labor have been women. Between 1972 and 1987, the total number of women entering the

labor force increased 320 percent compared with 57 percent for men; the female labor force

participation rate (by percentage of total labor force) has more than doubled. Forty-two

percent of Mauritian women were at work (outside the home) in the modern sector in 1987.

This is comparable to the female labor force participation rate of developed countries. Table

4.4 provides data on employment by gender in Mauritius.

TABLE: 4.4
MAURITIUS: MODERN SECTOR EMPLOYMENT BY SECTOR
(M=Males; F=Females) 1972 1987
M F T M F T
Employed (1,000) 169 44 213 265 141 406
Participation Rate (%) 83 20 52 82 42 62
(Source: Ministry of Economic Planning and Development, Human
Resources Division, adapted from Table 5.1 in World Bank 1989b:58)

This trend has accelerated recently. The World Bank reports:

Indeed, one of the most prominent and significant features of the
Mauritian development in recent years is the extent to which it has
been dependent upon drawing women into the labor market. Of the
overall increase in employment between 1983 and 1987 of some
124,000 workers, roughly 40 percent reflects increases in the







participation of women and about 38 percent is accounted for by the
reduction in unemployment. Growth in the working-age population
and increased male participation rates contributed only 16 percent and
less that 6 percent respectively (ibid:57).

As in Zimbabwe and Barbados, Mauritian women were encouraged to control fertility

and to obtain more education in order to meet new employment opportunities. Table 4.5

shows the concomitant educational advancement of women in the work force between 1972

and 1983.

TABLE: 4.5
MAURITIUS: DISTRIBUTION OF EMPLOYED POPULATION BY
EDUCATIONAL ATTAINMENT, AGE GROUP AND SEX: 1972-1983
1972 1983 1972 1983 1972 1983
(percentages) (15-24) (25-44) (45-64)
M F M F M F M F M F M F
Nil 6 14 2 3 15 42 6 20 29 60 22 54
Primary 60 46 48 46 60 36 49 39 63 33 63 35
Secondary 33 39 49 50 22 20 39 34 6 6 12 10
Tertiary 1 1 1 1 3 2 6 6 2 1 3 2
(Source: Central Statistics Office, 1983 Housing and Population Census of Mauritius.
Analysis Report, Volume IV (April 1987), Table 4.3, p.60., 12 from Table 5.5 in World
Bank 1989b:58)

This table lends itself to some interesting retrodictive interpretations. Since fulfillment

of primary and secondary education is usually completed before or about the same time one

reaches childbearing age, it can be inferred that in 1983 over 90 percent of the women

reaching childbearing age had obtained at least a primary education and about 50 percent

had reached secondary school. Between 1945-1965, one-half to three-quarters of Mauritian

women reaching childbearing age had obtained a primary school education. During these

20 years the number of Mauritian women of childbearing age who had completed

secondary school increased almost 3-1/2 times, from 12 to 40 percent; by 1983, more

women than men were completing secondary degrees.

Dramatic infrastructural economic change in the 1970s and 1980s led to rising

educational expectations and demographic transition. Dramatic fertility decline is reflected

in table 4.6.







TABLE: 4.6
MAURITIUS: CRUDEBIRTH RATE, 1952-1987
YEAR BIRTHS PER PERCENT CHANGE
THOUSAND IN TEN YEARS
1952 44.3 --
1962 38.5 -13.1
1972 24.8 -35.6
1987 19.1 -16.9*
Calculated from 1983 data when the crude birth rate is reported at 20.6
(Source: Central Statistics Office, Digest of Demographic Statistics, 1987,
found in World Bank 1989b: 111)

This data suggests that the Mauritian demographic transition began as early as the

1950s, before the introduction of modem methods of birth control; transition increased in

the 1960s, and has continued to the present. Population growth in Mauritius fell from an

annual rate of 3 percent in the 1950s and early 1960s to around 1.5 percent by the early

1970s. Today, the natural rate of population increase is about 1.25 percent; when

accounting for net emigration, the Mauritian population is presently growing at less than 1

percent per year. This is in sharp contrast to Benedict's dire conclusion twenty years ago:

In many ways Mauritius can be viewed as a microcosm of the earth's
population problem. The eradication of disease and improved health
services have led to an unprecedented increase in population, which
continues to grow at a dangerous rate. This population growth has
outstripped the country's ability to support itself. Unemployment is
rife and increasing, and this is leading to political unrest.... It is
probably too late to avoid a demographic disaster in Mauritius, and
the rest of the world may have to rescue this island people from the
consequences of their overbreeding (1972:275).

Since Benedict's field research, infrastructural economic change has occurred in

Mauritius and created a series of events which have led to fertility transition. With a

growing demand for skilled workers, employers selected women over children and on a

more equal basis with men than ever before. This led to the employment of women in jobs

away from the household; child labor also became less valued. Increasing meritocratic

access to economic opportunities created the material incentives for parents to support their

children through school and for women to achieve in school and to practice fertility control.








More nonagricultural economic opportunities based on skill and performance resulted in

more egalitarian power relations between the sexes and more opportunities for women to

pursue goals independently of their childbearing capacity. Increasingly, women began to

weigh the opportunity costs of their reproductive careers against the growing potential of

their productive careers. As a result of these changes, parents stressed educational

advancement for their daughters and young career oriented women had fewer children.


Transition in Kuwait

Women living in Arab Islamic states traditionally have enjoyed little autonomy. In some

states women are considered the property of men; their primary role is that of childbearer.

Marshall (1984:499) notes: "Muslim women have been less involved in traditional

agricultural and trading activities and have significantly lower rates of literacy, educational

achievement, nonagricultural labor force participation than women in other developing

areas at similar levels of industrialization." It is not surprising that, "Among less developed

countries today, fertility/per capita-income groupings show Moslem countries to be

atypical, having high fertility across a broad range of income levels" (Donaldson 1991:9).

Indeed, Reeves asserts:

Reactionary religious forces within these societies do all they can to
prevent women from attaining greater social status. Ideally they
would like to see women back in harems where they believe women
belong, fulfilling purely domestic responsibilities and acting as
pleasure objects and reproductive machines (1989:29).

However, even in traditionally male dominated Arab Islamic societies, when women

have more equal access to employment and education, they are treated less as submissive

objects and more as equal subjects. In spite of cultural obstacles, women everywhere are

less likely to be treated as "pleasure objects" and "reproductive machines" when outside

economic opportunities free them from domestic bondage and dependence on men and








children for their well-being. As women gain better access to resources and contribute more

to family income they attain greater power vis-a-vis men in making reproductive decisions.

These changes are beginning to be felt in some Arab Islamic countries. Reeves

(1989:28-29) divides the Arab Islamic states into two general categories based on treatment

of women. First, there are the states where seclusion and veiling are strictly practiced and

where women have few if any rights. These states include Saudi Arabia, Oman, Qatar, the

United Arab Emirates, Yemen Arab Republic, and Mauritania. Second, there are the states

where a combination of religious and secular law prevails and women have acquired some

rights. These states include Kuwait, Iraq, Syria, Jordan, Sudan, Algeria, Egypt, Morocco,

and Somalia.

Among this group, the women of Kuwait stand out as demographic innovators in a

region slow to change. Following the causal arguments provided in previous sections, it is

not surprising that the women of Kuwait have fewer children and more economic

independence than most of their Arab Islamic sisters. Economic change has benefited the

educational and economic aspirations of Kuwaiti women more than women in any other

Islamic country. The comparatively lower total fertility rate of Kuwait among other Middle

Eastern countries is one result of the growing social and economic independence of

Kuwaiti women. Table 4.7 compares the total fertility rate of Kuwait with several other

Middle Eastern countries.

TABLE: 4.7
TOTAL FERTILITY RATES FOR SELECTED
MIDDLE EASTERN COUNTRIES: 1989
Country TFR Country TFR
Saudi Arabia 7.1 Jordon 5.8
Iraq 6.7 Iran 5.6
Syria 6.2 Kuwait 4.6
(Source: Zachariah and Vu 1989)

Women's roles changed with changing modes of production and the economic

development of Kuwait. The speed ofinfrastructural economic change in Kuwait was








unprecedented. Kuwait acquired in a generation the level of economic transformation it

took the developed countries a century or more of struggle to achieve.

When oil was first discovered in 1938, Kuwait was a poor Shaykhdom whose people

secured a meager subsistence by herding, fishing, pearling, and trading. Haifa century

later, the grandchildren of simple Bedouins have become international bankers and the

people of Kuwait enjoyed one of the highest standards of living in the world. In FY 1939

the average per capital income was US$35; by 1981, GDP on a per capital basis was about

US$16,500--the highest in the world (Nyrop 1985:91-92). "Few if any persons are below

the absolute poverty level and malnutrition has been effectively eliminated" (Country

Reports 1986:1296).

The transformation of Kuwait into a major oil exporter began after the end of the

Second World War. Between 1946 and 1957, oil exports rose from 800,000 tons to 55

million tons, making Kuwait the second largest oil exporter in the world (behind

Venezuela). From 1955 to 1965 Kuwaits oil revenues grew at an average rate of 10 percent

per year. Profits have skyrocketed since the early 1970s, after the Organization of

Petroleum Exporting Countries (OPEC) was formed, and have remained high.

With the influx of oil revenues after the Second World War, Kuwait has aggressively

constructed a modern infrastructure. i.e., electricity, piped water and sewage, a huge

desalination system, modern housing, schools, and hospitals, deep-water ports, airports,

and paved roads. However, the lack of metallic minerals, the small size of its domestic

market, and the high cost of labor has limited industrial investment and development. Oil

revenues have allowed Kuwait to develop its infrastructure and social welfare system

without the development of a substantial industrial base. Industry (excluding oil refining,




Full Text
xml version 1.0 encoding UTF-8
REPORT xmlns http:www.fcla.edudlsmddaitss xmlns:xsi http:www.w3.org2001XMLSchema-instance xsi:schemaLocation http:www.fcla.edudlsmddaitssdaitssReport.xsd
INGEST IEID EVSVNQJ2S_FXL6PP INGEST_TIME 2011-07-29T20:52:52Z PACKAGE AA00003272_00001
AGREEMENT_INFO ACCOUNT UF PROJECT UFDC
FILES



PAGE 2

(92/87,21$5< '(02*5$3+,& 75$16,7,21 7+(25< &203$5$7,9( &$86(6 2) 35(+,6725,& +,6725,& $1' 02'(51 '(02*5$3+,& 75$16,7,216 %\ 6+(3+(5' ,9(5621 $ ',66(57$7,21 35(6(17(' 72 7+( *5$'8$7( 6&+22/ 2) 7+( 81,9(56,7< 2) )/25,'$ ,1 3$57,$/ )8/),//0(17 2) 7+( 5(48,5(0(176 )25 7+( '(*5(( 2) '2&725 2) 3+,/2623+< 81,9(56,7< 2) )/25,'$

PAGE 3

$&.12:/('*0(176 ZLVK WR WKDQN P\ 3K' FRPPLWWHH 'UV + 5XVVHOO %HUQDUG 5RQDOG &RKHQ $EH *ROGPDQ 7LP +DFNHQEHUJ DQG 0DUYLQ +DUULV H[WHQG P\ DSSUHFLDWLRQ WR 'U *ROGPDQ JHRJUDSK\f DQG 'U +DFNHQEHUJ SV\FKRORJ\f IRU MRLQLQJ P\ FRPPLWWHH IURP RXWVLGH P\ GHSDUWPHQW DOVR ZLVK WR WKDQN 'U : 3HQQ +DQGZHUNHU +LV ERRN RQ WKH FDXVHV RI WKH GHPRJUDSKLF WUDQVLWLRQ LQ %DUEDGRV KDV KDG D ODUJH LPSDFW RQ PH 0V *ZHQGRO\Q :\QQH 0V (OL]DEHWK 0LOOHU DQG HVSHFLDOO\ 'U -DFN %ODWKHUZLFN KDYH EHHQ D FRQVWDQW VXSSRUW DOVR ZDQW WR PHQWLRQ P\ FORVHVW IULHQG GXULQJ WKHVH JUDGXDWH VFKRRO \HDUV +DED 0XVHQJH]L IURP =LPEDEZHf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f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

PAGE 4

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

PAGE 5

7$%/( 2) &217(176 SDJH $&.12:/('*0(176 35()$&( L $%675$&7 Y &+$37(56 ,1752'8&7,21 (3,67(02/2*< $1' '(02*5$3,& .12:/('*( (WLF %HKDYLRUDO t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

PAGE 6

$EVWUDFW RI WKH 'LVVHUWDWLRQ 3UHVHQWHG WR WKH *UDGXDWH 6FKRRO RI WKH 8QLYHUVLW\ RI )ORULGD LQ 3DUWLDO )XOILOOPHQW RI WKH 5HTXLUHPHQWV IRU WKH 'HJUHH RI 'RFWRU RI 3KLORVRSK\ (92/87,21$5< '(02*5$3+,& 75$16,7,21 7+(25< &203$5$7,9( &$86(6 2) 35(+,6725,& +,6725,& $1' 02'(51 '(02*5$3+,& 75$16,7,216 %\ 6+(3+(5' ,9(5621 'HFHPEHU &KDLUPDQ 'U + 5XVVHOO %HUQDUG 0DMRU 'HSDUWPHQW $QWKURSRORJ\ 7KH REMHFWLYH RI WKLV ZRUN LV WKUHHIROG f WR VKRZ KRZ HSLVWHPRORJLFDO DVVXPSWLRQV LQIOXHQFH IHUWLOLW\ UHVHDUFK PHWKRGV WKHRU\ GDWD DQDO\VLV DQG SRSXODWLRQ SROLF\ f WR SUHVHQW D XQLILHG WKHRU\ IRU XQGHUVWDQGLQJ WKH FDXVHV RI IHUWLOLW\ EHKDYLRU DQG f WR VKRZ KRZ WKLV WKHRU\ FDQ H[SODLQ WKH XQGHUO\LQJ FDXVHV RI GHPRJUDSKLF WUDQVLWLRQ IURP SUHKLVWRULF WR SUHVHQW WLPHV 5HYLHZLQJ WKH OLWHUDWXUH RQ UHSURGXFWLYH GHFLVLRQPDNLQJ LW LV VKRZQ KRZ HPLF PHQWDOLVW DQG HWLF EHKDYLRULVW HSLVWHPRORJLFDO DSSURDFKHV OHDG WR GLYHUJHQW H[SODQDWLRQV LQ IHUWLOLW\ UHVHDUFK &XOWXUDO LGHDOLVW DQG FXOWXUDO PDWHULDOLVW IHUWLOLW\ WKHRULHV DUH FRQWUDVWHG DVVXPSWLRQV DERXW FRQVFLRXVQHVV DQG GHOLEHUDWH IHUWLOLW\ FRQWURO DUH GLVFXVVHG ,W LV DUJXHG WKDW HWLF EHKDYLRUDO DQG FXOWXUDO PDWHULDOLVW DSSURDFKHV DYRLG WKH ELDVHV RI PRGHUQL]DWLRQ DQG ZHVWHUQL]DWLRQ WKHRULHV WKDW DUH RIWHQ DVVRFLDWHG ZLWK HPLF PHQWDOLVW DQG FXOWXUDO LGHDOLVW DSSURDFKHV Y

PAGE 7

7KH ULVH RI GHPRJUDSKLF WUDQVLWLRQ WKHRULHV LV SUHVHQWHG EHJLQQLQJ ZLWK PRGHUQL]DWLRQ DQG ZHVWHUQL]DWLRQ WKHRULHV IROORZHG E\ &DOGZHOOfV ffZHDOWK IORZV WKHRU\ DQG +DQGZHUNHUfV UHVRXUFH DFFHVV K\SRWKHVLVf )LQDOO\ WKH V\QHUJLVP RI FXOWXUDO PDWHULDOLVW UDGLFDO EHKDYLRULVW DQG SXQFWXDWHG HYROXWLRQLVW WKHRULHV LV IRUPXODWHG DV WKH EDVLV IRU HYROXWLRQDU\ GHPRJUDSKLF WUDQVLWLRQ WKHRU\f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fV VWUXJJOH WR PDNH WKH EHVW RI WKHLU OLYHV JLYHQ D VHW RI H[WHUQDO FLUFXPVWDQFHV FRPSOHWHO\ EH\RQG WKHLU FRQWURO 7KH PRVW LPSRUWDQW FDXVDO IDFWRUV LQ PRGHP IHUWLOLW\ GHFOLQH DUH f HFRQRPLF FRQGLWLRQV RU HPSOR\PHQW RSSRUWXQLWLHV WKDW FRQIOLFW ZLWK FKLOGUHDULQJ DQG f ZRPHQfV DFFHVV WR PDWHULDO UHVRXUFHV LQGHSHQGHQW RI PHQ DQG FKLOGUHQ YL

PAGE 8

&+$37(5 ,1752'8&7,21 6LQFH (KUOLFKfV 7KH 3RSXODWLRQ %RPE f DQG 0HDGRZVf 7KH /LPLWV WR *URZWK 0HDGRZV HW DO f WKHUH KDV EHHQ D JURZLQJ SRSXODU SHUFHSWLRQ WKDW UDSLG JOREDO SRSXODWLRQ JURZWK LV HQGDQJHULQJ WKH QDWXUDO HFRORJLFDO V\VWHPV RI ILQLWH HDUWK $OPRVW WZHQW\ \HDUV ODWHU (KUOLFK KDV DSSURSULDWHO\ UHGLUHFWHG KLV EODPH WR WKH KLJK FRQVXPSWLRQSROOXWLRQ SDWWHUQV RI WKH RQHIRUWK RI WKH ZRUOGV SRSXODWLRQ ZKR OLYH LQ LQGXVWULDOL]HG FRXQWULHV 2PVWHLQ DQG (KUOLFK f ,I SRSXODWLRQ JURZWK LV QR ORQJHU D JOREDO GDQJHU ZK\ DUH VRFLDO VFLHQWLVWV VWLOO FRQFHUQHG DERXW WKH FDXVHV RI KLJK IHUWLOLW\" 7KH DQVZHU LV WKDW UDSLG SRSXODWLRQ JURZWK LV VWLOO HQGDQJHULQJ ILQLWH QDWXUDO KXPDQ HFRV\VWHPV LQ FHUWDLQ SDUWV RI WKH GHYHORSLQJ ZRUOG 7KH IDWH RI WKH HDUWK PD\ QRW EH LQ LPPHGLDWH GDQJHU E\ SRSXODWLRQ JURZWK LQ GHYHORSLQJ FRXQWULHV EXW WKH ORFDO OLYHOLKRRG KHDOWK DQG ZHOIDUH RI PDQ\ PLOOLRQV RI SHRSOH LV LQ GDQJHU 0DQ\ PRUH SRSXODWLRQV DUH SROLWLFDOO\ DQG JHRJUDSKLFDOO\ FLUFXPVFULEHG WRGD\ WKDQ HYHU EHIRUH ,Q FDVHV RI FLUFXPVFULSWLRQ UDSLG SRSXODWLRQ JURZWK HYHQWXDOO\ OHDGV WR HQYLURQPHQWDO GHSOHWLRQV VWDQGDUGV RI OLYLQJ GHFOLQH DQG OHYHOV RI PDOQXWULWLRQ LQFUHDVH 7KLV LQ WXUQ PD\ OHDG WR SROLWLFDO LQVWDELOLW\ DQG HYHQWXDOO\ WR D FLYLO UHYROW LQ ZKLFK PDQ\ PRUH SHRSOH VXIIHU ,Q VSLWH RI WKHVH GHYHORSPHQWV WKH YHU\ QRWLRQ WKDW RYHUSRSXODWLRQ H[LVWV LV FRQWURYHUVLDO 5DSLG SRSXODWLRQ JURZWK KDV EHHQ YLHZHG E\ VRPH DV D SUHUHTXLVLWH WR PDUNHW GHYHORSPHQW DQG HQWUHSUHQHXULDO LQLWLDWLYH 2WKHUV DUH FRQYLQFHG WKDW D IRFXV RQ RYHUSRSXODWLRQ DV WKH FDXVH RI HQYLURQPHQWDO GHJUHGDWLRQ GHFOLQLQJ OLYLQJ VWDQGDUGV PDOQXWULWLRQ FLYLO XQUHVW HWF LV OLNH ffEODPLQJ WKH YLFWLPf ,W LV DUJXHG WKDW WKHVH

PAGE 9

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f DUH PRUH NHHQO\ DZDUH RI WKH G\QDPLF FDXVDO UHODWLRQVKLSV EHWZHHQ PDWHULDO DQG QRQPDWHULDOf IDFWRUV LQ FXOWXUDO HYROXWLRQDU\ FKDQJH $OVR VLQFH PLOOLRQV RI GROODUV RI LQWHUQDWLRQDO GHYHORSPHQW DLG LV GLVEXUVHG DQQXDOO\ DQ\ UHVHDUFK WKDW FDQ HQKDQFH LWV LQWHQGHG SRVLWLYH LPSDFW RQ SHRSOH DQG PLQLPL]H SRVVLEOH XQLQWHQGHG QHJDWLYH LPSDFWVf LV RI YDOXH )LQDOO\ IRU PH WKHUH LV D SHUVRQDO H[FLWHPHQW RI GLVFRYHU\ DQG VDWLVIDFWLRQ LQ IRUPXODWLQJ D QHZ VROXWLRQ WR DQ ROG TXHVWLRQ WKDW IHHO KDV QRW \HW EHHQ FRQYLQFLQJO\ DQVZHUHG 7KLV PDQXVFULSW LV GLYLGHG LQWR VHYHQ FKDSWHUV &KDSWHU RQH LV WKH LQWURGXFWLRQ ,Q FKDSWHU WZR IRFXV RQ WKH HSLVWHPRORJLFDO EDVLV IRU XQGHUVWDQGLQJ WKHRULHV RI UHSURGXFWLYH GHFLVLRQPDNLQJ DQG GHPRJUDSKLF WUDQVLWLRQ GHVFULEH WKH HSLVWHPRORJLFDO XQGHUSLQQLQJV IRU WZR GLIIHUHQW PRGHOV RI UHSURGXFWLYH GHFLVLRQPDNLQJ DQG GHVFULEH PDWHULDOLVW DQG EHKDYLRULVW SHUVSHFWLYHV LQ JUHDWHU GHWDLO ,Q WKH WKLUG FKDSWHU GHVFULEH WKH OHDGLQJ GHPRJUDSKLF WUDQVLWLRQ WKHRULHV EHJLQQLQJ ZLWK WKH JHQHUDOLVW PRGHPL]DWLRQ$YHVWHPL]DWLRQ WKHRU\ IROORZHG E\ &DOGZHOOfV ZHDOWK IORZV WKHRU\ DQG +DQGZHUNHUfV UHVRXUFH DFFHVV K\SRWKHVLV LQ WKH ILQDO VHFWLRQ RI WKLV FKDSWHU LQWURGXFH HYROXWLRQDU\ GHPRJUDSKLF WUDQVLWLRQ WKHRU\ ,Q FKDSWHU IRXU UHYLHZ DQG FRPSDUH HPSLULFDO HYLGHQFH IURP SUHKLVWRULF DQG KLVWRULF GHPRJUDSKLF WUDQVLWLRQV &KDSWHU ILYH LV D UHYLHZ RI UHVHDUFK ZKLFK SHUWDLQV WR PRGHP GHPRJUDSKLF WUDQVLWLRQ WKH FDXVDO UHODWLRQVKLSV EHWZHHQ HGXFDWLRQ HPSOR\PHQW DQG IHUWLOLW\ DQG D GHVFULSWLRQ RI VHYHUDO UHFHQW GHPRJUDSKLF WUDQVLWLRQV LQ WHUPV RI WKHVH

PAGE 10

IDFWRUV ,Q FKDSWHU VL[ GLVFXVV WKH LPSOLFDWLRQV RI DQ HWLF PDWHULDOLVW DSSURDFK WR XQGHUVWDQGLQJ WKH FDXVHV RI GHPRJUDSKLF WUDQVLWLRQ DQG WKH SRVVLEOH DSSOLFDWLRQV RI HYROXWLRQDU\ GHPRJUDSKLF WUDQVLWLRQ WKHRU\ IRU GRPHVWLF DQG LQWHUQDWLRQDO DLG DQG GHYHORSPHQW SROLF\ &KDSWHU VHYHQ LV WKH FRQFOXVLRQ

PAGE 11

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n PDNLQJ DQG GHPRJUDSKLF WUDQVLWLRQ PRGHO EXLOGLQJ EHJLQQLQJ ZLWK WKHLU HSLVWHPRORJLFDO DVVXPSWLRQV ZLOO VKRZ KRZ WKHVH DSSURDFKHV OHDG WR GLYHUJHQW H[SODQDWLRQV RI IHUWLOLW\ WUDQVLWLRQ DQG H[SODLQ ZK\ WKH HSLVWHPRORJLFDO DVVXPSWLRQV RI RQH DSSURDFK OHDG WR D PRUH ULJRURXV FURVVFXOWXUDO DQG HYROXWLRQDU\ EDVLV IRU XQGHUVWDQGLQJ WKH FDXVHV RI UHSURGXFWLYH EHKDYLRU $OVR ZLOO VKRZ KRZ WKLV DSSURDFK DYRLGV HWKQRFHQWULF DQG ZHVWHUQFHQWULF DVVXPSWLRQV DERXW WKH FDXVHV RI VRFLRFXOWXUDO FKDQJH

PAGE 12

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f ZULWHV ff(SLVWHPRORJ\ LV WKH FRPPRQ JURXQG LQ DOO GHEDWHV ZKHWKHU WKH GHEDWH LQYROYHG FRPPHQVXUDEOH RU LQFRPPHQVXUDEOH WKHRUHWLFDO SRVLWLRQV (YHQWXDOO\ DOO XQUHVROYHG VXEVWDQWLYH LVVXHV ERLO GRZQ WR D GLVDJUHHPHQW DERXW HSLVWHPRORJ\f 7KHUHIRUH XQGHUVWDQGLQJ HSLVWHPRORJLFDO GLIIHUHQFHV LV FULWLFDO WR MXGJLQJ WKH YDOXH RI PHWKRGV WKHRULHV LQWHUSUHWDWLRQV DQG DQDO\VLV $ ZRUNLQJ GHILQLWLRQ RI WKH GLIIHUHQFH EHWZHHQ HPLF DQG HWLF DSSURDFKHV ZLOO KHOS LOOXPLQDWH WKH HSLVWHPRORJLFDO GLIIHUHQFHV EHWZHHQ PHQWDOLVW DQG EHKDYLRULVW PRGHOV DOVR VHH +HDGODQG HW DO f 7KLV GLVWLQFWLRQ LV PDGH QHFHVVDU\ E\ D VLWXDWLRQ XQLTXH WR KXPDQ VFLHQWLVWV ZH DUH DW RQFH REVHUYHUV DQG SDUWLFLSDQWVWKH REMHFW DQG VXEMHFW RI LQTXLU\XVXDOO\ ZLWK GHHSO\ HQFXOWXUDWHG ELDVHV DQG YLHZV (PLF RSHUDWLRQV KDYH WKHLU KDOOPDUN LQ WKH HOHYDWLRQ RI WKH QDWLYH LQIRUPDQW WR WKH VWDWXV RI XOWLPDWH MXGJH RI WKH DGHTXDF\ RI WKH REVHUYHUfV GHVFULSWLRQV DQG DQDO\VHV 7KH WHVW RI WKH DGHTXDF\ RI WKH HPLF DQDO\VHV LV WKHLU DELOLW\ WR JHQHUDWH VWDWHPHQWV WKH QDWLYH DFFHSWV DV UHDO PHDQLQJIXO RU DSSURSULDWH ,Q FDUU\LQJ RXW UHVHDUFK LQ WKH HPLF PRGH WKH REVHUYHU DWWHPSWV WR DFTXLUH D NQRZOHGJH RI WKH FDWHJRULHV DQG UXOHV RQH PXVW NQRZ LQ RUGHU WR WKLQN DQG DFW DV D QDWLYH +DUULV f 7KH PHQWDOLVW RULHQWDWLRQ RI DQ HPLF DSSURDFK LV HYLGHQW ZKDW LV LPSRUWDQW LV KRZ RU ZKDW WKH QDWLYH UHVSRQGHQW WKLQNV 5HVHDUFK RQ IHUWLOLW\ GHFLVLRQPDNLQJ WKDW XVHV DQ HPLF PHQWDOLVW DSSURDFK WHQGV WR UHO\ RQ ZKDW QDWLYH LQIRUPDQWV VD\ RU EHOLHYH DERXW WKHPVHOYHV

PAGE 13

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f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

PAGE 14

)URP DQ HPLF PHQWDOLVW SHUVSHFWLYH LW LV LPSRUWDQW WR DVN SHRSOH KRZ WKH\ PDNH UHSURGXFWLYH FKRLFHV DQG WR GHOYH LQWR WKH VRFLDO FRQWH[W LQ ZKLFK WKHLU GHFLVLRQV DUH PDGH FKDQJLQJ YDOXHV DQG FXOWXUDOO\ PRWLYDWHG EHKDYLRU LV RI SDUDPRXQW LQWHUHVW )RU LQVWDQFH .QRGHO DQG YDQ GH :DOOH f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f (PLF PHQWDOLVWV DUH FXOWXUDO LGHDOLVWV HWLF EHKDYLRULVWV DUH FXOWXUDO PDWHULDOLVWV (PLF UHVHDUFK DSSURDFKHV GR QRW FRPELQH ZHOO ZLWK EHKDYLRULVW SHUVSHFWLYHV HWLF DSSURDFKHV GR QRW FRPELQH ZHOO ZLWK PHQWDOLVW SHUVSHFWLYHV 7KHVH GLIIHUHQFHV ZLOO EHFRPH PRUH DSSDUHQW DV ZH ORRN DW WKHLU WKHRUHWLFDO RIIVSULQJ 2QH RI WKH ILUVW HWLF PRGHOV RI UHSURGXFWLYH GHFLVLRQPDNLQJ ZDV LQWURGXFHG E\ 1REHO ODXUHDWH *DU\ %HFNHU LQ ,Q KLV ffQHZ KRPH HFRQRPLFVf WKHRU\ WKH &KLFDJR &ROXPELD WKHRU\f %HFNHU DVVXPHG D UDWLRQDO FRQVXPHU DQG EHOLHYHG WKDW WKH SUHIHUHQFH RUGHULQJ RI FRQVHTXHQFHV LV WKH PRVW LPSRUWDQW GHWHUPLQDQW RI GHFLVLRQV DQG EHKDYLRU %HFNHU DOVR VHH %RXOGLQJ f +H ZDV WKH ILUVW WR DSSO\ WKLV PLFURHFRQLPLF IUDPHZRUN WR GHPRJUDSKLF WKHRU\ (VVHQWLDOO\ %HFNHU SURSRVHG WKDW IHUWLOLW\ GHFLVLRQV DUH JXLGHG E\ WKH VDPH PDWHULDOLVW SULQFLSOHV WKDW JXLGH HFRQRPLF GHFLVLRQV LQ WKH KRXVHKROG %HFNHUfV UHDVRQLQJ LV WKDW VLQFH FKLOGUHQ FRQWULEXWH XWLOLW\ EXW DW D SULFH IHUWLOLW\ GHFLVLRQV VKRXOG EH EDVHG RQ WKH VDPH EDVLF SULQFLSOHV DV FRQVXPHU GHFLVLRQV &URVELH H[SODLQV %HFNHU DUJXHG WKDW FKLOGUHQ ZHUH D KRXVHKROG FRPPRGLW\ DQG WKDW WKH GHVLUH IRU FKLOGUHQ VKRXOG EH VXEMHFW WR WKH HFRQRPLF ODZV RI GHPDQG 0RUH VSHFLILFDOO\ KH DUJXHG WKDW KRXVHKROGV ZRXOG EH UDWLRQDO LQ WKHLU UHSURGXFWLYH GHFLVLRQPDNLQJ DQG WKXV WKH GHPDQG

PAGE 15

IRU FKLOGUHQ DQG UHSURGXFWLRQ ZRXOG LQFUHDVH DV WKH SULFH RI FKLOGUHQ GHFUHDVHG RU DV KRXVHKROG LQFRPH WKH WDVWH IRU FKLOGUHQ RU WKH SULFHV RI RWKHU KRXVHKROG JRRGV LQFUHDVHG f 0LQFHU f H[SDQGHG %HFNHUfV PRGHO WR LQFOXGH WKH YDOXH RI D ZRPDQfV WLPH $FFRUGLQJ WR 0LQFHU ZRPHQ ZRXOG EH OHVV OLNHO\ WR KDYH FKLOGUHQ ZKHQ WKHLU WLPH LV YDOXDEOH WR WKHP RSSRUWXQLW\ FRVWVf DQG PRUH OLNHO\ WR KDYH FKLOGUHQ ZKHQ LW LV QRW $OVR D ZRPDQ VKRXOG EH PRUH OLNHO\ WR KDYH FKLOGUHQ ZKHQ FKLOGUHQ FDQ UHGXFH KHU WLPH VSHQW RQ KRXVHKROG DQG IRRG SURGXFWLRQ GXWLHV DQG ZKHQ FKLOGUHQ FDQ EHQHILW KRXVHKROGV HFRQRPLFDOO\ 7KHVH SURSRVLWLRQV ZHUH VXEVWDQWLDWHG E\ D VHULHV RI WLPHDOORFDWLRQ VWXGLHV DQG PRUH GHWDLOHG PLFURHFRQRPLF UHVHDUFK RI GRPHVWLF HFRQRPLHV VHH %HFNHU %HQ3RUDWK 6FKXOW] 1HUORYH 0XHOOHU f 2QH LPSRUWDQW ILQGLQJ IURP PLFUR HFRQRPLF UHVHDUFK LV WKDW FKLOGUHQ LQ PDQ\ GHYHORSLQJ FRXQWULHV PDNH D YDULHW\ RI YDOXDEOH FRQWULEXWLRQV WR WKH KRXVHKROG IURP D YHU\ HDUO\ DJH :KLWH 0XHOOHU &DLQ 5RVHQ]ZHLJ 1DJ HW DO +R f ,W LV QRW VXUSULVLQJ WR ILQG WKDW HDUO\ KRXVHKROG FRQWULEXWLRQV PDGH E\ FKLOGUHQ LQ WKHVH FRXQWULHV FRUUHODWHV VWURQJO\ ZLWK KLJK IHUWLOLW\ $QRWKHU UHILQHPHQW RI WKH QHZ KRPH HFRQRPLFV PRGHO LV FRPPRQO\ UHIHUUHG WR DV WKH ffTXDQWLW\TXDOLW\ WUDGHRIIf %HFNHU DQG /HZLV f K\SRWKHVL]HG WKDW LI SDUHQWV H[SHFWHG JUHDWHU DGYDQWDJH LQYHVWLQJ OLPLWHG UHVRXUFHV LQ IHZHU FKLOGUHQ TXDOLW\f WKDQ LQ PDQ\ FKLOGUHQ TXDQWLW\f WKH\ ZRXOG KDYH IHZHU FKLOGUHQ DOVR VHH 'H7UH\ f 7KH PDWHULDO EDVLV IRU WKLV K\SRWKHVLV FDQ DOVR EH DSSOLHG WR GLIIHUHQWLDO LQYHVWPHQWV LQ PDOH DQG IHPDOH RIIVSULQJ ZKHUH WKHUH DUH H[SHFWDWLRQV RI JUHDWHU DGYDQWDJH LQYHVWLQJ OLPLWHG UHVRXUFHV LQ RQH VH[ VHH &KRZGKXU\ DQG &KHQ 0LOOHU &KHQ HW DO *UHHQKDOJK 6FKHSHU+XJKHV f 5HFRJQL]LQJ WKDW SDUHQWDO UHSURGXFWLYH SUHIHUHQFHV PD\ YDU\ %HQ3RUDWK KDV DUJXHG WKDW FRQMXJDO SDLUV EH YLHZHG DV VHOILQWHUHVWHG LQGLYLGXDOV LQ WKH PDUULDJH FRQWUDFW UDWKHU

PAGE 16

WKDQ DV D VLQJOH HQWLW\ ,Q KLV ffWUDQVDFWLRQV IUDPHZRUNf %HQ3RUDWK f DVVHUWV WKDW WKH VKRUW DQG ORQJ WHUP FRVW DQG EHQHILWV RI FKLOGUHQ DUH QRW WKH VDPH IRU ERWK SDUHQWV DOVR VHH %HQ3RUDWK &DLQ 1XJHQW f )RU LQVWDQFH WKHUH LV OLWWOH LQFHQWLYH IRU PHQ WR KDYH IHZHU FKLOGUHQ ZKHQ WKH\ FDQ SDVV RQ WKH FRVWV RI FKLOG VXSSRUW WR ZLYHV RU DQ H[WHQGHG IDPLO\ VHH %RVHUXS f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f )URP D PDWHULDOLVW SHUVSHFWLYH )DSRKXQGD DQG 7RGDUR LELGf FRQWLQXH ff7KH ORFXV RI WKH IHUWLOLW\ GHFLVLRQPDNLQJ SURFHVV LV GHWHUPLQHG E\ ZKR FRQWUROV DQG DOORFDWHV WKH HFRQRPLF UHVRXUFHV ZLWKLQ WKH IDPLO\ $ FKDQJH LQ LQWUDIDPLOLDO DVVHW FRQWURO FRXOG SUHFLSLWDWH D FKDQJH LQ GHFLVLRQPDNLQJ SUHURJDWLYHV OHDGLQJ WR DOWHUHG IHUWLOLW\ EHKDYLRUf ,Q DGGLWLRQ WR DOWHUHG IHUWLOLW\ EHKDYLRU LW LV QRW VXUSULVLQJ WKDW VRFLRHFRQRPLF IRUFHV WKDW DIIHFW WKH YDOXH RI FKLOGUHQ DOVR DIIHFW WKH VRFLDO FRQVWUXFWLRQ RI IDWKHUKRRG %OHGVRH f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f

PAGE 17

$V HFRQRPLF JURZWK RFFXUV WKH UHODWLYH YDOXHV RI ODQG ODERU DQG FDSLWDO FKDQJH $OVR QHZ H[SHQVHV DVVRFLDWHG ZLWK XUEDQ LQGXVWULDO OLYLQJ FKDQJH WKH FRVWV RI UDLVLQJ FKLOGUHQ DW WKH VDPH WLPH QHZ HPSOR\PHQW RSSRUWXQLWLHV IRU DGXOW FKLOGUHQ DOWHU HFRQRPLF SRZHU UHODWLRQVKLSV DQG FKDQJH LQWHUJHQHUDWLRQDO EHQHILW IORZV )DSRKXQGD DQG 7RGDUR DVVHUW 7KH VL]H RI QHW LQWHUJHQHUDWLRQDO EHQHILW IORZV IURP FKLOGUHQ WR SDUHQWV LV SRVLWLYHO\ UHODWHG WR SDUHQWDO FRQWURO RI YDOXDEOH SK\VLFDO DVVHWV SULPDULO\ ODQG 7KH ULVLQJ SULFH RI FKLOGUHQ LQGXFHG E\ UHYHUVHG LQWHUJHQHUDWLRQDO EHQHILW IORZV LV WKHUHIRUH D UHIOHFWLRQ RI WKH ULVLQJ PDUNHW YDOXH RI KXPDQ FDSLWDO LQYHVWPHQWV DQG WKH GLPLQLVKHG UHODWLYH LPSRUWDQFH RI SDUHQWDOO\ FRQWUROOHG SK\VLFDO ZHDOWK LELGf ,Q KLV ffUHODWLYH HFRQRPLF VWDWXV K\SRWKHVLVf (DVWHUOLQ f SRVLWV WKDW DV KRXVHKROG LQFRPH LQFUHDVHV WKHUH ZLOO EH DQ LQFUHDVHG GHPDQG IRU DOO JRRGV LQFOXGLQJ FKLOGUHQ (DVWHUOLQ EHOLHYHV WKDW LQFUHDVHG DYDLODELOLW\ DQG FRQVXPSWLRQ RI FRQVXPHU JRRGV ZLWKLQ D OLPLWHG EXGJHWf ZLOO SURJUHVVLYHO\ UHGXFH UHSURGXFWLYH LQYHVWPHQWV VLQFH FKLOGUHQ QRZ EHFRPH RQH RI PDQ\ JRRGV +RZHYHU ZKDW H[SODLQV WKH IDFW WKDW LQ WKH 8QLWHG 6WDWHV WKH EDE\ ERRP RFFXUUHG LQ WDQGHP ZLWK H[SDQGLQJ FRQVXPHULVP" ,Q (DVWHUOLQfV ffH[SHULHQFHG OLYLQJ VWDQGDUGf FRQFHSW WKH LQFUHDVHG DYDLODELOLW\ DQG FRQVXPSWLRQ RI FRQVXPHU JRRGV ZLOO SURGXFH IHUWLOLW\ GHFOLQH RYHU WLPH DV YDOXHV LQKHUHQW LQ WKLV SURFHVV DUH SDVVHG GRZQ WR FKLOGUHQ (DVWHUOLQ DEF (DVWHUOLQ 3ROODFN DQG :DFKWHU f $OVR DV KHDOWK LPSURYHPHQWV LQFUHDVH FKLOG VXUYLYDO DQG IHFXQGLW\ DQ H[FHVV VXSSO\ RI FKLOGUHQ UHGXFHV GHPDQG DQG LQFUHDVHV PRWLYDWLRQ IRU IHUWLOLW\ FRQWURO (DVWHUOLQ DQG &ULPPLQV f ,Q KLV fOLIHVW\OHQRUPWLPH FRQVWUDLQWf DSSURDFK 'RQDOGVRQ FRQWHQGV WKDW OLIHVW\OH FKDQJHV DQG VKLIWV LQ QRUPDWLYH YDOXHV DQG WLPH FRQVWUDLQWV GXULQJ PRGHUQL]DWLRQ OHDG WR FKDQJHV LQ IHUWLOLW\ RQFH D OLIHVW\OH VWDQGDUG LV VHW IHUWLOLW\ ZLOO EH DOWHUHG WR SURWHFW LW

PAGE 18

'RQDOGVRQ REVHUYHV 2YHUDOO WKH EURDG VSDQ RI PRGHP KLVWRU\ VKRZV WKDW VRFLHWLHV VWULYH WR PDLQWDLQ DFKLHYHG VWDQGDUGV DQG WKDW WKH\ FRQWURO SRSXODWLRQ LQ WKH SURFHVV RI GRLQJ VR 1RW HYHU\ VXEVHFWRU RI WKH VRFLHW\ LV VXFFHVVIXO LQ PDLQWDLQLQJ VWDQGDUGV EXW RYHUDOO RQFH DGYDQFH LV UHDFKHG LW LV SURWHFWHG f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f ZULWHV ff7KHLU ODUJH QXPEHU RI FKLOGUHQ ZHUH QRW WKH UHVXOW RI DQ\WKLQJ UHPRWHO\ DSSURDFKLQJ FRVWEHQHILW FRQVLGHUDWLRQV EXW ZHUH UDWKHU WKH UHVXOW RI D QHFHVVDU\ SDUW RI WKH SURFHVV RI DGDSWDWLRQ WR HQYLURQPHQWDO FRQGLWLRQVf $Q HSLVWHPRORJLFDO GLVFXVVLRQ RI WKH UROH RI FRQVFLRXVQHVV DQG SUR[LPDWH IDFWRUVf LQ IHUWLOLW\ RXWFRPHV LV GLVFXVVHG PRUH IXOO\ LQ WKH QH[W VHFWLRQ ,Q VSLWH RI VRPH RYHUODS RQ WKH LVVXH RI WKH UROH RI FRQVFLRXVQHVV HWLF DQG EHKDYLRUDO PHWKRGV DQG WKHRULHV RI UHSURGXFWLYH GHFLVLRQPDNLQJ KDYH UXQ FRXQWHU WR WKHRULHV URRWHG LQ HPLF DQG PHQWDOLVW DSSURDFKHV )RU LQVWDQFH FULWLFL]LQJ WLPH DOORFDWLRQ VWXGLHV 3HGHUVHQ f ZULWHV f7R DVVXPH VXFK FDOFXODWLRQV VHHPV WR LPSO\ WRR VWURQJO\ WKDW SHRSOH DOO

PAGE 19

RYHU WKH ZRUOG DFW MXVW OLNH WKH ,%0 ZKHQ WKH\ PDNH WKHLU FKRLFHVf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f ,W LV WKRXJKW WKDW LQ SUHFDSLWDOLVW HFRQRPLHV IUHH FKRLFH LV OHVV UDWLRQDO DQG OHVV RSWLPL]LQJ SUHIHUHQFHV DQG WDVWHV DUH PRUH ZKLPVLFDO DQG OHVV SUHGLFWDEOH + 6LPRQ f REVHUYHV ff$FWXDO KXPDQ FKRLFHV GHSDUW UDGLFDOO\ IURP WKRVH LPSOLHG E\ WKH D[LRPV RI UDWLRQDOLW\f H[FHSW LQ WKH PRVW WUDQVSDUHQW VLWXDWLRQV +XPDQV DUH XQDEOH WR FKRRVH FRQVLVWHQWO\ LQ WKH IDFH RI HYHQ PRGHUDWH FRPSOH[LW\ RU XQFHUWDLQW\f &URVELH f DVVHUWV ff&XUUHQW UDWLRQDOLW\ PRGHOV RI UHSURGXFWLYH GHFLVLRQPDNLQJ DUH GHILFLHQW IRU WKH\ GR QRW FRQVLGHU WKH IXOO FRPSOH[LW\ DQG IDOOLELOLW\ RI WKH KXPDQ GHFLVLRQ PDNHUf FI :DOOVWHQ f )RU LQVWDQFH LQ ffVXEMHFWLYH H[SHFWHG XWLOLW\f WKHRU\ LW LV DUJXHG WKDW DQWLFLSDWHG FRQVHTXHQFHV DGG D FRJQLWLYH GLPHQVLRQ RI XQFHUWDLQW\ WR IHUWLOLW\ GHFLVLRQPDNLQJ RXWFRPHV %HDFK HW DO 7RZQHV HW DO f ,Q D VLPLODU PRGHO WKDW UHOLHV SULPDULO\ RQ VXEMHFWLYH VWDWHV RI PLQG WKH ffYDOXH RI FKLOGUHQf WKHRU\ SRVLWV WKDW WKH YDOXH RI FKLOGUHQ FDQQRW EH UHGXFHG WR VLPSOH HFRQRPLFV RU DQ\ RWKHU VLQJOH YDULDEOH DQG WKDW UHDVRQ LV OHVV LPSRUWDQW WKDQ HPRWLRQ LQ WKH UHSURGXFWLYH GHFLVLRQPDNLQJ SURFHVV )DZFHWW )DZFHWW DQG $UQROG f )DZFHWW f FRQWHQGV WKDW f$V FKLOGUHQ EHFRPH OHVV YDOXDEOH HFRQRPLFDOO\ WKH\ EHFRPH PRUH YDOXHG HPRWLRQDOO\ DQG DV HFRQRPLF GHYHORSPHQW SURFHHGV FKLOGUHQ DUH LQ FRPSHWLWLRQ ZLWK RWKHU VRXUFHV RI VDWLVIDFWLRQf

PAGE 20

/HLEHQVWHLQ f KDV DUJXHG WKDW SV\FKRORJLFDO IDFWRUV LH SHUVRQDOLW\ DQG LQGLYLGXDO LGHQWLW\ GHWHUPLQH UHSURGXFWLYH RXWFRPHV )DZFHWW QRWHV 1R VLQJOH FRQFHSWXDO RU WKHRUHWLFDO IUDPHZRUN JXLGHV UHVHDUFK RQ SHUFHSWLRQV RI WKH VDWLVIDFWLRQV DQG FRVWV RI FKLOGUHQ 5HVHDUFK RQ WKLV WRSLF LV HFOHFWLF DQDO\]LQJ WKH SHUFHLYHG YDOXH RI FKLOGUHQ GHVFULSWLYHO\ DQG LQFRUSRUDWLQJ WKLV VXEMHFWLYH RULHQWDWLRQ LQ YDULRXV IUDPHZRUNV WR H[SODLQ IHUWLOLW\ f 7KHVH HPLF PHQWDOLVW WKHRULHV VKDUH WKH DVVXPSWLRQ WKDW VXEMHFWLYH VRFLDO DQGRU SHUVRQDO IDFWRUV DUH SULPDU\ GHWHUPLQDQWV LQ IHUWLOLW\ GHFLVLRQV 0HQWDOLVWV ZKR FODLP WKH\ KROG D PRUH HFOHFWLF DSSURDFK WR XQGHUVWDQGLQJ UHSURGXFWLYH GHFLVLRQPDNLQJ DUJXH WKDW UHDVRQ LWVHOI LV JURZLQJ PRUH LQWHUVXEMHFWLYH ,Q WKH ffWKHRU\ RI UHDVRQHG DFWLRQf H[SHFWDWLRQV DQG UHIOHFWLYH QRUPDWLYH VWDQGDUGV H[SODLQ FRQWUDFHSWLYH DQG UHSURGXFWLYH GHFLVLRQPDNLQJ VHH 'DYLGVRQ DQG -DFFDUG )LVKEHLQ HW DO f &URVELH H[SODLQV $FFRUGLQJ WR WKLV WKHRU\ D SHUVRQfV EHKDYLRUDO DQG QRUPDWLYH EHOLHIV DERXW VRPH EHKDYLRU MRLQWO\ GHWHUPLQH WKH SHUVRQfV LQWHQWLRQ WR SHUIRUP WKH EHKDYLRU WKLV EHKDYLRUDO LQWHQWLRQ LQ WXUQ VHUYHV DV WKH VROH DQG GLUHFW GHWHUPLQDQW RI WKH EHKDYLRU LWVHOI 7KH PRUH SRVLWLYH WKH EHKDYLRUDO DQG QRUPDWLYH EHOLHIV WKH JUHDWHU WKH LQWHQWLRQ DQG WKH PRUH OLNHO\ WKH EHKDYLRU LV WR EH SHUIRUPHG f ,W LV DUJXHG WKDW EHKDYLRUDO DQG QRUPDWLYH EHOLHIV DUH SURGXFWV RI IDPLO\ DQG VRFLHW\ 5RELQVRQ DQG +DUELVRQ f FRQWHQG WKDW KLJK ELUWKUDWHV PD\ EH XVHG WR VDWLVI\ WKH RYHUULGLQJ VRFLDO JRDO RI JURXS IDPLO\ WULEH QDWLRQf VXUYLYDO 'RQDOGVRQ f REVHUYHV ff:KHQ UHSURGXFWLYH EHKDYLRU LV YLHZHG RYHU WKH ORQJ UXQ IURP WKH SHUVSHFWLYH RI WKH IDPLO\fV DQG VRFLHW\fV ZHOO EHLQJ WKH LQGLYLGXDO DSSHDUV WR EH RUFKHVWUDWHG WRZDUG FRQIRUPLW\ LQ WKLV IXQGDPHQWDO VSKHUH RI OLIHf %ODNH DVVHUWV )HUWLOLW\ LV GHWHUPLQHG E\ WKH FKDUDFWHULVWLFV RI IDPLO\ DQG WKH JHQHUDO QRUPV DQG YDOXHV DWWULEXWHG WR WKH FRQFHSW RI IDPLO\ LQ WKH JLYHQ VRFLHW\ DQG WKH PRUH IXQGDPHQWDO FKDQJHV RI IHUWLOLW\ DUH FDXVHG E\ WKH FKDQJHV LQ WKH LQVWLWXWLRQ RI IDPLO\ WKHUHIRUH D WKHRU\ RI UHSURGXFWLYH PRWLYDWLRQ LV DW WKH VDPH WLPH D WKHRU\ RI WKH IDPLO\ DQG VRFLHW\ f

PAGE 21

,Q 0F1LFROOfV f ffLQVWLWXWLRQDO GHWHUPLQDQWVf WKHRU\ RI IHUWLOLW\ FKDQJH KH SRVWXODWHV WKDW GHVLUDEOH IHUWLOLW\ EHKDYLRU LV LQVWLWXWLRQDOL]HG LQ D VRFLHW\ VRFLDO QRUPV UHSODFH LQGLYLGXDO QRUPV 6LPLODUO\ &DOGZHOO f FODLPV WKDW ffDOO DLPV DUH XOWLPDWHO\ VRFLDOf &LWLQJ WKH FRQIRUPLQJ HIIHFWV RI WKH SDVW DQG FXUUHQW WHDFKLQJV RI PLVVLRQDULHV FRORQLDO DGPLQLVWUDWRUV VHFXODU VFKRROWHDFKHUV QDWLRQDO VFKRRO V\VWHPV WKH PDVV PHGLD DQG QHZ QDWLRQDO HOLWHV &DOGZHOO LELGf DVVHUWV ff)RU IHUWLOLW\ GHFOLQH WKH UDSLG HVWDEOLVKPHQW RI D JOREDO VRFLHW\ LV SUREDEO\ PRUH LPSRUWDQW WKDQ WKH FUHDWLRQ RI D JOREDO HFRQRP\f ,Q KLV WKHRU\ RIffVRFLDO LQIOXHQFH JURXSVf /HLEHQVWHLQ f FRQWHQGV WKDW QRUPDWLYH VWDQGDUGV DQG PRWLYDWLRQV IRU IHUWLOLW\ DQG IDPLO\ VL]H GLIIXVH EHWZHHQ VRFLDO LQIOXHQFH JURXSV LH SHRSOH RI ORZHU VRFLRHFRQRPLF VWDWXV HPXODWH WKH IHUWLOLW\ EHKDYLRUV RI SHRSOH RI KLJKHU VRFLRHFRQRPLF VWDWXV $ORQJ VLPLODU HPLF QRUPDWLYH DQG GLIIXVLRQDU\ OLQHV RI UHDVRQLQJ DQ ffLQWHUQDWLRQDO GHPRQVWUDWLRQ HIIHFWf LV EHOLHYHG WR WDNH SODFH ZKHUHE\ IHUWLOLW\ QRUPV LQ GHYHORSHG FRXQWULHV DUH HPXODWHG E\ GHYHORSLQJ FRXQWULHV 7HLWHOEDXP f 'HPRJUDSKLF WKHRULVWV ZKR VSHFLDOL]H LQ WKH XQGHUVWDQGLQJ RI VXEMHFWLYH VWDWHV RI PLQG VRFLDOL]DWLRQ SURFHVVHV DQG WKH GLIIXVLRQ RI QRUPDWLYH EHOLHIV KDYH PDGH YDOXDEOH FRQWULEXWLRQV WR IHUWLOLW\ GHFLVLRQPDNLQJ UHVHDUFK +RZHYHU DV ZH ZLOO VHH EHORZ WR EH VDWLVILHG ZLWK WKLV OHYHO RI XQGHUVWDQGLQJ ffTXLWV HDUO\f 7KXV PDQ\ GHPRJUDSKLF WKHRULVWV DQG UHVHDUFKHUV LJQRUH WKH XQGHUO\LQJ PDWHULDO IRUFHV DFWLQJ XSRQ DQG FKDQJLQJ LQGLYLGXDO DQG FXOWXUDO SUHIHUHQFHV YDOXHV DQG EHOLHIV (YHQ VRPH HFRQRPLFDOO\ RULHQWHG GHPRJUDSKLF H[SHUWV KDYH XQGHUHVWLPDWHG WKH GLYHUVLW\ DQG HIIHFWV RI WKHVH PDWHULDO IRUFHV
PAGE 22

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fV PHQWDO VWDWH LV XQWUXVWZRUWK\ LQ GHWHUPLQLQJ WKH FDXVHV RI WKHLU IHUWLOLW\ EHKDYLRU 7KLV LV ZK\ WKH\ XVH HWLF EHKDYLRULVW UHVHDUFK VWUDWHJLHV 7KLV LV DOVR ZK\ FXOWXUDO PDWHULDOLVWV DQG EHKDYLRULVWV GR QRW VSHFXODWH DERXW VWDWHV RI FRQVFLRXVQHVV 7KLV LV H[SODLQHG IXUWKHU LQ WKH QH[W VHFWLRQ 5HODWHG WR WKH DVVXPSWLRQ RI FRQVFLRXV FKRLFH LV WKH QRWLRQ RI QDWXUDO IHUWLOLW\ 'HPRJUDSKLF WKHRULVWV KDYH DVVXPHG WKH H[LVWHQFH RIffQDWXUDOf YHUVXV ffWDUJHWHGf IHUWLOLW\ +HQU\ GHILQHG ffQDWXUDO IHUWLOLW\f DV IHUWLOLW\ ZKLFK ffH[LVWV RU KDV H[LVWHG LQ WKH DEVHQFH RI GHOLEHUDWH ELUWK FRQWUROf f ,W LV HVWLPDWHG WKDW QDWXUDO IHUWLOLW\ FDQ UHDFK D ELRORJLFDO PD[LPXP RI DERXW ELUWKV SHU ZRPDQ %RQJDDUWV f %RQJDDUWV DQG 0HQNHQ f H[SDQGHG WKH QRWLRQ RI QDWXUDO IHUWLOLW\ WR LQFOXGH ff7KH IHUWLOLW\ WKDW SUHYDLOV LQ

PAGE 23

WKH DEVHQFH RI GHOLEHUDWH DWWHPSWV WR OLPLW WKH QXPEHU RI VXUYLYLQJ FKLOGUHQf 7KLV WDNHV LQWR DFFRXQW WKH SUR[LPDWH HIIHFWV RI SURORQJHG EUHDVWIHHGLQJ DQG SRVWSDUWXP DEVWLQHQFH ZKLFK ORZHU IHUWLOLW\ ZKLOH LQFUHDVLQJ UDWHV RI FKLOG VXUYLYDO %RQJDDUWV DQG 0HQNHQ LELGf H[SODLQ QDWXUDO IHUWLOLW\ DV fD IXQFWLRQ RI D VHW RI EHKDYLRUDO DQG ELRORJLFDO SUR[LPDWH GHWHUPLQDQWVf 7KH SUR[LPDWH RU LQWHUPHGLDWH YDULDEOHV DSSURDFK WR IHUWLOLW\ ZDV ILUVW LQWURGXFHG LQGHSHQGHQWO\ E\ +HQU\ FLWHG LQ %RQJDDUWV DQG 0HQNHQ f DQG 'DYLV DQG %ODNH f %RQJDDUWV f ODWHU RSHUDWLRQDOL]HG WKLV DSSURDFK E\ IRFXVLQJ RQ WKH FDXVDO VLJQLILFDQFH RI D VPDOOHU VHW RI LQWHUPHGLDWH YDULDEOHV OLQNLQJ VRFLDO SV\FKRORJLFDO FXOWXUDO DQG HFRQRPLF IDFWRUV ZLWK WRWDO IHUWLOLW\ UDWHV )URP DQDO\VLV RI GDWD RI SUHVHQW GD\ DQG KLVWRULFDO SRSXODWLRQV %RQJDDUWV f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

PAGE 24

GHYHORSLQJ VRFLHWLHV )RU LQVWDQFH ZKLOH DVVHUWLQJ WKDW WKHUH LV QR LQGLYLGXDO FKRLFH LQ D SUHPRGHP VRFLHW\ LV WRR VWURQJ (DVWHUOLQ QRQHWKHOHVV EHOLHYHV HYROXWLRQ WR D PRGHP VRFLHW\ KDV HQWDLOHG D FKDQJH IURP VRFLDO FRQWURO WR D PRUH VHOIFRQVFLRXV LQGLYLGXDOL]HG FRQWURO RI IHUWLOLW\ (DVWHUOLQ LV WU\LQJ WR DFFRXQW IRU WKH GLIIHUHQFHV LQ IHUWLOLW\ EHKDYLRUV EHWZHHQ WUDGLWLRQDO DQG PRGHP FXOWXUHV (DVWHUOLQ f FRQWHQGV KLV EURDGHU HFRQRPLF IUDPHZRUNf OHQGV LWVHOI WR JUHDWHU UHFRJQLWLRQ RI VXFK GHPRJUDSKLF FRQFHSWV DV QDWXUDO IHUWLOLW\ DQG WR WKH IRUPXODWLRQ RI DOWHUQDWLYH K\SRWKHVHV IUHTXHQWO\ YRLFHG E\ VRFLRORJLVWV DQWKURSRORJLVWV DQG RWKHU QRQHFRQRPLVWVf 'HPRJUDSKHUV KDYH DVVXPHG WKDW FRXSOHV GR QRW GHOLEHUDWHO\ FRQWURO WKHLU IHUWLOLW\ XQWLO WKH HQG RI D IHUWLOLW\ WUDQVLWLRQ ZKHQ ZRPHQ EHJLQ WR XVH PRGHP PHWKRGV RI FRQWUDFHSWLRQ DQG DERUWLRQ WR OLPLW WKHLU FKLOGEHDULQJ FDSDELOLWLHV $V WKH WHUP ffQDWXUDO IHUWLOLW\f VXJJHVWV LW KDV EHHQ SUHVXPHG WKDW SUHFRQWUDFHSWLQJf SHRSOH DUH VLPSO\ EHKDYLQJ QDWXUDOO\ DQG DUH QRW DZDUH RI WKH PHDQV E\ ZKLFK WR FRQWURO WKHLU IHUWLOLW\ 7KH PRGHO DVVXPSWLRQ LV WKDW WDUJHWHG IHUWLOLW\ DQG IHUWLOLW\ FRQWURO LV D QHZ LQYHQWLRQ RI PRGHP FRQVFLRXVQHVV HYROYLQJ DORQJ ZLWK KLJKHUf IRUPV RI UDWLRQDOLW\ VHH :HEHU f ,QGHHG :ULJOH\ f GHVFULEHV QHZ IHUWLOLW\ SDWWHUQV LQ WHUPV RI D FKDQJH IURP XQFRQVFLRXV UDWLRQDOLW\ WR FRQVFLRXV UDWLRQDOLW\ 7KLV FXOWXUDO LGHDOLVW DVVXPSWLRQ DERXW WKH FKDQJLQJ QDWXUH RI FRQVFLRXVQHVV LV LQFRUUHFW 'HPRJUDSKLF WKHRULVWV ZKR XVH WKLV GLVWLQFWLRQ DUH XQIDPLOLDU ZLWK DQWKURSRORJLFDO FRQWULEXWLRQV WR WKH NQRZOHGJH RI KXPDQ DQG FXOWXUDO HYROXWLRQ DQG ZLWK WKH PDQ\ DQWKURSRORJLFDO LQVLJKWV LQWR IHUWLOLW\ UHVHDUFK 7KH DVVXPSWLRQ WKDW PRGHP KXPDQV DQG SHRSOH LQ GHYHORSHG FRXQWULHVf DUH PRUH FRQVFLRXV DQG WKHUHIRUH DUH PRUH LQFOLQHG WR FRQVFLRXVO\ FRQWURO WKHLU IHUWLOLW\ WKDQ HDUOLHU SHRSOHV DQG SHRSOH OLYLQJ LQ GHYHORSLQJ FRXQWULHVf LV XQIRXQGHG DW EHVW DQG ZHVWHUQFHQWULF DW ZRUVW 7KH XQGHUO\LQJ DVVXPSWLRQ LV QRW RQO\ XQSURYDEOH EXW LV UHPLQLVFHQW RI WKH QLQHWHHQWKFHQWXU\ YHUVLRQ RI

PAGE 25

WKH HYROXWLRQ RIffFLYLOL]HGf FRQVFLRXVQHVV ,PSOLFLW LQ WKLV SV\FKLF HYROXWLRQDU\ VFKHPD LV WKDW WKHUH DUH ffSURJUHVVLYHf DQG ffEDFNZDUGf SHRSOHV 6XFK SURSRVLWLRQV DUH FKDOOHQJHG E\ DUFKHRORJLFDO HYLGHQFH EHKDYLRUDO GDWD DQG KLVWRULFDO IDFW +DUULV DQG 5RVV DVVHUW 7KH RULJLQ RI WKLV DVVXPSWLRQ OLHV LQ HWKQRFHQWULF DQG HVSHFLDOO\ LQ (XURFHQWULF LGHDOL]DWLRQV RI WKH EHKDYLRU RIffSURJUHVVLYHf SRVWn GHPRJUDSKLF VRFLHWLHV LQ FRPSDULVRQ ZLWK WKH UHSURGXFWLYH EHKDYLRU RIffEDFNZDUGf SUHGHPRJUDSKLF VRFLHWLHV 2QO\ SRVWGHPRJUDSKLF WUDQVLWLRQ FRQWUDFHSWLQJ VRFLHWLHV DUH YLHZHG DV KDYLQJ WKH FDSDFLW\ WR PDNH UDWLRQDO FDOFXODWLRQV FRQFHUQLQJ WKH UHDULQJ RI RSWLPXP QXPEHUV RI FKLOGUHQ +HQFH HYLGHQFH RI WKH XVH RI DQ DUUD\ RI FXOWXUDOO\ SDWWHUQHG SURFHGXUHV ZKLFK GHPRQVWUDEO\ KDYH WKH HIIHFW RI FRQWUROOLQJ IHUWLOLW\ LQ QRQFRQWUDFHSWLQJ VRFLHWLHVDERUWLRQ DEVWLQHQFH ODFWDWLRQLV FDWHJRULFDOO\ GHPRWHG WR WKH VWDWXV RI EHKDYLRU ZKRVH ffJRDOf KDG QRWKLQJ WR GR ZLWK IHUWLOLW\ FRQWURO DQG ZKLFK WKHUHIRUH FRXOG QRW EH WUXH IHUWLOLW\ FRQWURO LQ WKH IXOO QREOH LGHDOLVW VHQVH f 8QTXHVWLRQHG DFFHSWDQFH RI WKLV QRWLRQ KDV FRQWULEXWHG WR WKH GHVLJQ RI LQHIIHFWXDO LQWHUQDWLRQDO SURJUDPV GHVLJQHG WR UHGXFH IHUWLOLW\ &XOWXUDO LGHDOLVW GHPRJUDSKHUV DQG VRFLRORJLVWV ZHUH FRQYLQFHG WKDW WKH WUDQVPLVVLRQ RIffUDWLRQDOLVWLFf ZHVWHUQ NQRZOHGJH DQG IDPLO\ SODQQLQJ ZRXOG HQOLJKWHQ EDFNZDUGf SHRSOH DQG OHDG WR IHUWLOLW\ GHFOLQH LQ WKH KLJK IHUWLOLW\ UHJLPHV RI WKH GHYHORSLQJ ZRUOG 7KLV ZDV WKH EDVLV RI NQRZOHGJH IURP ZKLFK IDPLO\ SODQQLQJ SURJUDPV ZHUH RULJLQDOO\ GHVLJQHG DQG DGPLQLVWHUHG 7KLV HPLF PHQWDOLVW DSSURDFK OHG WR WKH EHOLHI WKDW PRGHP HGXFDWLRQ LQ IDPLO\ SODQQLQJ DQG FRQWUDFHSWLRQ ZRXOG FKDQJH WKH SUHIHUHQFHV YDOXHV DQG EHOLHIV RI fSUHFRQWUDFHSWLQJf SHRSOHV DFFRUGLQJ WR QHZ IHUWLOLW\ JRDOV DQG GHVLUHV ZLWK QHZ LQIRUPDWLRQ WKH\ ZRXOG EHJLQ WR WDNH GHOLEHUDWH VWHSV WR OLPLW IHUWLOLW\ 0DPGDQL ZDV RQH RI WKH ILUVW WR FULWLFL]H WKHVH FXOWXUDO LGHDOLVW DVVXPSWLRQV RI ZHVWHUQ WUDLQHG VRFLDO VFLHQWLVWV 0DPGDQL ZDV LQYROYHG LQ WKH .KDQQD 6WXG\ WKH ILUVW ORQJLWXGLQDO VWXG\ f RI D ELUWK FRQWURO SURJUDP WR KDYH D FRQWURO DV ZHOO DV D WHVW SRSXODWLRQ 7KH ILQGLQJV RI WKH VWXG\ ZHUH HLWKHU LQFRQFOXVLYH RU VKRZHG WKDW WKH ELUWK FRQWURO SURJUDP

PAGE 26

KDG QR HIIHFW RQ IHUWLOLW\ 0DPGDQL REVHUYHG WKDW WKH HPLF PHQWDOLVW PRGHO XVHG E\ KLV FROOHDJXHV OHG WKHP WR EHOLHYH LI RQO\ WKH ffULJKWf LQIRUPDWLRQ FDQ EH JLYHQ WR WKH SHRSOH WKH\ ZLOO EH FRQYLQFHG LI RQO\ WKH OHDGHUV FDQ EH FRQWDFWHG DQG FRQYLQFHG WKH\ ZLOO XVH WKHLU LQIOXHQFH ZLWK WKH SHRSOH WR FKDQJH WKHLU EHKDYLRU 7KH XQGHUO\LQJ DVVXPSWLRQ LV WKDW WKH EHKDYLRU RI WKH SRSXODWLRQ JLYHQ WKH HQYLURQPHQW DQG LWV FRQVWUDLQWV LV QRW UDWLRQDO 0DPGDQL f +RZHYHU 0DPGDQL IRXQG WKH IHUWLOLW\ EHKDYLRU RI WKHVH SHRSOH ZDV TXLWH UDWLRQDO FRQVLGHULQJ WKHLU GHVSHUDWH HFRQRPLF FLUFXPVWDQFHV 0DPGDQL DVVHUWV 7KH IDLOXUH RI WKH ELUWK FRQWURO SURJUDP ZDV QRW D IDLOXUH LQ H[HFXWLRQ EXW D IDLOXUH LQ XQGHUVWDQGLQJ 1R SURJUDP ZRXOG KDYH VXFFHHGHG EHFDXVH ELUWK FRQWURO FRQWUDGLFWHG WKH YLWDO LQWHUHVWV RI WKH PDMRULW\ RI YLOODJHUV 7R SUDFWLFH FRQWUDFHSWLRQ ZRXOG KDYH PHDQW WR ZLOOIXOO\ FRXUW HFRQRPLF GLVDVWHU LELGf SHRSOH DUH QRW SRRU EHFDXVH WKH\ KDYH ODUJH IDPLOLHV 4XLWH WKH FRQWUDU\ WKH\ KDYH ODUJH IDPLOLHV EHFDXVH WKH\ DUH SRRU LELG f ,Q D UHVWXG\ RI WKH VDPH ,QGLDQ YLOODJH D GHFDGH ODWHU 1DJ DQG .DN f GRFXPHQWHG ZLGHVSUHDG DWWLWXGH DQG EHKDYLRU FKDQJHV ZLWK UHJDUG WR FRQWUROOLQJ ELUWKV 7KH\ IRXQG WKDW HFRQRPLF GHYHORSPHQW DQG WHFKQRORJLFDO FKDQJHV LQ DJULFXOWXUH LQ WKH UHJLRQ VLQFH WKH SUHYLRXV VWXG\ KDG FKDQJHG WKH RSSRUWXQLW\ VWUXFWXUH RI WKH SHRSOH &DVWH V\VWHPV RI LQVWLWXWLRQDOL]HG LQHTXDOLW\ ZHUH LQ WKH SURFHVV RI EUHDNLQJ GRZQ 6NLOOV DQG SHUVSHFWLYHV GHYHORSHG LQ IRUPDO HGXFDWLRQ ZHUH LQFUHDVLQJO\ UHZDUGHG ZLWK KLJKHU SD\LQJ MREV ,I WKH HFRQRP\ ZDVQfW JURZLQJ IDVW WKH VWDWH ZDV ,W ZDV QRZ ffUDWLRQDOf IRU SDUHQWV WR LQYHVW LQ IHZHU FKLOGUHQ LQ RUGHU WR SD\ IRU WKHLU HGXFDWLRQ ZKLFK LQ WXUQ ZDV H[SHFWHG WR EHQHILW IDPLOLHV LQ WKH ORQJ UXQ 7KH OHVVRQ WR EH OHDUQHG IURP WKLV H[DPSOH LV WKDW ZRPHQ ZKR KDYH DFFHVV WR IDPLO\ SODQQLQJ VHUYLFHV EXW FKRRVH QRW WR XVH FRQWUDFHSWLYHV DUH QR OHVV UDWLRQDO LQGLYLGXDOL]HG RU FRQVFLRXV RI WKHLU IHUWLOLW\ EHKDYLRU WKDQ DUH ZRPHQ ZKR XVH FRQWUDFHSWLYHV ,I ZRPHQ LQ GHYHORSLQJ FRXQWULHV KDYH OHVV FRQWURO RYHU WKHLU IHUWLOLW\ LW LV EHFDXVH RI LQIHULRU

PAGE 27

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ffRSHUDWLRQVf VXEMHFW WR UHSOLFDWLRQ E\ LQGHSHQGHQW REVHUYHUV f &XOWXUDO PDWHULDOLVW NQRZOHGJH FODLPV PXVW EH IRXQGHG RQ WKH IROORZLQJ FRQGLWLRQV f RSHUDWLRQDOL]DEOH f SDUVLPRQLRXV f HPSLULFDOO\ WHVWDEOH UHSOLFDEOH DQG IDOVLILDELOH f ORJLFDOO\ FRKHUHQW DQG LQWHUSHQHWUDWLQJ f UHWURGLFWLYH DQG SUHGLFWLYH %H\RQG WKH VFLHQWLILF PHWKRG WKH QHHG IRU D FOHDU GDWD ODQJXDJH OLHV DW WKH KHDUW RI DWWHPSWV WR FUHDWH D

PAGE 28

VRFLDO VFLHQFH DERXW KXPDQ EHLQJV )RU WKLV UHDVRQ WKH HSLVWHPRORJLFDO EDVLV RI FXOWXUDO PDWHULDOLVP DOVR UHOLHV RQ WKH GLVWLQFWLRQV EHWZHHQ PHQWDO DQG EHKDYLRUDO ILHOGV DQG EHWZHHQ HPLFV DQG HWLFV ,Q RSSRVLWLRQ WR HPLF PHQWDOLVW DQG RWKHU QRQSRVLWLYLVWLF DSSURDFKHV +DUULV f DUJXHV IRU WKH GHYHORSPHQW RI DQ REVHUYHURULHQWHG HWLFf DQDO\VLV RI EHKDYLRUDO HYHQWV WKDW SUHFOXGHV WKH QHHG WR NQRZ WKH DFWRUfV PHQWDO VWDWH HPLFVf 6LPLODUO\ LQ 6NLQQHUfV f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f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f 7KLV LV WUXH ZKHWKHU DQ LQGLYLGXDO LV FRQVFLRXV RU XQFRQVFLRXV RI WKH LQWHQWLRQDO RU XQLQWHQWLRQDO FRQVHTXHQFHV RI WKHLU EHKDYLRU $FFXUDF\ LV QRW WKH RQO\ SUREOHP ZLWK LQIRUPDQW UHSRUWV VRPHWLPHV WKH\ PLVUHSUHVHQW WKH WUXWK ,QIRUPDQWV RIWHQ WHOO UHVHDUFKHUV ZKDW WKH\ ZDQW WR KHDU LQ RUGHU WR VWD\ RQ WKHLU

PAGE 29

JRRG VLGH 7KLV LV H[DFWO\ ZKDW KDSSHQHG LQ WKH .KDQQD VWXG\ UHIHUUHG WR DERYH 5HVHDUFKHUV ZHUH SX]]OHG WKDW IHUWLOLW\ UHPDLQHG KLJK WKRXJK ZRPHQ UHSRUWHG WKH\ ZHUH XVLQJ WKH FRQWUDFHSWLYHV JLYHQ WKHP 0DPGDQL f ODWHU IRXQG WKDW ZRPHQ ZHUH VLPSO\ WHOOLQJ WKH UHVHDUFKHUV ZKDW WKH\ WKRXJKW WKH\ ZDQWHG WR KHDU VR WKDW QR IHHOLQJV ZHUH KXUW ,Q D PRUH UHFHQW H[DPSOH RI UHVHDUFKHU FRQIXVLRQ LQ LQWHUSUHWLQJ WKH :RUOG )HUWLOLW\ 6XUYH\ 6FRWW DQG &KLGDPEDUDP f SX]]OH RYHU WKH IDFW WKDW ffWKH FRQVLVWHQW )LQGLQJ LQ DOPRVW HYHU\ FRXQWU\ RI ODUJH QXPEHUV RI ZRPHQ ZKR ZKLOH H[SUHVVLQJ WKH GHVLUH IRU QR PRUH FKLOGUHQ DUH GRLQJ QRWKLQJ WR UHVWUDLQ WKHLU IHUWLOLW\ HYHQ ZKHQ FRQWUDFHSWLRQ LV UHDGLO\ DYDLODEOHf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f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

PAGE 30

SHUFHLYHGf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f $QWKURSRORJLVWV KDYH DOVR H[SODLQHG ZK\ DJJUHJDWH UHSURGXFWLYH UDWHV FRUUHODWH ZLWK WKH FRVWV DQG EHQHILWV RI FKLOGEHDULQJ IRU LQGLYLGXDOV OLYLQJ LQ GLIIHUHQW PRGHV RI SURGXFWLRQ +DQGZHUNHU Df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f IRU DJJUHJDWHV RI LQGLYLGXDOV FRQGLWLRQHG E\ WKH YDULRXV PDWHULDO FLUFXPVWDQFHV LQ ZKLFK WKH\ OLYH

PAGE 31

7KHUHIRUH UHSURGXFWLYH GHFLVLRQPDNLQJ DQG GHPRJUDSKLF WUDQVLWLRQ PXVW EH XQGHUVWRRG IURP DQ HWLF EHKDYLRUDO HSLVWHPRORJLFDO SHUVSHFWLYH LQ D QRPRWKHWLF FRPSDUDWLYH DQG HYROXWLRQDU\ FRQWH[W ,QGHHG 6NLQQHU f DVVHUWV WKDW SDUDOOHO SURFHVVHV RI VHOHFWLRQE\FRQVHTXHQFHV RFFXUV LQ ELRORJLFDO EHKDYLRUDO DQG FXOWXUDO HYROXWLRQ 6NLQQHU f ZULWHV f,Q FHUWDLQ UHVSHFWV RSHUDQW UHLQIRUFHPHQWV UHVHPEOHV WKH QDWXUDO VHOHFWLRQ RI HYROXWLRQDU\ WKHRU\ -XVW DV JHQHWLF FKDUDFWHULVWLFV ZKLFK DULVH DV PXWDWLRQV DUH VHOHFWHG RU GLVFDUGHG E\ WKHLU FRQVHTXHQFHV VR QRYHO IRUPV RI EHKDYLRU DUH VHOHFWHG RU GLVFDUGHG WKURXJK UHLQIRUFHPHQWf ,Q DJUHHPHQW +DUULV DQG 5RVV SDUDSKUDVH 6NLQQHUfV REVHUYDWLRQ 6RFLRFXOWXUDO V\VWHPV HYROYH LQ FRQIRUPLW\ ZLWK WKH FRQVHTXHQFHV IRU LQGLYLGXDOV DQG JURXSV ZKR GR RU GR QRW DGRSW LQQRYDWLRQV :H LQYLWH WKRVH ZKR ILQG LW GLIILFXOW WR FRPSUHKHQG KRZ VXFK V\VWHPV FDQ HPERG\ D UDWLRQDO RU RSWLPL]LQJ FDOFXOXV LQ WKH DEVHQFH RI FRQVFLRXV FDOFXODWLRQ WR H[DPLQH WKH RFFXUUHQFH RI RSWLPL]LQJ UHODWLRQV HVWDEOLVKHG WKURXJK VHOHFWLRQE\FRQVHTXHQFHV LQ WKH HYROXWLRQ RI VSHFLHV LQ WKH EHKDYLRU SDWWHUQV RI D VLQJOH VSHFLHV RI RUJDQLVP DQG LQ WKH EHKDYLRU RI FRPPXQLWLHV RI GLYHUVH VSHFLHV RUJDQL]HG LQWR HFRV\VWHPV f (WLF EHKDYLRULVW FXOWXUDO PDWHULDOLVW DQG HYROXWLRQDU\ PRGHOV RI UHSURGXFWLYH GHFLVLRQn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fV KHDG PDNH WKLV DSSURDFK XQWHQDEOH IURP D UHVHDUFK VWDQGSRLQW EXW VXFK DQ DSSURDFK DOVR OHDGV WR D PLVWUXVW RI VFLHQWLILF UHVHDUFK VWUDWHJLHV DQG PRUH SDUVLPRQLRXV FDXVDO H[SODQDWLRQV

PAGE 32

0HQWDOLVWV VHHN WR LQYDOLGDWH WKHRULHV DQG DSSURDFKHV WKDW GR QRW FRQIRUP WR LGHDOLVW WHQHWV EHFDXVH WKH\ EHOLHYH XWLOLW\ FDOFXODWLRQV DUH GHKXPDQL]LQJ ,Q GRLQJ VR WKH\ GHQ\ REMHFWLYH UHDOLW\ DQG UHMHFW WKH PDWHULDO QHFHVVLWLHV WKDW XQLWH DOO RI KXPDQLW\ XQGHU RQH VHW RI FRQWLQJHQFLHV 0RUHRYHU FXOWXUDO LGHDOLVW DQG PHQWDOLVW PRGHOV RI WKH FDXVHV RI UHSURGXFWLYH EHKDYLRU WHQG WR UDQJH IURP EHLQJ RYHUO\ FRPSOH[ WR HVSRXVLQJ WKH IXWLOLW\ RI PRGHOLQJ LWVHOI 7KXV WKH\ WHQG WR EH XQSURGXFWLYH IURP D SROLF\ VWDQGSRLQW ,I UHSURGXFWLYH EHKDYLRU ZDV QRW GHWHUPLQHG RU ODZIXO LQ DQ\ ZD\ WKHQ UHVHDUFK ZRXOG EH XQQHFHVVDU\ DQG SUHGLFWLRQ DQG FRQWURO ZRXOG EH LPSRVVLEOH %XW WKLV LV VLPSO\ QRW WKH FDVH 6WURQJ FRUUHODWLRQV H[LVW EHWZHHQ UHSURGXFWLYH EHKDYLRU DQG REMHFWLYH PDWHULDO FRQGLWLRQV LQ WKH DUFKHRORJLFDO UHFRUG LQ UHFRUGHG KLVWRU\ DQG LQ FRQWHPSRUDU\ FURVV FXOWXUDO FRPSDUDWLYH GDWD ,QGHHG WKLV PDNHV HWLF EHKDYLRULVW HSLVWHPRORJLHV DQG FXOWXUDO PDWHULDOLVW EHKDYLRULVW DQG HYROXWLRQDU\ WKHRUHWLFDO DSSURDFKHV D QHFHVVLW\ LI ZH DUH WR SUHGLFW DQG FRQWURO GHPRJUDSKLF SDWWHUQV LQ WKH IXWXUH

PAGE 33

&+$37(5 7+(25,(6 2) '(02*5$3+,& 75$16,7,21 (DUOLHU LQ WKLV FHQWXU\ WKH H[SRQHQWLDO JURZWK RI WKH HDUWKfV SRSXODWLRQ ZDV WKRXJKW WR EH SURRI RI WKH JURZLQJ KDSSLQHVV DQG SURJUHVV RI PDQNLQG ,Q DQ HPLQHQW $PHULFDQ GHPRJUDSKHU FRQFOXGHG KLV SUHVLGHQWLDO DGGUHVV WR WKH $PHULFDQ (FRQRPLF $VVRFLDWLRQ %RWK WKH LQFUHDVH RI KDSSLQHVV DQG LQFUHDVH LQ QXPEHUV VKRZ D EHWWHU DGDSWDWLRQ WR HQYLURQPHQW DQG ZKHUH QXPEHUV KDYH LQFUHDVHG ZH PD\ LQIHU WKH LQFUHDVH RI KXPDQ KDSSLQHVV ,I WKLV DUJXPHQW LV VRXQG WKH LQFUHDVH RI WKH HDUWKfV SRSXODWLRQ LQ OHVV WKDQ WZR FHQWXULHV E\ DERXW WZR WKLUGV RI D ELOOLRQ SHUVRQV LV WKH RQO\ TXDQWLWDWLYH WHVW DQG SURRI RI WKH SURJUHVV RI PDQNLQG FLWHG LQ 'HPHQ\ f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

PAGE 34

0RGHUQL]DWLRQ DQG :HVWHUQL]DWLRQ 7KHRULHV )URP WKH V GHPRJUDSKHUV ZKR EHOLHYHG LQ WKH ffPRGHUQL]DWLRQ WKHRU\f RI IHUWLOLW\ EHKDYLRU KHOG WKDW GHPRJUDSKLF WUDQVLWLRQ IURP KLJK WR ORZ ELUWK DQG GHDWK UDWHV ZDV FDXVHG E\ ZHVWHUQ LPSRUWVVXFK DV SURIHVVLRQDO KHDOWK FDUH XQLYHUVDO ZHVWHUQ HGXFDWLRQ PDVV PHGLD DQG FRPPXQLFDWLRQ V\VWHPV XUEDQL]DWLRQ FRQVXPHU JRRGV DQG VHUYLFHV DQG DQ LQFUHDVH LQ SHU FDSLWD LQFRPH 1RWHVWHLQ 'DYLV f 5HGXFWLRQV LQ PRUWDOLW\ ZHUH WKRXJKW WR OHDG WR IHUWLOLW\ GHFOLQH DIWHU D VKRUW ODJ 7KLV ODJ UHSUHVHQWV WKH WLPH LW WRRN SHRSOH WR EHJLQ WR WUXVW WKDW WKHLU FKLOGUHQ ZRXOG VXUYLYH WKXV UHOLHYLQJ WKHP RI WKH QHHG WR EHDU PRUH FKLOGUHQ WKDQ WKH\ DFWXDOO\ GHVLUHG ,Q WKH HDUO\ V )UHHPDQ H[SODLQHG WKH GRPLQDQW YLHZ RI IHUWLOLW\ WUDQVLWLRQ 0RVW VRFLRORJLVWV DQG GHPRJUDSKHUV ZRXOG SUREDEO\ DJUHH WKH EDVLF FDXVH RI WKH JHQHUDO >IHUWLOLW\@ GHFOLQH DUH Df D VKLIW LQ IXQFWLRQV IURP WKH IDPLO\ WR RWKHU VSHFLDOL]HG LQVWLWXWLRQV VR WKDW WKHUH ZDV D GHFUHDVH LQ WKH QXPEHU RI FKLOGUHQ UHTXLUHG WR DFKLHYH VRFLDOO\ YDOXHG JRDOV DQG Ef D VKDUS UHGXFWLRQ LQ PRUWDOLW\ ZKLFK UHGXFHG WKH QXPEHU RI ELUWKV QHFHVVDU\ WR KDYH DQ\ GHVLUHG QXPEHU RI FKLOGUHQ f 0RGHUQL]DWLRQ ZDV V\QRQ\PRXV ZLWK WKH ZHVWHUQ QRWLRQ RI SURJUHVV )URP D SROLF\ VWDQGSRLQW WKHUH ZHUH WZR FRQIOLFWLQJ YLHZV RQ IHUWLOLW\ WUDQVLWLRQ LQ WKH HDUO\ V f IHUWLOLW\ GHFOLQH LV WKH QDWXUDO UHVXOW RI PRGHUQL]DWLRQ LH XUEDQL]DWLRQ EHWWHU KHDOWK SUDFWLFHV DQG ORZHU PRUWDOLW\ XQLYHUVDO HGXFDWLRQ LQGXVWULDOL]DWLRQ DQG RFFXSDWLRQDO FKDQJH 7KHUHIRUH JRYHUQPHQW ELUWK FRQWURO SROLFLHV DUH XQQHFHVVDU\ DQG f EHFDXVH PRGHUQL]DWLRQ UHGXFHV PRUWDOLW\ PXFK IDVWHU WKDQ IHUWLOLW\ WKLV UDSLG WUDQVLWLRQDO SRSXODWLRQ JURZWK LPSHGHV SURJUHVV 7KHUHIRUH WKHUH LV D QHHG IRU GHOLEHUDWH SURJUDPV WR UHGXFH IHUWLOLW\ &RDOH DQG 7UHDGZD\ f 1HLWKHU JURXS GRXEWHG WKDW PRGHUQL]DWLRQ ZRXOG UHGXFH IHUWLOLW\ 7KH XQGHUO\LQJ GHEDWH ZDV DERXW WKH OHJLWLPDWH SURPRWLRQ RI FRQWUDFHSWLRQ DQG DERUWLRQ RQ D ZRUOGZLGH EDVLV

PAGE 35

%HIRUH VFKRODUV IRUPHG WKHLU YLHZV RI GHPRJUDSKLF WUDQVLWLRQ IURP LPSUHVVLRQLVWLF JHQHUDOL]DWLRQV RI IHUWLOLW\ GHFOLQHV DVVRFLDWHG ZLWK PRGHUQL]DWLRQ LQ (XURSH 1RUWK $PHULFD $XVWUDOLD 1HZ =HDODQG DQG -DSDQ +RZHYHU D YLWDO QHZ VRXUFH RI GDWD ZDV GLVFRYHUHG )RU RYHU RQHKXQGUHG \HDUV (XURSHDQ VWDWHV KDG FROOHFWHG VRFLRHFRQRPLF DQG GHPRJUDSKLF GDWD LQ PRUH WKDQ VL[ KXQGUHG SURYLQFHV 7KH (XURSHDQ )HUWLOLW\ 3URMHFW DOVR NQRZQ DV WKH 3ULQFHWRQ )HUWLOLW\ 3URMHFWf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f (VVHQWLDOO\ &RDOH DQG :DWNLQV FRQFOXGH WKDW WKH GRPLQDQW UHDVRQV IRU ORZHU PDULWDO IHUWLOLW\ GHPRJUDSKLF WUDQVLWLRQf LQ (XURSH DUH DV IROORZV f EHWWHU PHGLFDO NQRZOHGJH OHG WR UHGXFWLRQV LQ PRUWDOLW\ ZKLFK LQ WXUQ OHG WR IHUWLOLW\ GHFOLQH D VWDQGDUG PRGHUQL]DWLRQ SRVWXODWH RI GHPRJUDSKLF WUDQVLWLRQf DQG f GXULQJ D SHULRG RI JURZLQJ DJULFXOWXUDO DQG LQGXVWULDO SURGXFWLYLW\ PRUH SHRSOH ZDQWHG WR OLPLW ELUWKV DQG ZHUH VXFFHVVIXO LQ GRLQJ VR WKURXJK LQFUHDVHG FRQWUDFHSWLRQ DQG DERUWLRQ D VWDQGDUG ZHVWHUQL]DWLRQ SRVWXODWH RI GHPRJUDSKLF WUDQVLWLRQf

PAGE 36

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f 7KLV DFFXPXODWHG SX]]OHVROYLQJ KDV FUHDWHG D ODUJH ERG\ RI DQDO\VLV DQG WKHRU\ PRVW RI ZKLFK KDV EHHQ SURGXFHG E\ GHPRJUDSKHUV UHO\LQJ RQ DJJUHJDWH GDWD VRXUFHV VXFK DV WKRVH XVHG LQ WKH (XURSHDQ )HUWLOLW\ 3URMHFW 'HPRJUDSKLF SX]]OHV KDYH EHHQ ffVROYHGf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

PAGE 37

)RU LQVWDQFH LQ D UHFHQW SXEOLF SROLF\ SDSHU ZULWWHQ IRU WKH 8QLWHG 1DWLRQV )DURRJ DQG 'H*UDII f SURYLGH D ODXQGU\ OLVW RI IDFWRUV UHVSRQVLEOH IRU IHUWLOLW\ GHFOLQH LQ GHYHORSLQJ FRXQWULHV f WKH ULVH LQ XUEDQL]DWLRQ DQG WKH LQFUHDVLQJ FRVWV RI UDLVLQJ FKLOGUHQ SDUWLFXODUO\ HGXFDWLRQ FRVWV DVVRFLDWHG ZLWK DQ XUEDQ OLIH VW\OH f WKH GHFOLQLQJ SURGXFWLRQ YDOXH RI FKLOGUHQ ZLWK FRPSXOVRU\ HGXFDWLRQ FKLOG ODERU ODZV DQG LQFUHDVLQJ GHPDQG IRU VNLOOHG ODERU f LQFUHDVLQJ HGXFDWLRQ DQG DJH RI ZRPHQ DW PDUULDJH f FKDQJLQJ UROHV RI ZRPHQ LQ VRFLHW\ DQG JUHDWHU HFRQRPLF RSSRUWXQLWLHV IRU ZRPHQ RXWVLGH WKH KRPH f D VKLIW LQ UHOLJLRXV DQG FXOWXUDO YDOXHV f WKH VKLIW LQ GHSHQGHQFH IURP ORFDO ODUJHO\ VHOIFRQWDLQHG LQVWLWXWLRQV HJ WKH H[WHQGHG IDPLO\ V\VWHPf WR ODUJHU VRFLDO DQG HFRQRPLF XQLWV DOORZLQJ IRU JUHDWHU LQGLYLGXDO FRQWURO RI IHUWLOLW\ GHFLVLRQV HWF f ORZHU LQIDQW DQG FKLOG PRUWDOLW\ f WKH LQVWLWXWLRQDOL]DWLRQ RI ROGDJH VXSSRUW V\VWHPV DQG LQVXUDQFH VFKHPHV DQG f WKH JUHDWHU DYDLODELOLW\ RI IDPLO\ SODQQLQJ WHFKQRORJ\ LQIRUPDWLRQ DQG VHUYLFHV HWF 7KH QHFHVVDU\ DQG VXIILFLHQW FRQGLWLRQV OHDGLQJ WR IHUWLOLW\ GHFOLQH DUH QRW FOHDUO\ GHILQHG E\ )DURRJ DQG 'H*UDII LQ WKLV ODUJH DQG FRPSOH[ PRGHO $OVR QXPHURXV DWWHPSWV WR LVRODWH VRPH RI WKHVH YDULDEOHV DQG PHDVXUH WKHLU LPSDFW KDYH QRW VWRRG WKH WHVW RI FURVV FXOWXUDO FRPSDULVRQ 0RUHRYHU VRPH RI WKHVH IDFWRUV VXSSRVHG WR EH ffUHVSRQVLEOHf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

PAGE 38

7KH DYDLODELOLW\ RI FRQWUDFHSWLRQ LV DOVR LQ GRXEW DV D FDXVH RI IHUWLOLW\ GHFOLQH 2Q WKH UHODWLRQVKLS EHWZHHQ WKH DYDLODELOLW\ RI ELUWK FRQWURO DQG IHUWLOLW\ LQ WKH 8QLWHG 6WDWHV +DUULV f DVVHUWV 7KH LGHD WKDW WKH EDE\ ERRP FROODSVHG EHFDXVH RI WKH LQWURGXFWLRQ RI WKH fSLOOf FDQ EH HDVLO\ GLVPLVVHG VLQFH WKH EXVW EHJDQ LQ ZKLOH WKH SLOO ZDV QRW UHOHDVHG IRU SXEOLF XVH XQWLO -XQH $V ODWH DV ZKHQ IHUWLOLW\ ZDV IDOOLQJ DW XQSUHFHGHQWHG VSHHG RQO\ SHUFHQW RI PDUULHG ZRPHQ RI FKLOGEHDULQJ DJH ZHUH XVLQJ WKH fSLOOf ,Q GHYHORSLQJ FRXQWULHV D QXPEHU RI VWXGLHV KDYH VKRZQ WKDW FRQWUDFHSWLRQ LV XVHG WR UHSODFH WUDGLWLRQDO PHFKDQLVPV RI ELUWK VSDFLQJ DQG KDV OLWWOH RU QR DIIHFW RQ OLPLWLQJ IDPLO\ VL]H VHH*LRUJLV %RQJDDUWV :DUH f ,Q .HQ\D DQG /HVRWKR 0KOR\L f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f IDPLO\ SODQQLQJ FDQ KHOS UHGXFH PRUELGLW\ DQG PRUWDOLW\ OHYHOV DPRQJ PRWKHUV DQG WKHLU FKLOGUHQ ,Q VSLWH RI PXFK GDWD WR WKH FRQWUDU\ RQH RI WKH PRVW FRQVLVWHQWO\ FLWHG FDXVHV RI ORZHU IHUWLOLW\ LV LPSURYHPHQWV LQ KHDOWK FDUH ZKLFK UHVXOWV LQ GHFOLQLQJ LQIDQW PRUWDOLW\ 7KLV FRQFOXVLRQ LV YHU\ PXFK LQ GRXEW 7UDQVLWLRQ WR ORZ IHUWLOLW\ KDV EHHQ REVHUYHG WR SUHFHGH LQIDQW PRUWDOLW\ GHFOLQH LQ FHUWDLQ DUHDV RI )UDQFH DQG +XQJDU\ LQ WKH QLQHWHHQWK FHQWXU\ &DOGZHOO f 7KHUH DUH KLVWRULFDO H[DPSOHV RI IURQWLHU UHJLRQV LQ WKH 8QLWHG 6WDWHV &DQDGD &KLOH $XVWUDOLD 1HZ =HDODQG DQG WKH 5XVVLDQ (PSLUH ZKHUH IHUWLOLW\

PAGE 39

GHFOLQH SUHFHGHG PRUWDOLW\ GHFOLQH 'RQDOGVRQ f +LJK OHYHOV RI IHUWLOLW\ KDYH DOVR EHHQ VKRZQ WR FRLQFLGH ZLWK ORZ OHYHOV RI LQIDQW PRUWDOLW\ LQ GHYHORSLQJ FRXQWULHV &RDOH HW DO f .QRGHO DQG YDQ GH :DOOH f ZULWH f$W WKLV VWDJH QR GHILQLWLYH FRQFOXVLRQ FDQ EH UHDFKHG RQ WKH UROH RI GHFOLQLQJ PRUWDOLW\ LQ WKH IHUWLOLW\ WUDQVLWLRQ RI WKH :HVWf 9DQ GH :DOOH f KDV VKRZQ WKDW WKHUH LV QR V\VWHPDWLF DVVRFLDWLRQ EHWZHHQ IHUWLOLW\ DQG LQIDQW PRUWDOLW\ OHYHOV RI YDULRXV KLVWRULFDO (XURSHDQ SRSXODWLRQV EHIRUH GXULQJ DQG DIWHU GHPRJUDSKLF WUDQVLWLRQ 8VLQJ PRGHP DJJUHJDWH GDWD IURP $IULFD &DQWUHOOH HW DO f IDLOHG WR ILQG D UHODWLRQVKLS EHWZHHQ WRWDO IHUWLOLW\ UDWHV DQG LQIDQW PRUWDOLW\ $QDO\]LQJ D VDPSOH RI FRQWHPSRUDU\ GHYHORSLQJ FRXQWULHV +HVV f FRQFOXGHV f7KHUH LV OLWWOH HPSLULFDO VXSSRUW IRU GHFOLQLQJ LQIDQW PRUWDOLW\fV FRQWULEXWLQJ GLUHFWO\ WR UHGXFLQJ IHUWLOLW\f ,QGHHG KLJK LQIDQW PRUWDOLW\ DQG GHPDQG IRU IDPLO\ SODQQLQJ VHUYLFHV KDYH EHHQ VKRZQ WR FRH[LVW 6FKXOHU DQG *ROGVWHLQ f 6FULPVKDZ f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

PAGE 40

:HDOWK )ORZV 7KHRU\ ,Q WKH HDUO\ V &DOGZHOO f LQWURGXFHG D PRUH SDUVLPRQLRXV ZHVWHUQL]DWLRQ WKHRU\ RI WKH FDXVHV RI GHPRJUDSKLF WUDQVLWLRQ ,Q KLV ffZHDOWK IORZV WKHRU\f &DOGZHOO SRVLWV ,Q SUHWUDQVLWLRQ VRFLHWLHV LH EHIRUH WKH RQVHW RI IHUWLOLW\ GHFOLQHf WKH QHW YDOXH RI LQWHUJHQHUDWLRQDO ZHDOWK IORZV ODERU DQG VHUYLFHV JRRGV DQG PRQH\ DQG SUHVHQW DQG IXWXUH JXDUDQWHHV LQFOXGLQJ ROG DJH VXSSRUWf LV XSZDUG ZKHUHDV LQ SRVWWUDQVLWLRQDO VRFLHWLHV LW LV GRZQZDUG f &DOGZHOO DUJXHV WKDW FXOWXUDO HPLF PHQWDOLVWf IDFWRUV FUHDWH PRUDO FKDQJHV LQ LQWHUJHQHUDWLRQDO DWWLWXGHV WKDW OHDG WR D UHYHUVDO RI HFRQRPLF IDPLO\ REOLJDWLRQV f +H FODLPV WKDW ZHVWHUQ HGXFDWLRQ FUHDWHV QHZ DWWLWXGHV WRZDUG WKH IDPLO\ 7KLV LQ WXUQ OHDGV WR D UHYHUVDO RI ZHDOWK IORZV ZLWKLQ WKH IDPLO\ DQG VXEVHTXHQW DGDSWLYH FKDQJHV LQ IHUWLOLW\ EHKDYLRU f &DOGZHOO DUJXHV WKDW IHUWLOLW\ WUDQVLWLRQ LV D IXQFWLRQ RI WKH GLIIXVLRQ DQG DVVLPLODWLRQ RI ZHVWHUQ DWWLWXGHV WDVWHV SUHIHUHQFHV DQG YDOXHV WKURXJK VFKRROLQJ DQG WKH PDVV PHGLD f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

PAGE 41

UHVSRQVLELOLW\ LQ WKH SDVWf (DFK RI WKHVH IDFWRUV PDNHV FKLOGEHDULQJ D PRUH H[SHQVLYH DQG HFRQRPLFDOO\ VSHFXODWLYH SURSRVLWLRQ 8QIRUWXQDWHO\ WKH &DOGZHOOV DUH QRW DOZD\V FRQVLVWHQW RU FOHDU DERXW FDXVDWLRQ )RU LQVWDQFH &DOGZHOO DQG &DOGZHOO Df FRQWHQG WKDW WKLV SURFHVV RI ZHVWHUQL]DWLRQ LV GHOD\HG E\ GHHSO\ URRWHG $IULFDQ UHOLJLRXV YDOXHV ZKLFK VXSSRUW WKH SRZHU RI WKH HOGHUV DQG DQFHVWRUV 7KH\ DVVHUW fD GLVFXVVLRQ RI SURVDLF PDWHULDO FRQVLGHUDWLRQV XQGHUVWDWHV WKH HVVHQWLDOO\ UHOLJLRXV XQGHUSLQQLQJ RI KLJK IHUWLOLW\f LELGf ,Q WKH VDPH \HDU WKH &DOGZHOOV DOVR SUHVHQWHG DQ DUWLFOH ZKLFK VWDWHV ff(GXFDWLRQDO RSSRUWXQLWLHV DQG VXEVHTXHQW RFFXSDWLRQDO RSSRUWXQLWLHV DUH E\ IDU WKH PRVW LPSRUWDQW IDFWRUV LQ OLPLWLQJ IDPLO\ VL]Hf &DOGZHOO DQG &DOGZHOO E f ,W LV GLIILFXOW WR UHVROYH WKH IUHTXHQW FRQWUDGLFWLRQV LQ WKH &DOGZHOOVf ZULWLQJV ,V LW ffUHOLJLRXV XQGHUSLQQLQJVf ffHGXFDWLRQDO DQG RFFXSDWLRQDO RSSRUWXQLWLHVf RU ERWK IDFWRUV ZKLFK GHWHUPLQH IHUWLOLW\ EHKDYLRU" 7KH LQWHQGHG FDXVDO VHTXHQFH WKH &DOGZHOOV VXJJHVW LV f HGXFDWHG FKLOGUHQ EHFRPH f VHFXODUL]HG DGXOWV DQG WKHUHIRUH f KDYH ZHDNHU WLHV WR WUDGLWLRQDO SURQDWDOLVW EHOLHIV 7KLV LV XVXDOO\ WUXH %XW LV QRW WKH H[SHFWDWLRQ RI PRUH ROG DJH VXSSRUW RQH LQFHQWLYH IRU SDUHQWV WR HGXFDWH WKHLU FKLOGUHQ" 7KHUHIRUH LV LW QRW EHFDXVH RIffSURVDLF PDWHULDO FRQVLGHUDWLRQVf WKDW SDUHQWV LQYHVW PRUH LQ WKHLU FKLOGUHQfV HGXFDWLRQ WKHUHE\ HQFRXUDJLQJ WKHLU FKLOGUHQfV EUHDN ZLWK WUDGLWLRQDO UHOLJLRXV SUHVVXUHV IRU KLJK IHUWLOLW\" 3DUHQWV PD\ LQ IDFW EH FRQVXPHUV DQG LQYHVWRUV ZLWKRXW EHLQJ FRQVFLRXV RI KRZ WKHLU SURGXFWLYH DQG UHSURGXFWLYH EHKDYLRUV UHODWH WR FRQVXPSWLRQ DQG LQYHVWPHQW %DVHG RQ WKLV XQGHUVWDQGLQJ +DQGZHUNHU KDV SURSRVHG WKDW SHRSOH JHW DQ HGXFDWLRQ KDYH FKLOGUHQ DQG H[SORLW HDFK RWKHU WR JDLQ DFFHVV WR UHVRXUFHV

PAGE 42

5HVRXUFH $FFHVV +\SRWKHVLV 7KH ffUHVRXUFH DFFHVV K\SRWKHVLVf LV ORJLFDOO\ FRQVLVWHQW SDUVLPRQLRXV DQG GRHV QRW UHO\ RQ PHQWDOLVW RU ZHVWHUQ LGHRORJLFDO DVVXPSWLRQV 7KH UHVRXUFH DFFHVV K\SRWKHVLV DV IRUPXODWHG E\ +DQGZHUNHU D E f LV IRXQGHG RQ PDWHULDOLVW FDXVDO YDULDEOHV DV WKH\ UHODWH WR ZRPHQfV SRZHUfVSHFLILFDOO\ WKH RSSRUWXQLW\ WR SXUVXH JRDOV LQGHSHQGHQWO\ RI WKHLU FKLOGEHDULQJ FDSDFLW\f +DQGZHUNHU f +DQGZHUNHUfV H[SOLFLWO\ VWUXFWXUDO SROLWLFDOHFRQRPLF DQG DQWLSDWULDUFKDO RULHQWDWLRQ LV D IHPLQLVW DSSURDFK WR GHPRJUDSKLF WUDQVLWLRQ WKHRU\ +DQGZHUNHU ZULWHV 7KH UHVRXUFH DFFHVV K\SRWKHVLV WKXV FRQFHLYHV IHUWLOLW\ WUDQVLWLRQ DQG WKH UHYROXWLRQ LQ VRFLDO UHODWLRQVKLSV WKDW SUHFLSLWDWH LW DV RQH HIIHFW RI D IXQGDPHQWDO FKDQJH LQ WKH FRVWV WKDW DWWDFK WR UHVRXUFHV DQG WR WKH PHDQV ZRPHQ FDQ XVH WR JDLQ DFFHVV WR UHVRXUFHV DQG WKXV DV RQH HIIHFW RI D IXQGDPHQWDO FKDQJH LQ ZRPHQfV SRZHU f +DQGZHUNHUfV WKHRU\ LV URRWHG LQ WKH IROORZLQJ IRXU UHODWLRQVKLSV f )HUWLOLW\ WUDQVLWLRQ RFFXUV ZKHQ ZRPHQ DUH IUHHG IURP HFRQRPLF GHSHQGHQF\ RQ WKHLU FKLOGUHQ f ZRPHQ PD\ DFKLHYH WKLV IUHHGRP E\ GLUHFW JRYHUQPHQW PDQLSXODWLRQ RI UHVRXUFH DFFHVV FRVWV DV UHFHQWO\ LQ &KLQD DQG 6LQJDSRUH f ZRPHQ PD\ DOVR DFKLHYH WKLV IUHHGRP RQFH ZHOOSD\LQJ HPSOR\PHQW RSSRUWXQLWLHV RSHQ XS WR WKHP DV ZHOO DV WR PHQ DQG f WKHVH HPSOR\PHQW RSSRUWXQLWLHV RSHQ WR ZRPHQ ZKHQ HFRQRPLF SRZHU LV GHFHQWUDOL]HG DQG FUHDWHV FRPSHWLWLRQ WKDW VHOHFWV HPSOR\HHV PRUH RQ WKH EDVLV RI SHUVRQDO VNLOOV DQG FRPSHWHQFH WKDQ RQ WKH EDVLV RI SHUVRQDO UHODWLRQVKLSV ZLWK HPSOR\HUV f +DQGZHUNHU DJUHHV ZLWK WKH PDWHULDOLVW DVSHFWV RI &DOGZHOOVf ZHDOWK IORZV WKHRU\ LH WKH LPSRUWDQFH RI WKH GLUHFWLRQ RI LQWHUJHQHUDWLRQDO LQFRPH IORZV +DQGZHUNHU Ef DVVHUWV ff7KH DGYHUVH HIIHFW RI WKLV UHYHUVDO RI WKH LQWHUJHQHUDWLRQDO ZHDOWK IORZ RQ SDUHQWDO PDWHULDO ZHOOEHLQJ SURYLGHV WKH LQFHQWLYH IRU WKH VKDUS OLPLWDWLRQ RI IDPLO\ VL]H WKDW KDV EHHQ WKH VLQJXODU IHDWXUH RI WKH PRGHP GHPRJUDSKLF WUDQVLWLRQf +RZHYHU FRQWUDU\ WR &DOGZHOO DQG &DOGZHOOfV f FXOWXUDO LGHDOLVW DVVHUWLRQ WKDW WKH SULPDU\ FDXVHV RI KLJK IHUWLOLW\ LQ VXE6DKDUDQ $IULFD DUH NLQVKLS SDWWHUQV DQG WKH WUDGLWLRQDO VRFLRUHOLJLRXV HPSKDVLV RQ UHSODFLQJ WKH OLQHDJH +DQGZHUNHU DUJXHV WKDW KLJK

PAGE 43

IHUWLOLW\ LV D UHVSRQVH WR OLPLWHG DFFHVV WR VWUDWHJLF UHVRXUFHV 2Q D VLPLODU PDWHULDO EDVLV FRQWUDU\ WR &DOGZHOOfV LGHDOLVW EHOLHI LQ WKH HGXFDWLRQ PRGHO +DQGZHUNHU DVVHUWV WKDW HGXFDWLRQ DORQH ZLOO QRW IXHO IHUWLOLW\ WUDQVLWLRQ WUDQVLWLRQ RQO\ SURFHHGV ffZKHQ FKDQJHV LQ RSSRUWXQLW\ VWUXFWXUH DQG WKH ODERU PDUNHW LQFUHDVLQJO\ UHZDUG DFTXLUHG VNLOOV DQG SHUVSHFWLYHVf +DQGZHUNHU Df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f WKH\ FDQ FUHDWH +HQFH IHUWLOLW\ WUDQVLWLRQ VKRXOG QRW IROORZ IURP WKH RQVHW RI PDVV HGXFDWLRQ DV &DOGZHOO FODLPV EXW IURP WKH FRQMXQFWLRQ RI PDVV HGXFDWLRQ ZLWK FKDQJHV LQ RSSRUWXQLW\ VWUXFWXUH WKDW LQFUHDVLQJO\ UHZDUG HGXFDWLRQDOO\DFTXLUHG VNLOOV DQG SHUVSHFWLYHV E f $FFRUGLQJ WR +DQGZHUNHU WKLV GHSHQGV RQ IXQGDPHQWDO VWUXFWXUDO HFRQRPLF FKDQJH ZKLFK FUHDWHV PRUH QRQDJULFXOWXUDO HFRQRPLF RSSRUWXQLWLHV HVSHFLDOO\ IRU ZRPHQf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

PAGE 44

FXOWXUDOPDWHULDO FRQGLWLRQV DFKLHYHG VWDWXV LQFUHDVLQJO\ UHSODFHV DVFULSWLYH VWDWXV DV HGXFDWLRQ DQG WHFKQLFDO VNLOO DUH UHZDUGHG .LQVKLS DQG RWKHU SHUVRQDO UHODWLRQVKLSV ZKLFK WUDGLWLRQDOO\ ZHUH XVHG WR VHFXUH DFFHVV WR UHVRXUFHV DUH LQFUHDVLQJO\ UHSODFHG E\ DOWHUQDWLYH PHDQV ,Q %DUEDGRV +DQGZHUNHU SRLQWV RXW 3ULRU WR WKH %DUEDGLDQ HFRQRP\ ZDV FKDUDFWHUL]HG E\ DQ XQFRPSHWLWLYH DQG ROLJRSROLVWLF UHVRXUFH VWUXFWXUH WKH SULPDU\ HIIHFWV RI ZKLFK ZDV WR DOORFDWH RSSRUWXQLWLHV ODUJHO\ RQ WKH EDVLV RI SHUVRQDO UHODWLRQVKLSV DQG WKHVH RQ WKH EDVLV RI VH[ FODVV DQG FRORU %HWZHHQ DQG WKH %DUEDGLDQ HFRQRP\ XQGHUZHQW D PDMRU VWUXFWXUDO GLVFRQWLQXLW\ PDUNHG E\ WKH GHFOLQH LQ WKH LPSRUWDQFH RI VXJDU DQG WKH DVFHQGDQF\ RI LQGXVWULDO PDQXIDFWXULQJ DQG WRXULVP 7KH HFRQRPLF ZHOOEHLQJ RI WKHVH VHFWRUV ZDV VXEMHFW WR VHOHFWLRQ RQ WKH EDVLV RI TXDOLW\ DQG FRVW IDFWRUV VHW LQ LQWHUQDWLRQDO PDUNHWV WKH\ RSHQHG XS QHZ UHVRXUFH DFFHVV FKDQQHOV IRU ERWK PHQ DQG ZRPHQ DQG E\ WKH V %DUEDGLDQ ZRPHQ ZHUH DEOH WR FKDUW WKHLU RZQ FRXUVH LQ OLIH LQ ZD\V WKDW KDG EHHQ GHQLHG WR WKHLU PRWKHUV DQG JUDQGPRWKHUV f 7KH LQWURGXFWLRQ RI ZHVWHUQ VW\OH HGXFDWLRQ PRGHP KHDOWK FDUH DQG IDPLO\ SODQQLQJ SURJUDPV ZHUH QRW UHVSRQVLEOH IRU WKLV QHZ IUHHGRP ZRPHQfV LQGHSHQGHQFH FDPH DIWHU VWUXFWXUDO HFRQRPLF GHYHORSPHQWV RSHQHG QHZ UHVRXUFH FKDQQHOV ZKLFK RIIHUHG ZRPHQ QHZ VRFLRHFRQRPLF UROHV 1HZ IUHHGRPV ZHUH QRW WKH UHVXOW RI DQ DJJUHVVLYH HTXDOLW\ PRYHPHQW DPRQJ ZRPHQ ZKR VHOIFRQVFLRXVO\ VWUXJJOHG IRU WKHLU ULJKWV %DUEDGLDQ ZRPHQ GLG QRW SODQ WKH HFRQRPLF DQG VRFLDO UHYROXWLRQ LPSHUVRQDO IDFWRUV VHOHFWHG IRU WKHVH FKDQJHV 6HOHFWLRQ ZDV EDVHG RQ TXDOLW\ DQG FRVW IDFWRUV VHW LQ LQWHUQDWLRQDO PDUNHWV %DUEDGRVf FORVH JHRJUDSKLFDO SUR[LPLW\ WR WKH 8QLWHG 6WDWHV DOVR FRQWULEXWHG DV ZH ZLOO VHH EHORZ +DQGZHUNHU LV FULWLFDO RI GHPRJUDSKLF WUDQVLWLRQ WKHRULHV ZKLFK SRVLW LQWHUGHSHQGHQW SURFHVVHV RIffPRGHUQL]DWLRQf %XODWDR DQG /HH (DVWHUOLQ DQG &ULPPLQV f DQG WKH ffZHVWHUQL]DWLRQf RI IDPLO\ YDOXHV E\ PDVV HGXFDWLRQ &DOGZHOO f +DQGZHUNHU FODLPV WKDW PRVW LQGLFHV RI GHYHORSPHQW DQG PRGHUQL]DWLRQ HJ LPSURYHPHQWV LQ SXEOLF KHDOWK FDUH WKH DYDLODELOLW\ RI QHZ JRRGV DQG VHUYLFHV DQG JURZWK LQ SHU FDSLWD LQFRPH

PAGE 45

DUH IDFWRUV ZKRVH SXWDWLYH OLQNDJHV ZLWK IHUWLOLW\ DUH HLWKHU VSXULRXV RU LQFRQVLVWHQW ,QGHHG LQ VXPPLQJ XS KLV UHVHDUFK RI GHPRJUDSKLF FKDQJH LQ %DUEDGRVZKHUH WRWDO IHUWLOLW\ IHOO IURP DURXQG LQ WKH PLGV WRD ORZ RI DERXW LQ +DQGZHUNHU f+DQGZHUNHU ZULWHV ff7KH %DUEDGLDQ IHUWLOLW\ WUDQVLWLRQ ZDV FRPSOHWHG LQ RQO\ \HDUV DQG LW RFFXUUHG GHPRQVWUDEO\ LQGHSHQGHQWO\ RI FKDQJHV LQ WKH OHYHO RI ZRPHQfV HGXFDWLRQ ULVLQJ VWDQGDUGV RI OLYLQJ ZRPHQfV ZRUNHU SDUWLFLSDWLRQ UDWHV XUEDQL]DWLRQ ZHVWHUQL]DWLRQ RU WKH H[LVWHQFH RI WKH %DUEDGLDQ )DPLO\ 3ODQQLQJ $VVRFLDWLRQf f %H\RQG KLV FULWLFLVPV RI FXOWXUDO LGHDOLVW H[SODQDWLRQV RI GHPRJUDSKLF WUDQVLWLRQ +DQGZHUNHU TXHVWLRQV WKH HVVHQWLDO DVVXPSWLRQV RI FRQWHPSRUDU\ VRFLDO WKRXJKWZKLFK KH EHOLHYHV ZHUH SURIRXQGO\ LQIOXHQFHG E\ $GDP 6PLWK &ULWLFL]LQJ 6PLWKfV LPDJH RI SHRSOH DQG VRFLHW\ +DQGZHUNHU ZULWHV 7KLV LPDJH RI SHRSOH ZKR FRPSHWLWLYHO\ SXUVXH WKHLU RZQ LQWHUHVWV DQG LPSURYH WKH ZHOO EHLQJ RI D VRFLHW\ LQ WKH SURFHVV KDV JLYHQ ULVH WR WKH SUHVXPSWLRQ WKDW KXPDQ KLVWRU\ LV GHFLGHG E\ SXUSRVHIXO UDWLRQDO WKRXJKW DQG DFWLRQ 7KLV YLHZ KDV EHFRPH DQ HVVHQWLDO DVVXPSWLRQ RI FRQWHPSRUDU\ VRFLDO VFLHQFH DQG WKH PRGHUQL]DWLRQ K\SRWKHVLV LW XVHV WR LQWHUSUHW VRFLDO DQG GHPRJUDSKLF FKDQJH LQ WKH FRQWHPSRUDU\ ZRUOG f +DQGZHUNHU KDV WZR PDMRU FRPSODLQWV ZLWK 6PLWKfV WKHVLV )LUVW 6PLWKfV GHVFULSWLRQ RI VRFLDO SURFHVVHV DVVXPHV D VWDWH RI HTXLOLEULXP DQG FDQQRW EH XVHG WR GHVFULEH FKDQJHV LQ V\VWHP VWDWHV WKH FLUFXPVWDQFHV RI FKDQJH RU WKH GLUHFWLRQ FKDQJH PD\ WDNH VHFRQG LW LV XQUHDOLVWLF DQG XWRSLDQ WR FRQFHLYH RI KXPDQ KLVWRU\ DV WKH SURGXFW RI IRUHVLJKW LQWHQWLRQV DQG UDWLRQDOLW\ ZKHQ LW LV FOHDU WKDW SHRSOH PXGGOH DIIDLUV PLVWDNH EHVW LQWHUHVWV DQG ZKHQ KXPDQ UDWLRQDOLW\ FDQQRW HIIHFWLYHO\ VRUW WKURXJK SUREOHPV RI HYHQ PRGHUDWH FRPSOH[LW\ HJ +RJDUWK DQG 5HGHU f $OVR WKH FRPSOH[LWLHV RI SRZHU UHODWLRQVKLSV PDNHV LW LPSRVVLEOH WR SODQ DQG GLUHFW WKH FRXUVH RI KXPDQ HYHQWV HJ 6NRFSRO f +DQGZHUNHU FLWHV WKH LQIOXHQFHV RI &KDUOHV 'DUZLQfV HYROXWLRQLVP DQG .DUO 0DU[fV PDWHULDOLVP DV PRVW LPSRUWDQW WR KLV GHYHORSPHQW RI UHVRXUFH DFFHVV WKHRU\ $FFRUGLQJ WR

PAGE 46

'DUZLQ f WKH GLUHFWLRQ RI FKDQJH LV LQGHSHQGHQW RI IRUHVLJKW LQWHQWLRQV UDWLRQDOLW\ DQG SXUSRVH WKH IRUFHV RI QDWXUH DUH LPSHUVRQDO 7KH GULYLQJ IRUFH RI ELRORJLFDO HYROXWLRQ LV IRXQG LQ WKH LQWHUDFWLRQ EHWZHHQ PXWDWLRQ DQG FKDQJLQJ QDWXUDO FRQGLWLRQV 6LPLODUO\ WKH GULYLQJ IRUFH LQ VRFLDO HYROXWLRQ LV IRXQG LQ WKH LQWHUDFWLRQ EHWZHHQ KXPDQ LQQRYDWLRQ VHH %DUQHWW f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f +DQGZHUNHU FRQWHQGV WKDW 0DU[fV FHQWUDO FRQFOXVLRQV DERXW WKH FDXVHV RI KLVWRULFDO FKDQJHV LQ SRZHU DQG UHVRXUFH DFFHVV DUH FRUUHFWWKDW EHOLHIV EHKDYLRUV DQG VRFLDO UHODWLRQVKLSV DUH GHWHUPLQHG E\ KRZ SHRSOH FDQ EHVW DFFHVV UHVRXUFHV +DQGZHUNHU QRWHV 7HFKQLFDO LQQRYDWLRQV LQ HQHUJ\ XVH WUDQVSRUWDWLRQ LQIRUPDWLRQ SURFHVVLQJ DQG GLVVHPLQDWLRQ DJULFXOWXUH FRQVWUXFWLRQ DQG PDQXIDFWXULQJ VHH %UDXGHO %DUQHWW f UDGLFDOO\ FKDQJHG WKH FRVW VWUXFWXUH RI UHVRXUFH DFFHVV DQG WKXV FRQVWLWXWH WKH FRUH RI WKH FRQWHPSRUDU\ ZRUOG VRFLDO UHYROXWLRQ f +DQGZHUNHU f REVHUYHV ff7KH GLVWLQFWLYH TXDOLWLHV RI WKH FRQWHPSRUDU\ ZRUOG VRFLDO UHYROXWLRQ UHIOHFWV IXQGDPHQWDO FKDQJH LQ WKH FRVWV WKDW DWWDFK WR UHVRXUFHV DQG WR PHDQV ZRPHQ FDQ XVH WR JDLQ DFFHVV WR UHVRXUFHVf 7KXV DFFRUGLQJ WR +DQGZHUNHU PRGHP GHPRJUDSKLF WUDQVLWLRQ LV DVVRFLDWHG ZLWK D UHYROXWLRQ LQ VRFLDO UHODWLRQVKLSV VSHFLILFDOO\ FKDQJHV LQ ZRPHQfV SRZHU UHODWLRQVKLSV ZLWK PHQ WKHLU FKLOGUHQ DQG WKHLU SDUHQWV

PAGE 47

(YROXWLRQDU\ 'HPRJUDSKLF 7UDQVLWLRQ 7KHRU\ $V WKH WLWOH VXJJHVWV HYROXWLRQDU\ GHPRJUDSKLF WUDQVLWLRQ WKHRU\ KDV PXFK LQ FRPPRQ ZLWK +DQGZHUNHUf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fV UDGLFDO EHKDYLRULVP DQG +DUULVf FXOWXUDO PDWHULDOLVP LW LV DVVHUWHG WKDW IHUWLOLW\ EHKDYLRUV DQG RXWFRPHV DUH VHOHFWHG E\ WKHLU FRQVHTXHQFHV LQ PDWHULDO UHDOLW\ :KDW LV PHDQW E\ PDWHULDO FRQGLWLRQV DQG FDXVHV LQ WKHVH VWDWHPHQWV" 0DU[fV IRUP RI PDWHULDOLVP KDV DOUHDG\ EHHQ UHIHUUHG WR DV RQH RI WKH WKHRUHWLFDO IRXQGDWLRQV RI +DQGZHUNHUfV UHVRXUFH DFFHVV K\SRWKHVLV +RZHYHU 0DU[ ZDV D SROLWLFDOHFRQRPLVW DQG KLV QRWLRQ RI PDWHULDOLVP ZDV DGRSWHG WR H[SODLQ WKH FDXVHV RI SROLWLFDO DQG HFRQRPLF FKDQJH 0DU[ EODWHQWO\ LJQRUHG 0DOWKXVLDQ GHPRJUDSKLF SURFHVVHV 0DOWKXV f KH DOVR XQGHUHVWLPDWHG WKH SRWHQWLDO RI WHFKQRORJ\ VHH :KLWH f WR UDLVH WKH VWDQGDUGV RI PDWHULDO OLYLQJ IRU WKH PDVVHV WKHUHE\ WUDQVIRUPLQJ WKH GHVSHUDWH SUROHWDULDW LQWR D VDWLVILHG PLGGOHFODVV (QYLURQPHQWDO GHWHUPLQDQWV RI SROLWLFDO FXOWXUH FKDQJH VHH :LWWIRJHO f ZHUH DOVR LQFRQYHQLHQW WR 0DU[fV SROLWLFDO WKHRULHV )LQDOO\ 0DU[ ZDV D /DPDUNLDQ SULQFLSOHV RI 'DUZLQLDQ VHOHFWLRQ 'DUZLQ f ZHUH LQFRPSDWLEOH ZLWK KLV QRWLRQ RI

PAGE 48

KLVWRULFDO GHWHUPLQLVP 7KXV 0DU[fV XQGHUVWDQGLQJ RI WKH PDWHULDO FDXVHV RI FKDQJH ZHUH QDUURZ DQG OLPLWHG 2Q WKH RWKHU KDQG +DUULV LV D FXOWXUDO DQWKURSRORJLVW DQG KLV QRWLRQ RI PDWHULDOLVP LV JXLGHG E\ KLV DWWHPSW WR H[SODLQ D PXFK EURDGHU SKHQRPHQRQWKH FDXVHV RI FXOWXUDO HYROXWLRQDU\ FKDQJH 7KXV LQ FXOWXUDO PDWHULDOLVP +DUULV LQFOXGHV D EURDGHU VHW RI PDWHULDO FDXVDO IDFWRUV RI FKDQJH ,Q DGGLWLRQ WR 0DU[fV HFRQRPLF IDFWRUV RI PDWHULDO FKDQJH WKH GHVFULSWLYH FRPSRQHQWV RI +DUULVf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f IRUPXODWLRQ RI FXOWXUDO PDWHULDOLVP LV 0DU[fV QRZ IDPRXV DVVHUWLRQ 7KH PRGH RI SURGXFWLRQ LQ PDWHULDO OLIH GHWHUPLQHV WKH JHQHUDO FKDUDFWHU RI WKH VRFLDO SROLWLFDO DQG VSLULWXDO SURFHVVHV RI OLIH ,W LV QRW WKH FRQVFLRXVQHVV RI PHQ WKDW GHWHUPLQHV WKHLU H[LVWHQFH EXW RQ WKH FRQWUDU\ WKHLU VRFLDO H[LVWHQFH GHWHUPLQHV WKHLU FRQVFLRXVQHVV > @f

PAGE 49

&XOWXUDO PDWHULDOLVP LV LQGHEWHG WR 0DU[ RQ WKLV SRLQW +DUULV ZULWHV 7KH FXOWXUDO PDWHULDOLVW YHUVLRQ RI 0DU[fV JUHDW SULQFLSOH LV DV IROORZV 7KH HWLF EHKDYLRUDO PRGHV RI SURGXFWLRQ DQG UHSURGXFWLRQ SUREDELOLVWLFDOO\ GHWHUPLQH WKH HWLF EHKDYLRUDO GRPHVWLF DQG SROLWLFDO HFRQRP\ ZKLFK LQ WXUQ SUREDELOLVWLFDOO\ GHWHUPLQH WKH EHKDYLRUDO DQG PHQWDO HPLF VXSHUVWUXFWXUH f 7KH IXQGDPHQWDO WKHRUHWLFDO SULQFLSOH RI FXOWXUDO PDWHULDOLVP LV WKLV SULQFLSOH RI LQIUDVWUXFWXUDO GHWHUPLQLVP ,W LV DUJXHG WKDW PRGHV RI SURGXFWLRQ DQG UHSURGXFWLRQf§ LQIUDVWUXFWXUHVKRXOG EH JLYHQ KLJKHVW SULRULW\ LQ HIIRUWV WR IRUPXODWH DQG WHVW WKHRULHV RI VRFLRFXOWXUDO FDXVDWLRQ 'HPRJUDSKLF WHFKQRORJLFDO HFRQRPLF DQG HQYLURQPHQWDO FKDQJH LV LQIUDVWUXFWXUDO FKDQJH FKDQJHV LQ WKHVH PDWHULDO FRQGLWLRQV UHVXOW LQ VWUXFWXUDO DQG VXSHUVWUXFWXUDO FKDQJH 7KH HWLF EHKDYLRUDO PRGH RI UHSURGXFWLRQ LV GHILQHG E\ +DUULV f DV ff7KH WHFKQRORJ\ DQG WKH SUDFWLFHV HPSOR\HG IRU H[SDQGLQJ OLPLWLQJ DQG PDLQWDLQLQJ SRSXODWLRQ VL]Hf 7KH HWLF EHKDYLRUDO PRGH RI SURGXFWLRQ LV GHILQHG E\ +DUULV LELGf DV f7KH WHFKQRORJ\ DQG WKH SUDFWLFHV HPSOR\HG IRU H[SDQGLQJ RU OLPLWLQJ EDVLF VXEVLVWHQFH SURGXFWLRQ HVSHFLDOO\ WKH SURGXFWLRQ RI IRRG DQG RWKHU IRUPV RI HQHUJ\ JLYHQ WKH UHVWULFWLRQV DQG RSSRUWXQLWLHV SURYLGHG E\ D VSHFLILF WHFKQRORJ\ LQWHUDFWLQJ ZLWK D VSHFLILF KDELWDWf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

PAGE 50

GHILQLWLRQV WKH VWUXFWXUDO GLVFRQWLQXLWLHVf +DQGZHUNHU UHIHUV WR LQ KLV %DUEDGLDQ H[DPSOH DUH FDXVHG E\ LQIUDVWUXFWXUDO HFRQRPLF FKDQJHV HJ D ZRUOG PDUNHW VHOHFWLQJ IRU PDQXIDFWXUHG SURGXFWV RYHU UDZ VXJDU 8QIRUWXQDWHO\ +DQGZHUNHU GRHV QRW XVH WKH WKHRUHWLFDO IUDPHZRUN RI FXOWXUDO PDWHULDOLVP DQG GRHV QRW HPSOR\ LQIUDVWUXFWXUH DV DQ H[SODQDWRU\ FDWHJRU\ ,Q HYROXWLRQDU\ GHPRJUDSKLF WUDQVLWLRQ WKHRU\ LQIUDVWUXFWXUDO FKDQJH LV FULWLFDO WR XQGHUVWDQGLQJ WKH G\QDPLF FDXVHV RI GHPRJUDSKLF FKDQJH 7KH VWUDWHJLF SULRULW\ RI LQIUDVWXFWXUHPRGHV RI SURGXFWLRQ DQG UHSURGXFWLRQLV EDVHG RQ WKH IDFW WKDW KXPDQ EHLQJV FDQQRW FKDQJH HFRORJLFDO FKHPLFDO DQG SK\VLFDO ODZV EXW FDQ RQO\ VWULNH D EDODQFH EHWZHHQ SURGXFWLRQ UHSURGXFWLRQ DQG FRQVXPSWLRQ RI HQHUJ\ 7KHVH UHODWLRQVKLSV DUH XQLYHUVDO PDWHULDO DEVROXWHV WKDW DIIHFW HDFK LQGLYLGXDO FRQVFLRXVO\ RU XQFRQVFLRXVO\ DQG DOO FXOWXUHV SDVW SUHVHQW DQG IXWXUH /HWW f DVVHUWV &XOWXUDO PDWHULDOLVWV KDYH GHPRQVWUDWHG LQFRQWURYHUWLEO\ WKDW VRFLRFXOWXUDO V\VWHPV DGMXVW WKHPVHOYHV LQ SDWWHUQHG DQG SUHGLFWDEOH ZD\V WR HFRORJLFDO DQG GHPRJUDSKLF FRQVWUDLQWVf $ IXQGDPHQWDO WHQHW RI FXOWXUDO PDWHULDOLVP LV WKDW FXOWXUHV EHKDYH FUHDWLYHO\ DQG UDWLRQDOO\ EXW DOZD\V LQ UHVSRQVH WR PDWHULDO RSSRUWXQLWLHV DQG FRQVWUDLQWV 7KXV FXOWXUDO HYROXWLRQ LV SUREDELOLVWLFDOO\ GHWHUPLQHG E\ PDWHULDO FRQGLWLRQV )RU H[DPSOH FXOWXUDO VHOHFWLRQ IROORZV WKH VDPH FRVWEHQHILW SULQFLSOHV DV ELRORJLFDO VHOHFWLRQ ,OOXVWUDWLQJ WKH SULPDF\ RI LQIUDVWUXFWXUH DQG RI PDWHULDOLVW LQ WKLV FDVH HFRORJLFDOf HYROXWLRQDU\ VHOHFWLRQ +DUULV f DVVHUWV WKDW HFRORJLFDO FRQGLWLRQV HPERGLHG LQ WKH LQIUDVWUXFWXUH UDLVH DQG ORZHU WKH ELRSV\FKRORJLFDO FRVWV DQG EHQHILWV RI LQQRYDWLYH UHVSRQVHV &HUWDLQ LQQRYDWLYH EHKDYLRUV UDWKHU WKDQ RWKHUV DUH UHWDLQHG DQG SURSRJDWHG EHFDXVH WKH\ PD[LPL]H ELRSV\FKRORJLFDO EHQHILWV DQG PLQLPL]H ELRSV\FKRORJLFDO FRVWVf $QWKURSRORJLVWV KDYH VXFFHVVIXOO\ DFFRXQWHG IRU FXOWXUDO HYROXWLRQDU\ FKDQJH IURP WKH 3OHLVWRFHQH WR WKH SUHVHQW XVLQJ WKH FDXVDO KHLUDUFK\ LQWURGXFHG DERYH ,Q HYROXWLRQDU\ GHPRJUDSKLF WUDQVLWLRQ WKHRU\ SUHKLVWRULF GDWD DGGV FRPSDUDWLYH VWUHQJWK WR KLVWRULF GDWD

PAGE 51

ZKLOH D IRFXV RQ WKH PDWHULDO FDXVHV RI IHUWLOLW\ EHKDYLRU RIIHUV PRUH H[SODQDWRU\ SRZHU 1RW RQO\ DUH HWLF EHKDYLRUDO DQG HYROXWLRQDU\ DSSURDFKHV WR XQGHUVWDQGLQJ WKH FDXVHV RI GHPRJUDSKLF WUDQVLWLRQ PRUH VFLHQWLILFDOO\ JURXQGHG WKDQ HPLF PHQWDOLVW DQG KLVWRULFDO LQWHUSUHWLYH DSSURDFKHV EXW WKH\ RIIHU DQ HPSLULFDOO\ WHVWDEOH WKHRU\ ZLWKLQ D ODUJHU WHPSRUDO IUDPH RI UHIHUHQFH $V +DUULV DQG 5RVV f DVVHUW f$ SURSHU XQGHUVWDQGLQJ RI KLVWRU\ DQG SUHKLVWRU\ FDQQRW EH DFKLHYHG E\ UHDGLQJ DUELWUDU\ VOLFHV RI WLPH EXW RQO\ E\ UHDGLQJ IRUZDUG IURP WKH SDOHROLWKLF RU IURP WKH MXQFWLRQ EHWZHHQ PDMRU W\SHV RI VRFLDO IRUPDWLRQVf (YROXWLRQDU\ GHPRJUDSKLF WUDQVLWLRQ WKHRU\ DOVR DYRLGV WKH FXOWXUDO LGHDOLVW ELDVHV LQKHUHQW LQ PRGHUQL]DWLRQ DQG ZHVWHUQL]DWLRQ WKHRULHV )URP PDWHULDOLVW DQG EHKDYLRULVW IRXQGDWLRQV HYROXWLRQDU\ GHPRJUDSKLF WUDQVLWLRQ WKHRU\ DVVHUWV WKH FDXVDO SULRULW\ RI HWLF PDWHULDO FRQGLWLRQV DQG FRQWLQJHQFLHV DQG PHWDFRQWLQJHQFLHV RI UHLQIRUFHPHQW DQG SXQLVKPHQW RYHU HPLF PHQWDOLVW IDFWRUV ,QVWHDG RI FDXVDO UHIHUHQFHV WR WDVWHV SUHIHUHQFHV YDOXHV FXOWXUDO LGHDOV DQG RWKHU PHQWDO RU FXOWXUDOO\ VSHFLILF VXSHUVWUXFWXUDO SURFHVVHV HYROXWLRQDU\ GHPRJUDSKLF WUDQVLWLRQ WKHRU\ UHIHUV WR WKH G\QDPLF FDXVDO LQWHUDFWLRQ EHWZHHQ HFRQRPLF WHFKQRORJLFDO HQYLURQPHQWDO DQG GHPRJUDSKLF IDFWRUV $V RXWOLQHG DERYH WKHVH LQIUDVWUXFWXUDO IDFWRUV GHWHUPLQH VWUXFWXUDO DQG VXSHUVWUXFWXUDO FKDQJH 7KHUHIRUH DFFRUGLQJ WR HYROXWLRQDU\ GHPRJUDSKLF WUDQVLWLRQ WKHRU\ IHUWLOLW\ EHKDYLRU LV GHWHUPLQHG E\ KRZ LQGLYLGXDOV FDQ EHVW RSWLPL]H WKHLU PDWHULDO ZHOOEHLQJ ZLWKLQ OLPLWHG DQG FKDQJLQJ PDWHULDO FRQGLWLRQV QRW E\ WKH PLPLFNLQJ RI ZHVWHUQ DWWLWXGHV DQG EHKDYLRUDO QRUPV (WKQRFHQWULF QRWLRQV RI HYROYLQJ VWDWHV RI FRQVFLRXVQHVV UHDVRQLQJ DQG LQGLYLGXDOLVP DUH GLVFDUGHG PLVOHDGLQJ DQG ZHVWHUQFHQWULF QRWLRQV RI QDWXUDO IHUWLOLW\ DQG SUHFRQWUDFHSWLYH SHRSOHV DUH DEDQGRQHG (YROXWLRQDU\ GHPRJUDSKLF WUDQVLWLRQ WKHRU\ KROGV WKDW PHQWDOLVW DSSURDFKHV DUH XQSURGXFWLYH LQ H[SODLQLQJ WKH FDXVHV RI GLIIHUHQFHV DQG VLPLODULWLHV LQ IHUWLOLW\ EHKDYLRUV

PAGE 52

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f FRVWV DQG EHQHILWV WR ZRPHQ RI KDYLQJ FKLOGUHQ 7KXV IDPLO\ VL]H LV VPDOOHU ZKHQ KLJKHU IHUWLOLW\ FRQIOLFWV ZLWK DFFHVV WR PDWHULDO UHVRXUFHV )RU H[DPSOH IDPLO\ VL]H ZDV VPDOO GXULQJ WKH 3OHLVWRFHQH ZKHQ FKLOGUHQ FRQWULEXWHG OLWWOH WR IRRG SURGXFWLRQ DQG ZHUH D EXUGHQ EHFDXVH VXUYLYDO GHSHQGHG RQ FRQVWDQW PLJUDWLRQ DQG LQ KLVWRULF DQG PRGHP WLPHV ZKHQ FKLOGUHQ EHFRPH PRUH H[SHQVLYH DQG DUH D EXUGHQ IRU ZRPHQ ZKR VHHN HFRQRPLF PDWHULDOf RSSRUWXQLWLHV RXWVLGH WKH KRXVHKROG 2Q WKH RWKHU KDQG IDPLO\ VL]H LV ODUJHU ZKHQ KLJKHU IHUWLOLW\ HQKDQFHV DFFHVV WR PDWHULDO UHVRXUFHV )RU H[DPSOH XQGHU DJULFXOWXUDO PRGHV RI SURGXFWLRQ IDPLO\ VL]H LQFUHDVHG

PAGE 53

EHFDXVH FKLOGUHQ EHFDPH OHVV RI D PDWHULDO EXUGHQ DQG PRUH RI D PDWHULDO DVVHW WKH\ ZHUH HDVLHU WR IHHG DQG YDOXHG IRU WKHLU SURGXFWLYH ODERU IRU SROLWLFDOO\ PRWLYDWHG PDULWDO DOOLDQFHV DQG IRU GHIHQVH RI SURSHUW\ LI QHFHVVDU\ $ IXQGDPHQWDO WHQHW RI HYROXWLRQDU\ GHPRJUDSKLF WUDQVLWLRQ WKHRU\ LV WKDW LQGLYLGXDOV DQG FXOWXUHVf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nV f WKHRU\ RI ELRORJLFDO HYROXWLRQDU\ FKDQJH DOVR VHH 6LPSVRQ *RXOG DQG (OGUHGJH f 7KH WKHRU\ RI SXQFWXDWHG HTXLOLEULXP LV D UHILQHPHQW RI QHR'DUZLQLDQ HYROXWLRQDU\ WKHRU\ WKDW KDV JDLQHG D ODUJH FRQVHQVXV RI VXSSRUW ZLWKLQ WKH VFLHQWLILF FRPPXQLW\ RYHU WKH SDVW WZHQW\ \HDUV 0D\U f 0DQ\ FRQVLGHU LW D QHZ SDUDGLJP IRU HYROXWLRQDU\ WKRXJKW 5XVH f 6RPLW DQG 3HWHUVRQ f H[SODLQ $W LWV PRVW EDVLF SXQFWXDWHG HTXLOLEULXP LQYROYHG WZR NH\ SURSRVLWLRQV ILUVW WKDW VSHFLHV XQGHUJR ORQJ SHULRGV RI OLWWOH RU QR HYROXWLRQDU\ FKDQJH VHFRQG WKDW WKHVH OHQJWK\ LQWHUYDOV RI VWDVLV LH HTXLOLEULXPf DUH EURNHQ LH SXQFWXDWHGf E\ UHODWLYHO\ UDSLG VSHFLDWLRQ HYHQWVf (VVHQWLDOO\ LW LV DUJXHG WKDW ELRORJLFDO HYROXWLRQ GRHV QRW DOZD\V SURFHHG LQ D JUDGXDO PDQQHU EXW WKDW FDWDVWURSKLF HQYLURQPHQWDO HYHQWV KDYH OHG WR VXGGHQ FKDQJHV LQ QDWXUDO VHOHFWLYH FULWHULD 7KLV ZRXOG H[SODLQ ODUJH JDSV LQ WKH IRVVLO UHFRUG DQG WKH SURFHVV RI VSHFLDWLRQ (OGUHGJH f TXHULHV 7R ZKDW H[WHQW DUH WKHVH FKDQJHV LQ SDOHRQWRORJLFDO WKLQNLQJ UHOHYDQW WR D FRQVLGHUDWLRQ RI WKH KLVWRULHV DQG HYROXWLRQ RI VRFLDO V\VWHPV LQ

PAGE 54

JHQHUDO DQG WR WKH VWXG\ RI KXPDQ KLVWRU\ DQG DUFKDHRORJ\ LQ SDUWLFXODU"f 7KHVH TXHVWLRQV KDYH MXVW UHFHQWO\ EHHQ DVNHG DQG DUH EHLQJ GLVFXVVHG LQ D GLYHUVLW\ RI ILHOGV LQFOXGLQJ HFRQRPLFV VRFLRORJ\ SV\FKRORJ\ SV\FKRELRORJ\ SROLWLFDO VFLHQFH DUFKHRORJ\ DQG SK\VLFDO DQG FXOWXUDO DQWKURSRORJ\ 6RPLW DQG 3HWHUVRQ f 6RPLW DQG 3HWHUVRQ EHOLHYH WKDW WKH WKHRU\ RI SXQFWXDWHG HTXLOLEULXP DOUHDG\ KDV FRQVLGHUDEOH PHWDSKRULFDO DQG KHXULVWLF YDOXH LI QRW HYHQWXDOO\ KDUG VFLHQWLILF YDOLGLW\f 7KH\ DVVHUW ff7KHRULHV DV PHWDSKRUV RU PRGHOV FDQ DOVR EH VXEVWDQWLDO DLGV IRU DGYDQFLQJ RXU FRPSUHKHQVLRQ RI VRFLDO UHDOLW\f LELG f 8QGHU WKLV DXVSLFHV WKH WKHRU\ RI SXQFWXDWHG HTXLOLEULXP KDV EHHQ XVHG WR H[SODLQ FKDQJHV LQ $PHULFDQ HOHFWRUDO EHKDYLRU &DUPLQHV DQG 6WLPVRQ f WR PRGHO SROLWLFDO VRFLDOL]DWLRQ 5D FLWHG LQ 6RPLW DQG 3HWHUVRQ f DQG WR VSHFXODWH RQ FKDQJHV LQ WKH UHODWLRQVKLS EHWZHHQ WKH ELRVSKHUH DQG WKH VRFLRVSKHUH %RXOGLQJ f +RZ GRHV WKH WKHRU\ RI SXQFWXDWHG HTXLOLEULXP UHODWH WR KXPDQ EHKDYLRU DQG GHPRJUDSKLF SURFHVVHV" :KHQ GUDPDWLF HQYLURQPHQWDO FKDQJH FUHDWHV D SXQFWXDWLRQ SRLQW LQ ELRORJLFDO HYROXWLRQ VXUYLYDO LV VXGGHQO\ FRQWLQJHQW XSRQ D GLIIHUHQW VHW RI ELRORJLFDO DELOLWLHV 2UJDQLVPV WKDW DOUHDG\ KDYH ELRORJLFDO PDNHXSV ZKLFK DOORZ WKHP WR OLYH WR SURGXFH DQG UHSURGXFHf LQ WKHVH QHZ FRQGLWLRQV VXUYLYH RUJDQLVPV WKDW GR QRW SHULVK 6LPLODUO\ ZKHQ GUDPDWLF HQYLURQPHQWDO FKDQJH FUHDWHG D SXQFWXDWLRQ SRLQW LQ KXPDQ FXOWXUDO HYROXWLRQ VXUYLYDO VXGGHQO\ ZDV FRQWLQJHQW XSRQ D GLIIHUHQW VHW RI SURGXFWLYH DELOLWLHV DQG UHSURGXFWLYH EHKDYLRUV +XPDQ JURXSV WKDW DGRSWHG QHZ SURGXFWLYH DQG UHSURGXFWLYH VWUDWHJLHV VXUYLYHG RWKHUV JURXSV SHULVKHG %\ DQDORJ\ ZKHQ GUDPDWLF LQIUDVWUXFWXUDO FKDQJH FUHDWHV D SXQFWXDWLRQ SRLQW LQ FXOWXUDO HYROXWLRQ WKH VXFFHVV RI LQGLYLGXDO VXUYLYDO VWUDWHJLHV LV FRQWLQJHQW XSRQ D QHZ VHW RI SURGXFWLYH DQG UHSURGXFWLYH EHKDYLRUV $V WKH FRVWV RI FKLOGEHDULQJ EHJLQ WR RXWZHLJK WKH EHQHILWV VRPH ZRPHQ EHFRPH GHPRJUDSKLF LQQRYDWRUV DQG FXOWXUHV EHFRPH PRUH

PAGE 55

DQWLQDWDOLVW 7KLV FDQ RFFXU JUDGXDOO\ RU GUDPDWLFDOO\ GHSHQGLQJ RQ KRZ JUDGXDO RU GUDPDWLF WKH LQIUDVWUXFWXUDO FKDQJH 3XQFWXDWLRQ SRLQWV LQ KXPDQ FXOWXUDO HYROXWLRQ UHIOHFW GUDPDWLF FKDQJHV LQ SURGXFWLYH DQG UHSURGXFWLYH EHKDYLRUV $V ZH ZLOO VHH EHORZ WKHUH KDYH EHHQ WZR PDMRU SXQFWXDWLRQ SRLQWV LQ GHPRJUDSKLF KLVWRU\ DQG SUHKLVWRU\ 7KH ILUVW RFFXUUHG GXULQJ WKH 3DOHROLWKLF DIWHU DQ HFRORJLFDO FDWDVWURSKH IRUFHG KXPDQV WR DGRSW LQYHQWf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

PAGE 56

&+$37(5 35(+,6725,& $1' +,6725,& (9,'(1&( )URP DQ HYROXWLRQDU\ SHUVSHFWLYH WKHUH KDYH EHHQ WZR PDMRU ZHOO GRFXPHQWHG GHPRJUDSKLF WUDQVLWLRQV VLQFH WKH HPHUJHQFH RI +RPR VDSLHQV VDSLHQV \HDUV DJR WKH ILUVW WRZDUG LQFUHDVLQJ DQG WKH VHFRQG WRZDUG GHFUHDVLQJ SRSXODWLRQ JURZWK 1HZ IHUWLOLW\ SDWWHUQV IROORZHG GUDPDWLF FKDQJHV LQ VXUYLYDO VWUDWHJLHV ZKLFK ZHUH PDGH QHFHVVDU\ E\ IXQGDPHQWDO FKDQJHV LQ WKH ZD\ KXPDQV FRXOG DFFHVV PDWHULDO UHVRXUFHV 3URGXFWLYH DQG UHSURGXFWLYH GHPRJUDSKLFf WUDQVLWLRQV UHSUHVHQW SXQFWXDWLRQ SRLQWV LQ FXOWXUDO HYROXWLRQ 7KH ILUVW GHPRJUDSKLF WUDQVLWLRQ FRUUHVSRQGV ZLWK WKH 1HROLWKLF 5HYROXWLRQ ZKHQ KXPDQV GRPHVWLFDWHG SODQWV DQG DQLPDOV 7KLV LQQRYDWLYH QHZ IRRG SURGXFWLRQ WHFKQRORJ\ FUHDWHG DQ DEXQGDQFH RI QHZ IRRG UHVRXUFHV ZKLFK FRXOG EH KDUYHVWHG ZLWKRXW PLJUDWLQJ 7KH VHFRQG GHPRJUDSKLF WUDQVLWLRQ FRUUHVSRQGV ZLWK WKH ,QGXVWULDO 5HYROXWLRQ ZKHQ KXPDQV FDSWXUHG HQRUPRXV QHZ HQHUJ\ UHVHUYHV LQ IRVVLO IXHOV DQG XVHG WKHP LQ FRQMXQFWLRQ ZLWK PDFKLQHV WR SURGXFH ZRUN 7KLV LQQRYDWLYH QHZ SURGXFWLRQ WHFKQRORJ\ FUHDWHG DEXQGDQW IRRG UHVRXUFHV DQG DQ DOPRVW XQOLPLWHG DUUD\ RI FRPPRGLWLHV IRU KXPDQ FRQVXPSWLRQ 5HYROXWLRQDU\ FKDQJHV LQ KXPDQ UHSURGXFWLRQ FRLQFLGH ZLWK UHYROXWLRQDU\ FKDQJHV LQ SURGXFWLRQ 7KLV ffFRLQFLGHQFHf KDV OHG WR UHVHDUFK H[DPLQLQJ WKH DIIHFWV RI EDVLF UHVRXUFH FKDUDFWHULVWLFV RQ UHSURGXFWLRQ 7KLV FKDSWHU ORRNV DW WKH G\QDPLF IHHGEDFN EHWZHHQ PRGHV RI SURGXFWLRQ DQG PRGHV RI UHSURGXFWLRQ 6XUURXQGLQJ WKHVH WZR SHULRGV RI UHSURGXFWLYH

PAGE 57

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ffVROLWDU\ SRRU QDVW\ EUXWLVK DQG VKRUWf 6LPLODUO\ ZLWKRXW HPSLULFDO HYLGHQFH GHPRJUDSKHUV KDYH DVVXPHG WKDW KLJK IHUWLOLW\ DQG PRUWDOLW\ DFFRXQWHG IRU ORZ SRSXODWLRQ JURZWK UDWHV GXULQJ PRVW RI KXPDQ KLVWRU\ 7KLV DVVXPSWLRQ ZDV EDVHG RQ WKUHH SRSXODU EXW HUURQHRXV VSHFXODWLRQV DERXW WKH FRQGLWLRQV RI SUHKLVWRULFDO KXPDQNLQG f WKH +REEHVLDQ QRWLRQ WKDW SUHKLVWRULFDO SHRSOHV ZHUH LQKHUHQWO\ DJJUHVVLYH ffNLOOHUVf OLYLQJ LQ D ZRUOG RIffDOO DJDLQVW DOOf f WKH 5RXVVHDXHDQ QRWLRQ WKDW SUHKLVWRULF SHRSOHV OLYHG LQ D ffVWDWH RI QDWXUHf ZKHUH ELUWK DQG GHDWK UDWHV RFFXUUHG QDWXUDOO\ ZLWKRXW DFWLYH UHJXODWLRQ DQG f WKH 0DOWKXVLDQ QRWLRQ WKDW SUHKLVWRULFDO SHRSOHV ZHUH SUHFRQVFLRXV SURPLVFXRXV DQG XQFLYLOL]HG 7KHVH QRWLRQV DUH FRQWUDU\ WR GLYHUVH VRXUFHV RI DQWKURSRORJLFDO HYLGHQFH ,W LV QRZ EHOLHYHG WKDW DGHTXDWH QXWULWLRQ WKRXJK SHULRGLFDOO\ GHILFLHQW LQ FDORULHVf DQG D UHODWLYHO\ ORZ LQFLGHQFH RI LQIHFWLRXV GLVHDVH KHOSHG NHHS FKLOG DQG LQIDQW PRUWDOLW\ GRZQ GXULQJ PRVW RI WKH 3OHLVWRFHQH 7UXVZHOO DQG +DQVHQ 6HJUDYHV f -XGJLQJ IURP DUFKHRORJLFDO HYLGHQFH RI KHDOWK\ ERQHV DQG WHHWK PRUWDOLW\ PD\ QRW KDYH EHHQ KLJKHU \HDUV DJR WKDQ LW ZDV LQ SUHVHQWO\ GHYHORSHG FRXQWULHV LPPHGLDWHO\ EHIRUH WKH

PAGE 58

LQWURGXFWLRQ RI PRGHP VDQLWDWLRQ DQG PHGLFDO SUDFWLFHV $QJHO f 7KH JHQHUDO ZHOOn EHLQJ RI PRGHP KXQWHUJDWKHUHU SRSXODWLRQV VXSSRUW WKLV DUFKHRORJLFDO ILQGLQJ /HH f ,QGHHG 6DKOLQVf f FDOOV RXU 3OHLVWRFHQH DQFHVWRUV WKH ffRULJLQDO DIIOXHQW VRFLHW\f $VVXPLQJ ORZ WR PRGHUDWH PRUWDOLW\ LQ RUGHU WR DFFRXQW IRU ORZ SRSXODWLRQ JURZWKf IHUWLOLW\ DOVR PXVW KDYH EHHQ ORZ -RKQVRQ DQG (DUOH f FLWH ELRORJLFDO LQWHUPHGLDWH IDFWRUVVHH %RQJDDUWV f DQG HQYLURQPHQWDO IDFWRUV WR DFFRXQW IRU PRGHUDWH WR ORZ IHUWLOLW\ DQG ORZ SRSXODWLRQ JURZWK DPRQJ KXQWHUJDWKHUHUV )LUVW D FKURQLF FDORULF GHILFLHQF\ ORZHUV IHUWLOLW\ UDWHV EHFDXVH RI VHDVRQDO F\FOHV LQ IRRG DYDLODELOLW\ DQG OLPLWHG FDSDELOLWLHV IRU VWRUDJH SHULRGV RI IRRG VKRUWDJH ZHUH FRPPRQ 6HFRQG D ORQJ QXUVLQJ SHULRG GHOD\V UHQHZHG RYXODWLRQ VLQFH PRVW ZLOG IRRGV DUH DSSDUHQWO\ QRW ZHOO VXLWHG WR ZHHQ \RXQJ LQIDQWV QXUVLQJ DPRQJ IRUDJHUV W\SLFDOO\ UHPDLQV D FKLOGfV PDLQ IRRG VRXUFH IRU WKH ILUVW WZR RU WKUHH \HDUV 7KLUG WKH LQWHQVH SK\VLFDO H[HUFLVH UHTXLUHG IRU PRELOH IRUDJLQJ PD\ ORZHU IHPDOH IHUWLOLW\ )ULVFK HW DO f )RXUWK EHFDXVH FORVHO\ VSDFHG FKLOGUHQ DUH DQ HFRQRPLF KDUGVKLS LQ D PRELOH VRFLHW\ LQIDQWLFLGH PD\ KDYH EHHQ XVHG WR VSDFH ELUWKV %LUGVHOO f 3RRU QXWULWLRQ GXULQJ SHULRGV RI EUHDVWIHHGLQJ SURORQJV SRVWSDUWXP DPHQRUUKHD KHQFH LQIHFXQGDELOLW\ :LOPVHQ f ,Q DGGLWLRQ GLHWDU\ VWUHVV SUREDEO\ LQFUHDVHG WKH LQFLGHQFH RI LQIDQWLFLGH +DUULV DQG 5RVV 6FULPVKDZ f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f $ GLHW KLJK LQ SURWHLQ DQG ORZ LQ FDUERK\GUDWHV LV RSWLPDO IRU WKH ODFWDWLRQ PHWKRG EHFDXVH LW SUHYHQWV WKH DFFXPXODWLRQ RI ERG\ IDW WKH SXWDWLYH VLJQDO IRU WKH UHVXPSWLRQ RI SRVWQDWDO RYXODWLRQ ZKLOH VXVWDLQLQJ WKH KHDOWK RI WKH PRWKHU WKURXJK WKH VWUDLQ RI SURGXFLQJ PLON IRU WKUHH RU IRXU \HDUV DW D WLPH f

PAGE 59

6RPH UHVHDUFKHUV GLVSXWH WKLV fIDW K\SRWKHVLVf VHH %RQJDDUWV 0HQNHQ HW DO f EXW LW LV SUREDEOH WKDW ODFWDWLRQLQGXFHG DPHQRUUKHD ZDV DQ LPSRUWDQW IDFWRU LQ VSDFLQJ DQG UHGXFLQJ ELUWKV GXULQJ WKH 3OHLVWRFHQH +DQGZHUNHU QRWHV :H QRZ KDYH DEXQGDQW HYLGHQFH WKDW ODFWDWLRQLQGXFHG DPHQRUUKHD LV D VLQJXODUO\ LPSRUWDQW GHWHUPLQDQW RI ELUWK VSDFLQJ WKDW WRJHWKHU ZLWK UHODWLYHO\ PLQRU PLVDGMXVWPHQWV RI FRLWDO IUHTXHQF\ DQG WLPLQJ UHODWLYH WR RYXODWLRQ FDQ DFFRXQW IRU QDWXUDO IHUWLOLW\ OHYHOV LQ WKH QHLJKERUKRRG RI IRXU WR VL[ OLYH ELUWKV f %LUWK UDWHV SUREDEO\ ZHUH DOVR UHGXFHG VRPHZKDW EHFDXVH RI LQWHUUXSWLRQV LQ FRLWDO IUHTXHQF\ ZKHQ PHQ ZHQW RQ ORQJ KXQWLQJ WULSV :KHQ WKH ZKROH IDPLO\ PRYHG GHSHQGHQW FKLOGUHQ ZHUH D EXUGHQ WR FDUH IRU DQG FDUU\ 6XVVPDQ f $OVR FKLOGUHQ RIIHUHG OLWWOH UHWXUQ WR SDUHQWV IRU PDQ\ \HDUV UHWXUQV IURP FKLOGUHQ RI PRGHP KXQWHU JDWKHUHUV SHU XQLW RI HQHUJ\ H[SHQGHG DUH ORZ +D\GHQ ODEf &RRSHUDWLYH VRFLDO UHODWLRQV DPRQJ KXQWHUJDWKHUHU JURXSV DOVR OLPLWHG WKH VRFLDO DQG SROLWLFDO YDOXH RI FKLOGUHQ +DQGZHUNHU ZULWHV 7KH IOH[LELOLW\ RI NLQ WLHV UHVLGHQWLDO UXOHV FULWHULD IRU JURXS PHPEHUVKLS DQG VKDULQJ DPRQJ IRUDJHUV PHDQW WKDW LW ZDV QRW LPSRUWDQW IRU FKLOGUHQ WR SURYLGH FDUH DQG IRRG IRU SDUHQWV DQG FKLOGUHQ ZHUH QRW DVVHWV WKDW FRXOG EH XVHG WR H[WHQG SROLWLFDO SRZHU RU WR H[SDQG FRQWURO RYHU D VSHFLILF UHVRXUFH EDVH f ,QGHHG WRWDO IHUWLOLW\ DPRQJ OLYLQJ IRUDJLQJ JURXSV LV ORZ WKH PHDQ 7)5 LV IRU ILYH JURXSV IRU ZKLFK GDWD DUH DYDLODEOH +RZHOO -RQHV %UDLQDUG DQG 2YHUILHOG FLWHG LQ +DQGZHUNHU +DUSHQGLQJ DQG :DQGVQLGHU f %\ WKH HQG RI WKH SDOHROLWKLF 'XPRQG f DQG +DVVDQ f HVWLPDWH WKHUH ZHUH RQO\ PLOOLRQ SHRSOH RQ WKH SODQHW &RKHQ f HVWLPDWHV WKHUH ZHUH QR PRUH WKDQ PLOOLRQ 7KH DERYH GDWD VXJJHVW WKDW ORZ WR PRGHUDWH IHUWLOLW\ VPDOO IDPLOLHV DQG ORZ WR PRGHUDWH SRSXODWLRQ JURZWK ZDV WKH QRUP GXULQJ WKH SDOHROLWKLF 7KLV KHOSHG IRUDJHUV PDLQWDLQ DQ HTXLOLEULXP EHWZHHQ SRSXODWLRQ DQG UHVRXUFHV 'XPRQG f 7KHVH FRQGLWLRQV ODVWHG XQWLO WKH\ ZHUH GLVUXSWHG E\ FOLPDWLF FKDQJH DQG HFRORJLFDO FDWDVWURSKH

PAGE 60

$W WKH HQG RI WKH SDOHROLWKLF LPSURYHG KXQWLQJ WHFKQRORJLHV DOVR OHG WR PDVVLYH SUHGDWLRQ RI ODUJHERGLHG IRRG UHVRXUFHV +D\GHQ f GHVFULEHV WKHVH YXOQHUDEOH .VHOHFWHG ODUJHERGLHG SODQWV DQG DQLPDOV ZLWK ILYH LPSRUWDQW DWWULEXWHV f WDNH D ORQJ WLPH WR PDWXUH f KDYH YHU\ ORZ ELRORJLFDO SURGXFWLYLW\ DV SRSXODWLRQV WKH\ GR QRW SURGXFH PXFK HGLEOH WLVVXH LQ D \HDUf f H[KLELW ORZ RYHUDOO GHQVLWLHV f KDYH ORZ ELRPDVV DQG f SURGXFH UHODWLYHO\ IHZ RIIVSULQJ 7KXV WKH IRRG VXSSOLHG E\ WKHVH ODUJHn ERGLHG VSHFLHV FRXOG HDVLO\ EH GHSOHWHG 2YHUSUHGDWLRQ FRPELQHG ZLWK JOREDO ZDUPLQJ DQG D VXEVHTXHQW HFRORJLFDO FDWDVWURSKH OHG WR WKH ILQDO H[WLQFWLRQ RI WKH 3OHLVWRFHQH PHJDIDXQD VHH 0DUWLQ f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f HVWLPDWH D WKLUW\IROG SRSXODWLRQ LQFUHDVH LQ WKH 0LGGOH (DVW EHWZHHQ %3 IURP WR PLOOLRQ 'HHYH\ f HVWLPDWHV WKDW KXPDQ SRSXODWLRQ PXOWLSOLHG DERXW VL[WHHQ WLPHV GXULQJ WKLV SHULRG 3HRSOH VHWWOHG DQG EHJDQ WR GRPHVWLFDWH VPDOOERGLHG SODQWV DQG DQLPDOV +D\GHQ f GHVFULEHV ILYH VSHFLDO FKDUDFWHULVWLFV RI WKHVH UVHOHFWHG VPDOOERGLHG SODQWV DQG DQLPDOV f WKH\ DUH VKRUW OLYHG XVXDOO\ OHVV WKDQ D \HDUf f WKH\ SURGXFH SURGLJLRXV

PAGE 61

QXPEHUV RI RIIVSULQJ VRPHWLPHV LQ WKH KXQGUHGV RU WKRXVDQGV SHU SDUHQW f WKH\ KDYH YHU\ KLJK SRWHQWLDO ELRORJLFDO SURGXFWLYLW\ WKH DPRXQW RI HGLEOH WLVVXH WKH\ DUH FDSDEOH RI SURGXFLQJ LV HQRUPRXVf f LQ VRPH DUHDV WKH\ RFFXU LQ H[WUHPHO\ QXPHURXV DQG GHQVH FRQFHQWUDWLRQV f ZLWK SRWHQWLDOO\ YHU\ KLJK ELRPDVV 7KH QHZ SRWHQWLDO IRRG VXSSO\ IURP WKHVH VPDOOERGLHG SODQWV DQG DQLPDOV ZDV HQRUPRXV 3RSXODWLRQ LQFUHDVHG ZLWK VHWWOHPHQW DQG GRPHVWLFDWLRQ SULQFLSDOO\ EHFDXVH LQIDQW PRUWDOLW\ GHFOLQHG +DUSHQGLQJ DQG :DQGVQLGHU %UDLQDUG FLWHG LQ +DQGZHUNHU f ,QIDQW PRUWDOLW\ DQG LQIDQWLFLGH GHFOLQHG EHFDXVH QHZ UHVRXUFH DEXQGDQFH VXEVWDQWLDOO\ LPSURYHG QXWULWLRQ +DQGZHUNHU f KDV FDOFXODWHG WKDW fD PHUH b UHGXFWLRQ LQ LQIDQW PRUWDOLW\ IURP f DORQH ZRXOG UHVXOW LQ DQ LQWULQVLF UDWH RI LQFUHDVH RI b SHU \HDU WKH FRQYHQWLRQDO HVWLPDWH RI WKH SRSXODWLRQ fH[SORVLRQf H[SHULHQFHG LQ WKH 1HROLWKLFf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f *URZLQJ WHUULWRULDOLVP LQFUHDVHG WKH ULVN RI VRFLDO FRQIOLFW 7KURXJK WKH PDUULDJH RI FKLOGUHQ SDUHQWV IRUPHG SROLWLFDO DQG HFRQRPLF DOOLDQFHV ZLWK RWKHU IDPLOLHV WR KHOS WKHP LQ ODQG GLVSXWHV DQG ZLWK VHDVRQDO ODERU GHPDQGV :HLJKLQJ WKHVH ODUJH EHQHILWV DJDLQVW WKH VPDOO FRVWV RI IHHGLQJ DQG FDULQJ IRU FKLOGUHQ DPRQJ VHWWOHG DJULFXOWXUDOLVWV LW ZDV DGYDQWDJHRXV WR KDYH ODUJH IDPLOLHV

PAGE 62

+RZHYHU SRSXODWLRQ GLG QRW LQFUHDVH XQDEDWHG LQ D 0DOWKXVLDQ IDVKLRQ /RQJVWDQGLQJ VWDWLRQDU\ SRSXODWLRQV H[LVWHG LQ WKH HQYLURQPHQWDOO\ DQG SROLWLFDOO\ FLUFXPVFULEHG VWDWHV RI KLVWRULFDO ,QGLD 'DYLV &ODUN f &KLQD %LHOHQVWHLQ f DQG (J\SW %XW]HU %XW]HUDQG )UHHPDQ f 2QFH SRSXODWLRQ GHQVLWLHV UHDFKHG WKH OLPLWV RI HQYLURQPHQWDO FDUU\LQJ FDSDFLW\ VWDQGDUGV RI OLYLQJ GHFOLQHG PRUWDOLW\ DQG LQIDQWLFLGH SUREDEO\ LQFUHDVHG IHUWLOLW\ GHFUHDVHG DQG SRSXODWLRQ JURZWK OHYHOHG RII 6RFLDO LGHRORJLHV FRQIRUPHG WR WKH SROLWLFDO FOLPDWH VHW E\ WKH SUHYDLOLQJ GHPRJUDSKLF DQG PDWHULDO FRQGLWLRQV +DUULV DQG 5RVV f FLWH SRVLWLYH DVVRFLDWLRQV EHWZHHQ DQWLQDWDOLVW WROHUDQFH RI LQIDQWLFLGH DQG QRQUHSURGXFWLYH VH[XDO EHKDYLRU HJ KRPRVH[XDOLW\f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

PAGE 63

WKH WK FHQWXU\ DQG WKH RQVHW RI WKH %ODFN 'HDWK LQ DQG &ORVH WR RQH WKLUG RI (XURSHf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f 7KHVH GLVSRVVHVVLRQV ZHUH QRW ZLWKRXW SURWHVW DQG SHUVHFXWLRQ +DUULV DQG 5RVV f QRWH WKDW WKH ff&KXUFK DQG 6WDWH PDGH D JHQHUDO XVH RI ZLWFKKXQWV WR GDPSHQ SROLWLFDO RSSRVLWLRQf 7KH\ HVWLPDWH WKDW ZLWFKFUDIW SHUVHFXWLRQV DIWHU PD\ ZHOO KDYH EHHQ UHVSRQVLEOH IRU WKH GHDWK RI RYHU KDOI D PLOOLRQ ZRPHQ LELGf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

PAGE 64

WKH LQGXVWULDOL]LQJ ZRUOG 7KH VHFRQG GHPRJUDSKLF WUDQVLWLRQ LV DVVRFLDWHG ZLWK WKH LQGXVWULDO PRGH RI SURGXFWLRQ DQG UHSUHVHQWV DQRWKHU SXQFWXDWLRQ SRLQW LQ KXPDQ FXOWXUDO HYROXWLRQ 7KH 6HFRQG 'HPRJUDSKLF 7UDQVLWLRQ 7KH VHFRQG GHPRJUDSKLF WUDQVLWLRQ EHJDQ ZLWK DQ XQSUHFHGHQWHG RXWEXUVW RI SRSXODWLRQ JURZWK LQ WKH ODWH HLJKWHHQWK FHQWXU\ LQ PRVW FRXQWULHV LQ (XURSH DQG DPRQJ (XURSHDQ GHVFHQGDQWV LQ 1RUWK $PHULFD DQG 2FHDQLD IROORZHG E\ DQ HTXDOO\ GUDPDWLF GHFOLQH LQ SRSXODWLRQ JURZWK RFFXUULQJ EHWZHHQ DQG WKH )LUVW :RUOG :DU 7KH LQLWLDO VSXUW RI SRSXODWLRQ JURZWK LV DVVRFLDWHG ZLWK GHFOLQLQJ OHYHOV RI PRUWDOLW\ ZLWKRXW GHFOLQLQJ IHUWLOLW\ $ VLPLODU SKHQRPHQRQ LV H[SHULHQFHG LQ GHYHORSLQJ FRXQWULHV WRGD\ GXULQJ WKH HDUO\ VWDJHV RI GHPRJUDSKLF WUDQVLWLRQ 7KH VXEVHTXHQW GHFOLQH LQ SRSXODWLRQ JURZWK ZDV WKH UHVXOW RI UDSLGO\ GHFOLQLQJ IHUWLOLW\ 7DEOH UHSUHVHQWV WKH HVWLPDWHG GDWH RI IHUWLOLW\ GHFOLQH E\ PRUH WKDQ WHQ SHUFHQW DPRQJ (XURSHDQ FRXQWULHV EDVHG RQ ERXQGDULHVf 7$%/( )(57,/,7< '(&/,1( ,1 (8523( f )UDQFH f 1RUZD\ f %HOJLXP ,' (XURSHr f 6ZLW]HUODQG f $XVWULD f *HUPDQ\ f *UHHFH f (QJ$9DOHV f ,WDO\ f 6FRWODQG f +XQJDU\ f 1HWKHUODQGV f 6SDLQ f 'HQPDUN f ,UHODQG f 6ZHGHQ f (XUR5XVVLD rPHGLDQ SURYLQFH GDWH 6RXUFH &RDOH DQG 7UHDGZD\ f $IWHU )UDQFHfV SUHFRFLRXV IHUWLOLW\ GHFOLQH )UHQFK VSHDNLQJ %HOJLXP WKH )UHQFK VSHDNLQJ FDQWRQV RI 6ZLW]HUODQG &DWDORQLD DQG VRPH SURYLQFHV LQ +XQJDU\ IROORZHG LQ WKH QH[W IHZ GHFDGHV >DIWHU @ %HIRUH IHUWLOLW\ KDG IDOOHQ LQ RQO\ D IHZ RWKHU SURYLQFHV LQ *HUPDQ\ 'HQPDUN /DWYLD 6HUELD WKH 6ZHGLVK LVODQG RI *RWODQGV DQG 6W 3HWHUVEXUJ LQ 5XVVLD

PAGE 65

0RVW SURYLQFHV GLG QRW VWDUW IHUWLOLW\ WUDQVLWLRQ XQWLO DIWHU $OO EXW D IHZ KDG EHJXQ WKH WUDQVLWLRQ EHIRUH $ERXW SHUFHQW RI WKH SURYLQFHV EHJDQ WKHLU IHUWLOLW\ GHFOLQHV LQ WKH LQWHUYDO EHWZHHQ DQG /DWH GHFOLQHV RFFXUUHG LQ ,UHODQG DQG LQ WKH VRXWKHUQ DQG HDVWHUQ SHULSKHU\ RI (XURSH LQ 5XVVLD 5RPDQLD $OEDQLD VRXWKHUQ ,WDO\ 6SDLQ DQG 3RUWXJDO 0F*UHHYH\ f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f DUJXHV WKDW ELUWK DQG GHDWK UDWHV EHJDQ WR GHFOLQH VLPXOWDQHRXVO\ LQ WKH PLGV +RZHYHU +HQU\ f DUJXHV WKDW ORZHU GHDWK UDWHV EHWZHHQ FUHDWHG D VOLJKW EXOJH LQ WKH QDWXUDO UDWH RI SRSXODWLRQ LQFUHDVH XQWLO IHUWLOLW\ EHJDQ WR GHFOLQH LQ WKH V %RXUJHRLV 3LFKDW DVVXPHG WKDW PLJUDWLRQ ZDV QHJOLJLEOH WKDW WKH UHJLVWUDWLRQ RI GHDWKV ZDV FRPSOHWH DQG WKDW PRUWDOLW\ HVWLPDWHV ZHUH DFFXUDWH 7KXV 9DQ GH :DOOH f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f %LUWK LQWHUYDOV OHQJWKHQHG VXEVWDQWLDOO\ EHWZHHQ WKH VHFRQG DQG WKLUG DQG HVSHFLDOO\ WKH WKLUG DQG WKH IRXUWK FKLOG :HLU FLWHG LQ 0F*UHHYH\ f

PAGE 66

)HUWLOLW\ GHFOLQH ZDV UHJLRQDOO\ XQLIRUP WKURXJKRXW )UHQFK VRFLHW\ 1HZHOO f 7KLV VXJJHVWV WKH SUHVHQFH RI DQ RYHUDUFKLQJ FDXVH LQGHSHQGHQW RI UXUDO RU XUEDQ UHVLGHQFH DQG VRFLRHFRQRPLF VWDWXV $ULHV f QRWHV WKDW WKH GHFOLQH LQ PDULWDO IHUWLOLW\ LV DVVRFLDWHG ZLWK WKH XSZDUG VRFLDO PRELOLW\ RI )UHQFK FKLOGUHQ WKURXJK HGXFDWLRQ 0F*UHHYH\ DVVHUWV WKDW WKH )UHQFK 5HYROXWLRQ SURPRWHG XSZDUG VRFLDO PRELOLW\ LW EURXJKW QHZ DVSLUDWLRQV WR WKH IRUH LQFOXGLQJ HPSKDVLV RQ WKH HGXFDWLRQ RI FKLOGUHQ LW UHGXFHG DOOHJLDQFH WR UHOLJLRXV QRUPV DQG OHJLWLPL]HG LQGLYLGXDO FKRLFH WKH 1DSROHRQLF FRGH FKDQJHG LQKHULWDQFH FXVWRPV E\ HQGLQJ WKH SUDFWLFH RI SURPRJHQLWXUH DOO ODQGV WR WKH HOGHVW VRQf WKXV IRUFLQJ UXUDO IDPLOLHV WR UHGXFH IHUWLOLW\ WR DVVXUH WKDW ODQGKROGLQJV FRXOG SDVV LQWDFW WR WKH QH[W JHQHUDWLRQ D UHPDUNDEOH IHDWXUH RI LW ZDV LWV VSUHDG EH\RQG WKH HGXFDWHG DQG XUEDQ WR SHUPHDWH )UHQFK UXUDO OLIH f )UDQFH GLG QRW H[SHULHQFH WKH FRPPRQ VWDJH LQ GHPRJUDSKLF WUDQVLWLRQ RI D ORQJ SHULRG RI IDOOLQJ GHDWK UDWHV DQG KLJK ELUWK UDWHV &RQVHTXHQWO\ )UDQFH QHYHU KDG D VWURQJ VXUJH LQ SRSXODWLRQ JURZWK DV LQ RWKHU (XURSHDQ FRXQWULHV 7KRXJK WKH DJULFXOWXUDO ODERU IRUFH GHFOLQHG VORZO\ LW JUHZ DW DERXW WKH VDPH SDFH DV SRSXODWLRQ IURP $V D UHVXOW )UDQFH GLG QRW KDYH D ODUJH ODQGOHVV ODERU IRUFH &ODSKDP FODLPV ff7KHUH ZHUH RI FRXUVH HYHU\ZKHUH VRPH ODQGOHVV LQGLYLGXDOV EXW WKH UHDO UXUDO ODERULQJ FODVV WKH SUROHWDULDW WKH fZDJH VODYHVf RI 0DU[LDQ HFRQRPLFV GLG QRW H[LVWf f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

PAGE 67

,QGHHG WKH UDSLG LQFUHDVH RI DJULFXOWXUDO SURGXFWLYLW\ EHWZHHQ WKH HQG RI WKH 1DSROHRQLF :DUV LQ DQG WKH )UDQFR3UXVVLDQ :DU LQ ZDV EHFDXVH RI WKH VSUHDG RI PL[HG IDUPLQJ QRW WKH H[SDQVLRQ RI FXOWLYDWHG ODQG &ORXJK f KDV VKRZQ WKDW WKH QXPEHU RI VPDOO KROGLQJV LQ UXUDO )UDQFH LQFUHDVHG VXEVWDQWLDOO\ DIWHU WKH UHYROXWLRQ :ULJKW FRQWHQGV WKDW f,I WKHUH ZDV DQ\ GRPLQDQW WUHQG GXULQJ WKLV SHULRG LW ZDV WRZDUG D VWHDGLO\ LQFUHDVLQJ VXEGLYLVLRQ RI WKH VRLOf f 1HZHOO f DJUHHV WKDW ff7KH H[FHHGLQJO\ ORZ SRWHQWLDO IRU H[SDQVLRQ RI FXOWLYDWHG ODQG IRU )UDQFH DV D ZKROH PD\ KHOS H[SODLQ LWV XQLTXH GHPRJUDSKLF EHKDYLRUERWK WKH HDUO\ VWDUW RI WKH GHPRJUDSKLF WUDQVLWLRQ DQG WKH ORZ UDWHV RI QDWXUDO LQFUHDVHf 7KRXJK IHUWLOLW\ GHFOLQHG VORZO\ LQ )UDQFH EHWZHHQ EHWZHHQ PDULWDO IHUWLOLW\ GHFOLQHG VKDUSO\ DORQJ ZLWK RWKHU (XURSHDQ FRXQWULHV 9DQ GH :DOOH f &DOGZHOO D f EHOLHYHV WKDW WKH ORQJ VORZ GHFOLQH LQ IHUWLOLW\ ZDV WKH UHVXOW RI GHFOLQLQJ HFRQRPLF DGYDQWDJHV RI FKLOGUHQ LQ D FLUFXPVFULEHG DJULFXOWXUDO HFRQRP\ WKH UDSLG GHFOLQH LQ PDULWDO IHUWLOLW\ ZDV WKH UHVXOW RI ZRPHQf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f ,QFUHDVHG UXUDO UHSURGXFWLYH SUHVVXUH

PAGE 68

ZDV ODUJHO\ UHVSRQVLEOH IRU WKH JUHDW RXWPLJUDWLRQ WR 1RUWK $PHULFD LQ WKH V VHYHQ SHUFHQW RI 6FDQGLQDYLDfV SRSXODWLRQ HPLJUDWHG WR WKH 8QLWHG 6WDWHV $V GHILQHG E\ +DUULV DQG 5RVV f ff5HSURGXFWLYH SUHVVXUH UHIHUV WR DGYHUVH FRVW EHQHILW UDWLRV DV GLVWLQFW IURP SRSXODWLRQ SUHVVXUH ZKLFK LV XVXDOO\ WDNHQ WR PHDQ SRSXODWLRQ JURZWK 5HSURGXFWLYH SUHVVXUH PD\ LQFUHDVH LQ WKH DEVHQFH RI SRSXODWLRQ JURZWK DV D UHVXOW RI GHSOHWLRQV DQG GLPLQLVKLQJ UHWXUQVf 2U LQ WKLV FDVH HFRQRPLF IDFWRUV FUHDWHG UHSURGXFWLYH SUHVVXUHV ,QFUHDVLQJ UHSURGXFWLYH SUHVVXUHV DOVR DIIHFWHG (QJODQG DQG :DOHV )RU WKUHH FHQWXULHV WKH DJH DW PDUULDJH LQ (QJODQG DQG :DOHV FKDQJHG EXW IHUWLOLW\ LQ PDUULDJH VWD\HG WKH VDPH &RDOH DQG 7UHDGZD\ f 0DULWDO IHUWLOLW\ ZDV KLJK DQG GLG QRW GHFOLQH XQWLO WKH V &RDOH DQG :DWNLQV f /RZHU IHUWLOLW\ RFFXUUHG HDUOLHU LQ VRPH DUHDV EHFDXVH RI GHOD\HG PDUULDJH DQG KLJK UDWHV RI VSLQVWHUKRRG )O\QQ f %XW +DLQHV f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f $V LQ )UDQFH DQG 6ZHGHQ IHUWLOLW\ WUDQVLWLRQ LQ (QJODQG DQG :DOHV ZDV WKH UHVXOW RI LQIUDVWUXFWXUDO FKDQJH DVVRFLDWHG ZLWK UHSURGXFWLYH SUHVVXUH DQG WHFKQRORJLFDO LQQRYDWLRQ %URDGEDVHG VWUXFWXUDO HFRQRPLF FKDQJH DQG IHUWLOLW\ GHFOLQH RFFXUUHG DV D UHVXOW RI WKHVH LQIUDVWUXFWXUDO FKDQJHV

PAGE 69

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f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

PAGE 70

VHFXULW\ LQ WKHLU ROG DJH 0RUH FKLOGUHQ UHVXOWHG LQ D EHWWHU OLIH GXULQJ DJULFXOWXUDO PRGHV RI SURGXFWLRQ 7KHVH FXOWXUDO DQG PDWHULDO FRQGLWLRQV FKDQJHG ZLWK WKH DGYHQW RI WKH LQGXVWULDO PRGH RI SURGXFWLRQ 1HZ DJULFXOWXUDO WHFKQRORJLHV UHSODFHG WKH QHHG IRU IDUP ODERU DW WKH VDPH WLPH QRQIDUP HPSOR\PHQW RSSRUWXQLWLHV ZHUH H[SDQGLQJ 7KH GHFOLQLQJ YDOXH RI FKLOG ODERU RQ WKH IDUP DQG WKH LQFUHDVLQJ YDOXH RI ZRPHQf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f WKH WUHQG RI SHU ZRUNHU SURGXFW LQ DJULFXOWXUH ZDV LGHQWLFDO WR FRXQWU\ZLGH SHU ZRUNHU SURGXFW ,Q WKH 1HWKHUODQGV 'HQPDUN DQG $XVWUDOLD SURGXFWLYLW\ LQ WKH DJULFXOWXUDO VHFWRU LQFUHDVHG DW D UDWH VRPHZKDW IDVWHU WKDQ HFRQRP\ZLGH SURGXFWLYLW\ ,Q )UDQFH 6ZHGHQ ,WDO\ WKH 8665 DQG -DSDQ DJULFXOWXUDO SURGXFWLYLW\ JUHZ

PAGE 71

DW WZRWKLUGV RU PRUH WKH VSHHG RI HFRQRP\ZLGH SURGXFWLYLW\ .X]QHWV FLWHG LQ 0F*UHHYH\ f 'HPRJUDSKLF WUDQVLWLRQ RFFXUUHG LQ ERWK UXUDO DQG XUEDQ VHFWRUV WKURXJKRXW (XURSH +RZHYHU LQ HYHU\ FRXQWU\ IHUWLOLW\ ZDV KLJKHU LQ UXUDO WKDQ LQ XUEDQ DUHDV DQG ORZHU DPRQJ ODQGRZQHUV WKDQ DPRQJ SHDVDQWV $FURVV (XURSH ODQGRZQLQJ IDPLOLHV ZKR ZHUH DOUHDG\ UHGXFLQJ WKHLU IHUWLOLW\f UHPDLQHG LQ WKH FRXQWU\VLGH ZKLOH WKH UXUDO SRRU ZKR KDG WKH KLJKHVW UHSURGXFWLYH UDWHVf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f DUJXHV WKDW LQFUHDVHG DJULFXOWXUDO SURGXFWLYLW\ DQG QHZ DOWHUQDWLYHV WR IDPLO\IDUP ZRUN OHG WR WKH GLVVROXWLRQ RI WKH SDWULDUFKDO IDPLO\ V\VWHP DQG WKH EHJLQQLQJ RI IHUWLOLW\ WUDQVLWLRQ 6KRUWHU f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f

PAGE 72

0F*UHHYH\ FRQWLQXHV 7KH SDWULDUFKDO V\VWHP ZDV XQGHUPLQHG E\ WKH H[SDQVLRQ RI HGXFDWLRQ ZKLFK RIIHUHG MRE FHUWLILFDWLRQ LQGHSHQGHQW RI WKH SDWULDUFK DQG E\ WKH JURZWK RI ODERU PDUNHWV ZKLFK RIIHUHG DOWHUQDWLYHV WR FKLOGUHQ DQG GLPLQLVKHG WKH SDWULDUFKfV FRQWURO 6FKRROLQJ DQG MREV JRWWHQ LQGHSHQGHQWO\ FKDQJHG WKH UHODWLYH EDUJDLQLQJ SRVLWLRQV RI SDWULDUFK ZLIH VRQV DQG GDXJKWHUV ,QQRYDWLRQV LQ IDUP WHFKQLTXHV OHG WR JUHDWHU SHU ZRUNHU SURGXFWLYLW\ LQ DJULFXOWXUH DQG GLPLQLVKHG WKH QHHG IRU IDUP IDPLO\ ODERU 2YHUDOO WKH QHZ DOWHUQDWLYHV IRU FKLOGUHQ DQG WKH UHGXFHG GHPDQG IRU WKHLU VHUYLFHV E\ SDUHQWV UHGXFHG WKH HFRQRPLF DGYDQWDJHV RI FKLOGUHQ )HUWLOLW\ GHFOLQH ZDV D SUHGLFWDEOH UHVSRQVH WR WKHVH FKDQJHG FRQGLWLRQV LELG f ,QWHUJHQHUDWLRQDO REOLJDWLRQV FKDQJHG EHFDXVH WKH PRGH RI SURGXFWLRQ FKDQJHG 7KH JURZLQJ LQGXVWULDO PRGH RI SURGXFWLRQ FUHDWHG QHZ PDWHULDO UHODWLRQVKLSV ZKLFK KDG KLVWRULF UHSURGXFWLYH UHSHUFXVVLRQV :RPHQ EHFDPH OHVV GHSHQGHQW RQ PHQ FKLOGUHQ DQG H[WHQGHG IDPLOLHV IRU HFRQRPLF UHVRXUFHV SHUKDSV IRU WKH ILUVW WLPH LQ KXPDQ KLVWRU\ 0RUH HFRQRPLF LQGHSHQGHQFH DOORZHG IRU JUHDWHU LQGLYLGXDO DXWRQRP\ 6LQFH HDUO\ FKLOGEHDULQJ DQG ODUJH IDPLOLHV ZRXOG UHVWULFW WKHVH DVSLUDWLRQV IRU ZRPHQ WKH\ LQFUHDVLQJO\ GHOD\HG FKLOGEHDULQJ DQG UHVWULFWHG IDPLO\ VL]H )OLQQ f $OVR WKH DGYDQWDJHV RI KDYLQJ D IHZ H[SHQVLYHf HGXFDWHG ZDJHHDUQLQJ XUEDQL]HG FKLOGUHQ RXWZHLJKHG WKH DGYDQWDJHV RI KDYLQJ D ORW RI LQH[SHQVLYHf XQHGXFDWHG FKLOGUHQ +D\GHQ ZULWHV 8QGHU DGYDQFHG LQGXVWULDO FRQGLWLRQV WKH LQGLYLGXDO UDWKHU WKDQ WKH IDPLO\ RU OLQHDJH RU FODQf EHFRPHV WKH FRPSHWLQJ HFRQRPLF XQLW 7KLV UHSUHVHQWV WKH FURVVLQJ RI D QHZ UXELFRQ RI UHSURGXFWLYH EHKDYLRU IRU WKH IXQGDPHQWDO UHODWLRQVKLSV RI UHSURGXFWLRQ FKDUDFWHUL]LQJ WKH SUHYLRXV \HDUV ZLOO KDYH EHHQ DOWHUHG ZH KDYH ILQDOO\ UHDFKHG WKH WRS RI WKH VLJPRLG FXUYH RI SRSXODWLRQ LQFUHDVH EHJXQ ZKHQ KXQWHLJDWKHUHUV ILUVW EHJDQ PDNLQJ HIIHFWLYH XVH RI VPDOOERGLHG UHVRXUFHV VRPH \HDUV DJR DOVR VHH 7DEDK f 3RSXODWLRQ JURZWK UHPDLQHG ORZ DPRQJ 3DOHROLWKLF IRUDJLQJ SHRSOH QRW EHFDXVH WKH\ ZDQWHG IHZHU FKLOGUHQ EXW EHFDXVH RI ELRORJLFDO IDFWRUV DQG EHFDXVH WKH\ FRXOGQfW DIIRUG WKHP 0RUWDOLW\ GHFOLQHG DQG SRSXODWLRQ JUHZ GXULQJ WKH 3OHLVWRFHQH+RORFHQH WUDQVLWLRQ

PAGE 73

QRW EHFDXVH SHRSOH ZDQWHG PRUH FKLOGUHQ EXW EHFDXVH WKH\ FRXOG DIIRUG IHHGf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fV KLVWRU\ ^H[FHSW IRU FDWDVWURSKLF H[WLQFWLRQV` f 7R XQGHUVWDQG WKH GHWHUPLQDQWV RI FKDQJLQJ IHUWLOLW\ EHKDYLRU GHPRJUDSKLF WKHRU\ PXVW EH SODFHG LQ WKH PRUH HQFRPSDVVLQJ IUDPHZRUN RI HYROXWLRQDU\ WKHRU\ (YROXWLRQDU\

PAGE 74

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

PAGE 75

&+$37(5 02'(51 (9,'(1&( ,QFUHDVHV LQ PRGHP HGXFDWLRQ LV IUHTXHQWO\ FLWHG LQ WKH GHPRJUDSKLF WUDQVLWLRQ OLWHUDWXUH DV RQH RI WKH FDXVHV RI IHUWLOLW\ GHFOLQH LQ WKH GHYHORSLQJ ZRUOG $JJUHJDWH FURVVFXOWXUDO GDWD VKRZV VWURQJ FRUUHODWLRQV EHWZHHQ KLJK OHYHOV RI HGXFDWLRQ FRQWUDFHSWLYH SUHYDOHQFH DQG ORZHU IHUWLOLW\ &XOWXUDO LGHDOLVWV OLNH WKH &DOGZHOOf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

PAGE 76

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f 3URJUDPPDWLF VRFLDO SV\FKRORJLFDO DQG HPLF PHQWDOLVW DSSURDFKHV HPSKDVL]H WKDW HGXFDWLRQ FKDQJHV DWWLWXGHV SUHIHUHQFHV YDOXHV RSLQLRQV DQG EHOLHIV DFFRUGLQJ WR QHZ JRDOV DQG GHVLUHV EURXJKW DERXW E\ PRGHUQL]DWLRQ )DZFHWW )DZFHWW DQG $UQROG f &DOGZHOO DVVHUWV (GXFDWLRQ DSSHDUV WR FDXVH WKH PRVW FKDQJHV ,W FKDOOHQJHV WUDGLWLRQDO DXWKRULW\ JLYHV IHPDOHV DQ DEVROXWH FULWHULRQ RU YDOXH IRU FRPSDULVRQ ZLWK PDOHV WHDFKHV JLUOV QHZ DLPV DQG GHVWLQLHV WKDW DOPRVW DOZD\V LQFOXGH VRPH PRYH WRZDUG D PRUH HJDOLWDULDQ :HVWHUQ IDPLO\ VWUXFWXUH DQG FKDQJHV KXVEDQGVf DSSUHFLDWLRQ RI WKHLU ZLYHV ZLYHVf DSSUHFLDWLRQ RI WKHPVHOYHV DQG FKLOGUHQfV DSSUHFLDWLRQ RI WKHLU PRWKHUV ,Q IDPLOLHV ZLWK HGXFDWHG ZRPHQ ZLYHV EHFRPH PRUH H[SHQVLYH DQG VR GR FKLOGUHQ SDUWO\ EHFDXVH PRWKHUV DSSHDU WR EH PRUH OLNHO\ WR VWUHVV WKH GHSHQGHQFH RI FKLOGUHQ DQG WKH SULPDF\ RI WKH QXFOHDU IDPLO\ OE f 0RVW DJJUHJDWH OHYHO UHVHDUFK RQ KLVWRULF DQG PRGHP SRSXODWLRQV SRLQWV WR D VWURQJ QHJDWLYH UHODWLRQVKLS EHWZHHQ HGXFDWLRQ DQG IHUWLOLW\ LQ 6ZLW]HUODQG 9DQ GH :DOOH LQ *HUPDQ\ .QRGDO LQ WKH 8QLWHG 6WDWHV 9LQRYVNLV DOVR VHH %RJXH DQG

PAGE 77

3HWHUVHQ f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f 5HIHUULQJ WR VWXG\ SRSXODWLRQV LQ WKH :RUOG )HUWLOLW\ 6XUYH\ :)6f &OHODQG DQG 5RGULTXH] f QRWH f7KHUH LV RQO\ RQH LQVWDQFH ZKHQ IHUWLOLW\ LV KLJKHU DPRQJ FRXSOHV ZKHUH WKH ZLIH KDV VHFRQGDU\ VFKRROLQJ WKDQ DPRQJ ZLYHV ZKR FRPSOHWHG SULPDU\ VFKRROf 5HYLHZLQJ WKH VDPH GDWD VHW )DURRJ DQG 'H*UDII ZULWH 2Q DYHUDJH ZKHQ QRW FRQWUROOLQJ IRU RWKHU IDFWRUV ZRPHQ ZLWK VHYHQ RU PRUH \HDUV RI VFKRROLQJ JDYH ELUWK WR WKUHH IHZHU FKLOGUHQ WKDQ GLG ZRPHQ ZLWK QR VFKRROLQJ ZKLOH WKH GLIIHUHQWLDOV LQ VXUYLYLQJ FKLOGUHQ DFURVV HGXFDWLRQ OHYHOV ZHUH VPDOOHU 7KLV QHJDWLYH UHODWLRQVKLS EHWZHHQ IHUWLOLW\ DQG HGXFDWLRQ UHPDLQHG VLJQLILFDQW LQ DERXW SHU FHQW RI WKH FRXQWULHV VWXGLHG DIWHU FRQWUROOLQJ IRU GXUDWLRQ RI PDUULDJH XUEDQUXUDO UHVLGHQFH ZLIHfV RFFXSDWLRQ DQG KXVEDQGfV HGXFDWLRQ ,Q DGGLWLRQ LQ ERWK ELYDULDWH DQG PXOWLYDULDWH DQDO\VHV WKH UHODWLRQVKLS EHWZHHQ GHVLUHG IDPLO\ VL]H DQG HGXFDWLRQ ZDV FRQVLVWHQWO\ PRQRWRQLFDOO\ QHJDWLYH DQG WKDW EHWZHHQ FRQWUDFHSWLYH XVH DQG HGXFDWLRQ ZDV VLPLODUO\ SRVLWLYH f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f ,Q DQRWKHU JOREDO VDPSOH :KHHOHU f IRXQG VHFRQGDU\ VFKRRO HQUROOPHQW UDWHV IRU IHPDOHV DQG IDPLO\ SODQQLQJ HIIRUWV WR EH KLJKO\ VLJQLILFDQW LQ H[SODLQLQJ WKH SHUFHQWDJH

PAGE 78

FKDQJH LQ IHUWLOLW\ GXULQJ WKH V 7KH GHOD\HG UHDFWLRQ RI IHUWLOLW\ GHFOLQH LQ WKLV VWXG\ LV H[SODLQHG LQ SDUW E\ WKH WLPH LW WDNHV IRU IDPLO\ SODQQLQJ WR EH DFFHSWHG DQG ZLGHO\ DGRSWHG 0DXOGLQ DQG %HUHOVRQ f ,QFUHDVHV LQ DGXOW OLWHUDF\ KDV DOVR EHHQ IRXQG WR QHJDWLYHO\ FRUUHODWH ZLWK IHUWLOLW\ LQ D JOREDO VDPSOH RI FRQWHPSRUDU\ GHYHORSLQJ FRXQWULHV %RXOLHU f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f FRQFOXGHV WKDW HGXFDWLRQ FDXVHV IHUWLOLW\ GHFOLQH ffJLYHQ WKH VWURQJ QHJDWLYH HIIHFWV RI VHFRQGDU\ VFKRRO HQUROOPHQWV RQ IHUWLOLW\ IRXQG LQ WKLV DQG RWKHU VWXGLHVf ,JQRULQJ WKH HIIHFWV RI D TXDUWHU FHQWXU\ RI PDWHULDO FKDQJH +HVV LELG f ZULWHV f,Q /DWLQ $PHULFD WKH NH\ IDFWRU JHQHUDWLQJ WKH IHUWLOLW\ GHFOLQHV RYHU WKH ODVW \HDUV VHHPV WR EH JDLQV LQ VHFRQGDU\ IHPDOH HQUROOPHQW UDWHV )RU WKH PRUH HJDOLWDULDQ QDWLRQV RI $VLD HDUO\ DQG VWURQJ IDPLO\ SODQQLQJ SURJUDPV DUH WKH GULYLQJ IRUFHf &RQWUDU\ WR WKH SHUYDVLYH PHQWDOLVW DQDO\WLFDO ELDV UHVHDUFK LQWR WKH HIIHFWV RI HGXFDWLRQ DQG IDPLO\ SODQQLQJ RQ IHUWLOLW\ KDYH EHHQ IDU IURP FRQFOXVLYH 'DWD ZKLFK GLVSXWHV WKH FDXVDO HIIHFWV RI IDPLO\ SODQQLQJ RQ IHUWLOLW\ GHFOLQH KDYH EHHQ SURYLGHG DERYH VHH FKDSWHU f 3RVLWLYH DQG QHJDWLYH FRUUHODWLRQV EHWZHHQ HGXFDWLRQ DQG IHUWLOLW\ KDYH EHHQ IRXQG LQ KLVWRULFDO DQG FRQWHPSRUDU\ GDWD IRU DQ RYHUYLHZ VHH +DZWKRUQH *UDII &RFKUDQH f

PAGE 79

,QFRQVLVWHQFLHV ZHUH ILUVW GLVFRYHUHG LQ UHVHDUFK DW PLFUR OHYHOV RI DQDO\VLV HJ KRXVHKROGV ZKLFK FDOOHG LQWR TXHVWLRQ ILQGLQJV GHULYHG IURP DJJUHJDWH PHDVXUHV VXFK DV WKRVH XVHG LQ WKH :)6f $IWHU FRPSDULQJ ILQGLQJV IURP GLIIHUHQW UHVHDUFK GHVLJQV *UDII f KDV REVHUYHG ff7KH KLJKHU WKH OHYHO RI DJJUHJDWLRQ DQG WKH IXUWKHU WKH GDWD DUH UHPRYHG IURP WKH OHYHO RI LQGLYLGXDOV IDPLOLHV RU KRXVHKROGV WKH KLJKHU WKH GHJUHH RI DVVRFLDWLRQf ,Q PRUH QDUURZO\ GHVLJQHG KLVWRULFDO VWXGLHV RI 8QLWHG 6WDWHV IHUWLOLW\ EHKDYLRU DW WKH KRXVHKROG RU LQGLYLGXDO OHYHO RI DQDO\VLVf HGXFDWLRQ KDV EHHQ VKRZQ WR EH D OHVV LPSRUWDQW SUHGLFWRU RI IHUWLOLW\ GHFOLQH WKDQ WUDGLWLRQDO ZLVGRP KDV H[SHFWHG (DVWHUOLQ E /HHW f 7 3DXO 6FKXOW] f KDV IRXQG D SRVLWLYH FRUUHODWLRQ EHWZHHQ IHUWLOLW\ DQG HGXFDWLRQ LQ 7DLZDQ ,QGHHG ZKDW H[SODLQV WKH SRVW:RUOG :DU ,, EDE\ ERRP LQ WKH :HVW ZKHUH IHUWLOLW\ DQG HGXFDWLRQDO OHYHOV IRU ERWK PHQ DQG ZRPHQf UHDFKHG QHZ KHLJKWV" 5HVHDUFK LQ GHYHORSLQJ FRXQWULHV KDV LQGLFDWHG WKHUH PD\ EH D QRQOLQHDU UHODWLRQVKLS EHWZHHQ HGXFDWLRQ DQG IHUWLOLW\ /HYLQH f KDV VKRZQ WKDW ZRPHQ ZLWK VRPH SULPDU\ VFKRROLQJ GLVSOD\ VKRUWHU ELUWK LQWHUYDOV DQG KLJKHU IHUWLOLW\ WKDQ WKRVH ZLWKRXW SULPDU\ VFKRRO H[SHULHQFH DOVR VHH &OHODQG DQG 5RGULJXH] f *XH\H DQG YDQ GH :DOOH f KDYH UHFHQWO\ REVHUYHG WKDW ffWKHUH LV LQFUHDVLQJ HYLGHQFH LQ VXE6DKDUDQ $IULFD WKDW XQPDUULHG KLJK VFKRRO VWXGHQWV DUH PRUH OLNHO\ WR JHW SUHJQDQW WKDQ WKHLU XQHGXFDWHG FRXQWHUSDUWVf +HVV f DOVR IRXQG WKDW ff)RU VXE6DKDUDQ $IULFDQ QDWLRQV KLJKHU HQUROOPHQW UDWHV LQ VHFRQGDU\ HGXFDWLRQ IRU ZRPHQ ZHUH DVVRFLDWHG ZLWK KLJKHU IHUWLOLW\f 7KH UHDVRQ IRU WKLV LV SUREDEO\ WKDW ZRPHQ ZLWK VRPH HGXFDWLRQ WHQG WR HQJDJH LQ EHWWHU KHDOWK SUDFWLFHV HQWHU LQWR PRUH VWDEOH PDULWDO XQLRQV LJQRUH WUDGLWLRQDO SURKLELWLRQV RQ VH[XDO LQWHUFRXUVH DQG DUH PRUH NQRZOHGJHDEOH DERXW IRRG VXSSOHPHQWV %\ ZHDQLQJ

PAGE 80

WKHLU EDELHV HDUOLHU WKHVH ZRPHQ VKRUWHQ WKH GXUDWLRQ RI SRVWSDUWXP DPPHQRUKHD DQG WKHUHIRUH DUH H[SRVHG WR WKH ULVN RI SUHJQDQF\ VRRQHU WKDQ OHVV HGXFDWHG ZRPHQ VHH 1DJ f +RZHYHU GXULQJ WKH FRXUVH RI D OLIHWLPH LW LV FOHDU WKDW $IULFDQ ZRPHQ ZLWK DW OHDVW VHFRQGDU\ VFKRRO HGXFDWLRQ ZKR JR RQ WR JDLQIXO HPSOR\PHQW KDYH IHZHU FKLOGUHQ WKDQ WKHLU XQHGXFDWHG FRXQWHUSDUWV VHH Sf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fW PLJUDWH WR XUEDQ DUHDV EHFDXVH WKHUH DUH EHWWHU VFKRROV WKH\ PLJUDWH EHFDXVH WKHUH LV WKH SRVVLELOLW\ RI D EHWWHU OLIHf§EHWWHU MREV 3DUHQWV GRQfW VHQG WKHLU FKLOGUHQ WR VFKRRO WR EHFRPH PRUH HGXFDWHG IDUPHUV DQG VHDPVWUHVVHV WKH\ VHQG WKHLU FKLOGUHQ WR VFKRRO VR WKH\ FDQ JHW D KLJKHU SD\LQJ MRE LQ WKH PRGHP VHFWRU ZKLFK LQ WXUQ LV H[SHFWHG WR PDWHULDOO\ EHQHILW WKH IDPLO\ :RPHQ GRQf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

PAGE 81

PD\ YDU\ EXW IHUWLOLW\ EHKDYLRU LV FRQWLQJHQW XSRQ PDWHULDO FRVWV DQG EHQHILWV WR LQGLYLGXDOV HVSHFLDOO\ ZRPHQf 7KH PRVW LPSRUWDQW IDFWRU LQ WKLV UHJDUG LV KRZ SHRSOH DUH DEOH WR VXUYLYH RU HDUQ D OLYLQJ (PSOR\PHQW DQG )HUWLOLW\ )HPDOH ODERU SDUWLFLSDWLRQ ZDV ILUVW FRQVLGHUHG D IHUWLOLW\ GHWHUPLQDQW LQ WKH HDUO\ V VHH &ROOLYHU DQG /DQJORLV f %XW IHPDOH ODERU SDUWLFLSDWLRQ KDV EHHQ IRXQG WR EH DQ XQUHOLDEOH FDXVH RI IHUWLOLW\ GHFOLQH +LJK IHUWLOLW\ UHJLPHV FRLQFLGH ZLWK KLJK IHPDOH ODERU SDUWLFLSDWLRQ UDWHV LQ SUHLQGXVWULDO DQG SURWRLQGXVWULDO SRSXODWLRQV VXFK DV WKRVH LQ KLVWRULFDO (QJODQG RU FRQWHPSRUDU\ $IULFD +DQGZHUNHU f )HPDOH ODERU SDUWLFLSDWLRQ LV QRW D QHFHVVDU\ FRQGLWLRQ IRU IHUWLOLW\ GHFOLQHV LQ $VLD RU D VXIILFLHQW FRQGLWLRQ LQ :HVW $IULFD %LUGVDOO f $IWHU VXUYH\LQJ WKH GDWD RQ IHPDOH ODERU SDUWLFLSDWLRQ DQG IHUWLOLW\ FURVVFXOWXUDOO\ )DURRJ DQG 'H*UDII f DJUHH WKDW fQR FRQFOXVLYH UHODWLRQVKLS EHWZHHQ ZRPHQfV ZRUN SDUWLFLSDWLRQ DQG IHUWLOLW\ LV HYLGHQW IRU GHYHORSLQJ FRXQWULHVf 6RPH UHVHDUFK KDV VXJJHVWHG WKDW LQFUHDVHG LQFRPH IURP HPSOR\PHQW WKDW GRHV QRW LQWHUIHUH ZLWK FKLOGUHDULQJ PD\ DFWXDOO\ LQFUHDVH IHUWLOLW\ :DUH %LQGDU\ HW DO *ROGVWHLQ 3LQHOOL f 1HLWKHU HPSOR\PHQW RU IHUWLOLW\ LV UHVWULFWHG IRU ZRPHQ ZKR FDQ UHO\ RQ FKLOG FDUH SURYLGHG E\ WKHLU H[WHQGHG IDPLO\ 0XHOOHU f %XW H[WHQGHG IDPLO\ WLPH LQWHUFKDQJHV GLPLQLVK DQG NLQVKLS JURXSV VKULQN DV HFRQRPLF DQG JHRJUDSKLFDO PRELOLW\ LQFUHDVHV 2SSRQJ f 7KXV HFRQRPLF FKDQJHV ZKLFK FUHDWH LQFHQWLYHV IRU PLJUDWLRQ DQG PRUH HPSOR\PHQW RSSRUWXQLWLHV IRU ZRPHQ WR ZRUN RXWVLGH WKH KRXVHKROG DOVR VHOHFWV IRU WKH QXFOHDUL]DWLRQ RI WKH IDPLO\ 7KH FRVW RI FKLOGUHQ LQFUHDVHV IRU ZRPHQ ZKR DUH XQDEOH WR GHSHQG RQ FKLOG FDUH SURYLGHG E\ WKHLU H[WHQGHG IDPLO\

PAGE 82

,Q 3XHUWR 5LFR DQG -DSDQ -DIIH DQG $]XPL f IRXQG WKDW IHUWLOLW\ ZDV HTXDOO\ KLJK IRU ZRPHQ ZRUNLQJ LQ ffFRWWDJH LQGXVWULHVf DQG WKRVH ffHFRQRPLFDOO\ LQDFWLYHf RQO\ ZRPHQ ZKR ZRUNHG DZD\ IURP KRPH KDG ORZHU IHUWLOLW\ ,Q 7KDLODQG &KDODPZRQJ f KDV DOVR IRXQG KLJKHU IHUWLOLW\ DPRQJ ZRPHQ HQJDJHG LQ fKRPH LQGXVWU\f DQG ORZHU IHUWLOLW\ DPRQJ ZRPHQ ZRUNLQJ RXWVLGH WKH KRPH 7KHVH GDWD VXJJHVW WKDW ZRPHQf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f IRXQG DQ LQYHUVH UHODWLRQVKLS EHWZHHQ IHUWLOLW\ DQG WKH HPSOR\PHQW RI ZRPHQ RXWVLGH WKH KRPH ,Q DQ ,QGLDQ YLOODJH *XSWD f IRXQG WKDW IHUWLOLW\ GHFOLQHG ZLWK WKH H[SDQVLRQ RI XUEDQ LQGXVWULDO WHFKQLFDO DQG ZKLWHFROODU HPSOR\PHQW RSSRUWXQLWLHV RXWVLGH WKH YLOODJH &RQYHUVHO\ VWXGLHV VXJJHVW IHUWLOLW\ ZLOO LQFUHDVH ZKHQ ZRPDQ DUH H[FOXGHG IURP ZDJHODERU RU KDYH OLWWOH MRE RFFXSDWLRQDO PRELOLW\ 7LHQ f 6HYHUDO VWXGLHV KDYH IRXQG D IHUWLOLW\ LQKLELWLQJ UHODWLRQVKLS LQ IRUPDO VHFWRU ZRUN RXWVLGH WKH KRPH EHIRUH PDUULDJH 6WDQGLQJ 5RVHQ DQG 6LPPRQV =DUDWH f 7KHVH VWXGLHV VXJJHVW WKDW ZRPHQfV HPSOR\PHQW DZD\ IURP WKH KRPH ORZHUV IHUWLOLW\ 7KLV LV EHFDXVH PRGHP HPSOR\PHQW DZD\ IURP WKH KRPHf LV PRUH WLPHPRQH\ RULHQWHG DQG LQKHUHQWO\ OHVV FRPSDWLEOH ZLWK FKLOG FDUH WKDQ WUDGLWLRQDO ZRUN UROHV LQ DQG DURXQG WKH KRPHf ,Q DGGLWLRQ VRFLRFXOWXUDO LQIOXHQFHV FRPSHWLWLYH FRQVXPHU DWWLWXGHV DQG QRQ WUDGLWLRQDO QRUPV DERXW PDUULDJH DQG IDPLO\ DUH PRUH SUHYDOHQW LQ D PRGHP XUEDQ ZRUN

PAGE 83

JURXS DWPRVSKHUH ,I WKLV LV WUXH LW LV LPSRUWDQW WR XQGHUVWDQG KRZ FRQVWUDLQWV WR WKHVH RSSRUWXQLWLHV HIIHFW IHUWLOLW\ %HVLGHV WKH SHUYDVLYH FRQVWUDLQW RI D VWDJQDQW HFRQRP\ WKHUH DUH DW OHDVW WZR RWKHU SULPDU\ IDFWRUV WKDW OLPLW ZRPHQfV ZRUN SDUWLFLSDWLRQ RXWVLGH WKH KRPH f FKLOG ODERU DQG f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f DVVHUWV ff7KH VXEVWLWXWLRQ RI ZRPHQ IRU FKLOG ZRUNHUV FRXOG EH H[SHFWHG WR UHGXFH IHUWLOLW\ LQ WZR ZD\V E\ UDLVLQJ WKH FRVWV RI FKLOGUHQ DQG E\ UDLVLQJ WKH RSSRUWXQLW\ FRVWV RI ZRPHQfV LQDFWLYLW\f ,W FDQ EH LQIHUUHG WKDW WKH LQVWLWXWLRQDOL]DWLRQ DQG HQIRUFHPHQW RI FKLOG ODERU ODZV ZRXOG LPSDFW RQ WKH DYDLODELOLW\ RI HPSOR\PHQW RXWVLGH WKH KRPH IRU ZRPHQ WKXV FUHDWLQJ FRQGLWLRQV WKDW VHOHFW IRU ORZHU IHUWLOLW\ 2Q WKH VHFRQG SRLQW 6WDQGLQJ f REVHUYHV ff'LVFULPLQDWLRQ DJDLQVW ZRPHQ LQ WKH ODERU IRUFH KDV UHFHLYHG UHODWLYHO\ OLWWOH DWWHQWLRQ LQ WKH IHUWLOLW\ OLWHUDWXUH +RZHYHU LW FDQ KDYH D VLJQLILFDQW DIIHFW EHFDXVH LW DOWHUV WKH RSSRUWXQLW\ FRVWV RI FKLOGEHDULQJ DQG FKLOGUHDULQJf (PSOR\PHQW GLVFULPLQDWLRQ DOVR OHDGV WR HGXFDWLRQDO GLVFULPLQDWLRQ EHFDXVH SDUHQWV LQYHVW PRUH LQ WKH HGXFDWLRQ RI FKLOGUHQ WKH\ H[SHFW ZLOO HDUQ PRUH LQ WKH ODERU PDUNHW 7KXV HFRQRPLF RSSRUWXQLWLHV LPSDFW RQ IHPDOH HGXFDWLRQDO DWWDLQPHQW VHH *UHHQKDOJK f

PAGE 84

,Q 3DNLVWDQ 6DWKHU HW DO f REVHUYH ff:KHUHDV WKH HIIHFW RI ZRPHQfV HGXFDWLRQ RQ IHUWLOLW\ GLPLQLVKHV ZKHQ RWKHU LQGHSHQGHQW IDFWRUV DUH FRQWUROOHG WKH RSSRVLWH DSSOLHV LQ WKH FDVH RI ZRPHQfV RFFXSDWLRQf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f $V ZH KDYH VHHQ LQ DQ DQDO\VLV RI WKH HFRQRPLF DVSHFWV RI KLVWRULFDO GHPRJUDSKLF FKDQJH LQ (XURSH 0F*UHHYH\ f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f 7KH UHVHDUFK FLWHG DERYH VXJJHVWV WKDW LQIUDVWUXFWXUDO HFRQRPLF FKDQJH PD\ EH D SUHUHTXLVLWH WR GHPRJUDSKLF WUDQVLWLRQ -XVW DV GXULQJ WKH ILUVW GHPRJUDSKLF WUDQVLWLRQ QHZ PRGHV RI SURGXFWLRQ EULQJ QHZ PRGHV RI UHSURGXFWLRQ 3URGXFWLYH HPSOR\PHQW WKDW LV

PAGE 85

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f 7KLV ZLOO QRW EH WUXH IRU ZRPHQ SUHVHQWO\ HQWHULQJ WKHLU UHSURGXFWLYH \HDUV ,QGHHG :RUOG %DQN Df GDWD VKRZV WKDW WKH WRWDO IHUWLOLW\ UDWH 7)5f RI =LPEDEZH KDV GHFOLQHG GUDPDWLFDOO\ VLQFH WKH ODWH V GRZQ IURP WR GXULQJ WKLV SHULRG =LPEDEZH LV WKH ILUVW VXE6DKDUDQ $IULFDQ FRXQWU\ WR H[SHULHQFH VXVWDLQHG IHUWLOLW\ GHFOLQH 7KH RYHUZKHOPLQJ WHQGHQF\ WRGD\ LQ =LPEDEZH LV WRZDUG PRUH DQWLQDWDO FXOWXUDO SHUVSHFWLYHV DQG EHKDYLRUV 7KH RQVHW RI IHUWLOLW\ WUDQVLWLRQ LQ =LPEDEZH FRUUHVSRQGV ZLWK ZDU PLJUDWLRQ DQG UDSLG LQGXVWULDOL]DWLRQ EHWZHHQ ff(FRQRPLF JURZWK LQ =LPEDEZH DYHUDJHG DERXW SHUFHQW SHU \HDU EHWZHHQ f 3)' f 8QLWHG 1DWLRQV VDQFWLRQV RQ WKH JRYHUQPHQW RI 5KRGHVLD GXULQJ WKLV SHULRG IRUFHG &RORQLDO =LPEDEZH LQWR D GHYHORSPHQW

PAGE 86

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f =LPEDEZHfV *'3 LV FRPSRVHG RI DJULFXOWXUH bf PLQLQJ bf PDQXIDFWXULQJ bf LQIUDVWUXFWXUH DQG SURGXFHU VHUYLFHV bf DQG JRYHUQPHQW H[SHQGLWXUHV bf *2= f 7KLV GLYHUVLILHG HFRQRPLF JURZWK KDV WUDQVODWHG LQWR VXEVWDQWLDO LQFUHDVHV LQ VNLOOHG HPSOR\PHQW RSSRUWXQLWLHV IRU ERWK PHQ DQG ZRPHQ &RPSDULQJ &HQVXV GDWD 3RSXODWLRQ &HQVXV f ZLWK WKH /DERXU )RUFH 6XUYH\ /)6 f WKHUH KDV EHHQ DQ LQFUHDVH LQ WKH ODERU IRUFH RI QHDUO\ SHRSOH SHUFHQW RI ZKRP ZHUH ZRPHQ ,Q ZRPHQ FRQVWLWXWHG SHUFHQW RI DOO VDOHV ZRUNHUV SHUFHQW RI SURIHVVLRQDO DQG WHFKQLFDO ZRUNHUV SHUFHQW RI FOHULFDO ZRUNHUV DQG SHUFHQW RI VHUYLFH ZRUNHUV *2= f 7KH QXPEHU RI ZRPHQ HPSOR\HG E\ WKH SXEOLF VHFWRU PRVWO\ DV WHDFKHUVf LQFUHDVHG IURP LQ WR LQ .D]HPEH f :RPHQ DUH QRZ EHLQJ HQFRXUDJHG WR WUDQDV DJULFXOWXUDO H[WHQVLRQ ZRUNHUV DQG RIILFHUV DQG WR EHFRPH PRUH DFWLYH LQ WUDGH XQLRQ DFWLYLWLHV DQG HFRQRPLF FRRSHUDWLYHV ,QFUHDVHG RSSRUWXQLWLHV IRU ZRPHQ LQ UXUDO DUHDV KDYH VSXUUHG FKDQJHV LQ IHUWLOLW\ DQG HFRQRPLF SURGXFWLRQ ff0DL]H SURGXFWLRQ TXDGUXSOHG DIWHU

PAGE 87

ZRPHQfV DFFHVV WR ODQG DJULFXOWXUDO WUDLQLQJ DQG FUHGLW ZDV LPSURYHG $QG WKLV LV RQH UHDVRQ =LPEDEZH KDV RQH RI WKH KLJKHVW UDWHV RI IDPLO\ SODQQLQJ XVDJH DQG WKH ORZHVW LQIDQW PRUWDOLW\ UDWHV LQ $IULFDf 81)3$ f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f 8UEDQ ZRPHQ DUH WKUHH WLPHV PRUH OLNHO\ WKDQ UXUDO ZRPHQ WR KDYH REWDLQHG DW OHDVW VRPH VHFRQGDU\ HGXFDWLRQ b YHUVXV bf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f

PAGE 88

5HFHQWO\ WKHUH KDV EHHQ D GUDPDWLF LQFUHDVH LQ FRQWUDFHSWLYH XVH 6LQFH WKH =LPEDEZH 1DWLRQDO )DPLO\ 3ODQQLQJ &RXQFLO =1)3& f VXUYH\ FRPSOHWHG LQ WKHUH KDV EHHQ D SHUFHQW LQFUHDVH LQ ffHYHU XVHf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f +RZHYHU DPRQJ WHHQDJHUV ff7KH SURSRUWLRQ FXUUHQWO\ SUHJQDQW ZLWK WKH ILUVW FKLOG YDULHV OLWWOH ZLWK HGXFDWLRQDO OHYHOf LELGf &RQWUDFHSWLRQ LV LQFUHDVLQJO\ EHLQJ XVHG E\ ZRPHQ ZLWK OLWWOH RU QR HGXFDWLRQ %HWZHHQ DQG WKH FRQWUDFHSWLYH XVH RI DOO PHWKRGV DPRQJ ZRPHQ ZKR QHYHU DWWHQGHG VFKRRO LQFUHDVHG IURP SHUFHQW WR SHUFHQW WKH LQFUHDVH ZDV IURP SHUFHQW WR SHUFHQW IRU PRGHP PHWKRGV LELGf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f DV FRPSDUHG WR WKH RWKHU JURXSV SHUFHQWf ='+6 f ,Q DGGLWLRQ WR EHLQJ FRUUHODWHG ZLWK HGXFDWLRQDO DFKLHYHPHQW IHUWLOLW\ FRQWURO LV VWURQJO\ FRUUHODWHG ZLWK VHWWOHPHQW W\SH 7KH XUEDQ SRSXODWLRQ JUHZ DSSUR[LPDWHO\ SHUFHQW SHU

PAGE 89

\HDU EHWZHHQ 3)' f 7RGD\ DERXW RQHIRXUWK RI WKH SRSXODWLRQ RI =LPEDEZH OLYHV LQ XUEDQ DUHDV ZKHUH PRUH VNLOOHG HPSOR\PHQW RSSRUWXQLWLHV HQFRXUDJH SDUHQWV WR VXSSRUW WKHLU GDXJKWHUV HGXFDWLRQ DQG \RXQJ ZRPHQ WR GHOD\ FKLOGEHDULQJ DQG VWD\ LQ VFKRRO ORQJHU ,Q XUEDQ DUHDV SHUFHQW RI DOO ZRPHQ KDYH UHDFKHG VHFRQGDU\ VFKRRO DV RSSRVHG WR RQO\ SHUFHQW RI WKHLU UXUDO FRXQWHUSDUWV WKH GLIIHUHQFH LQ FRQWUDFHSWLYH XVH EHWZHHQ ZRPHQ OLYLQJ LQ XUEDQ YHUVXV UXUDO DUHDV LV SHUFHQW ='+6 f :LWK DJJUHJDWH GDWD LW LV GLIILFXOW WR WHOO ZKHWKHU VHWWOHPHQW W\SH DQG HPSOR\PHQW RSSRUWXQLWLHVf RU OHYHO RI HGXFDWLRQ LV PRUH FDXVDOO\ LPSRUWDQW LQ UHGXFLQJ IHUWLOLW\ +RZHYHU VLQFH HPSOR\PHQW RSSRUWXQLWLHV DUH ODUJHO\ UHVSRQVLEOH IRU XUEDQ PLJUDWLRQ DQG XUEDQL]DWLRQ LV FRUUHODWHG ZLWK LQFUHDVHG HGXFDWLRQ DQG FRQWUDFHSWLYH XVH D VWURQJ FDVH FDQ EH PDGH IRU HFRQRPLF FDXVDO IDFWRUV LQ IHUWLOLW\ GHFOLQH ,Q D UHFHQW VPDOO VDPSOH Q f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f WR GHVLUH RU IHZHU FKLOGUHQ WKDQ DUH ZRPHQ ZKR YDOXH KDYLQJ FKLOGUHQ RYHU FDUHHU RU ZRPHQ ZKR YDOXH FDUHHU DQG FKLOGEHDULQJ HTXDOO\ FKLVTXDUH S f ,YHUVRQ f ,QFUHDVHG RSSRUWXQLWLHV IRU IHPDOH HPSOR\PHQW LQFUHDVHV FDUHHU LQFHQWLYHV DQG UHGXFHV IHUWLOLW\ 7KH RSSRUWXQLW\ FRVWV RI FKLOGEHDULQJ WR ZRPHQ ZKR KDYH PRGHP VHFWRU HPSOR\PHQW VNLOOV DUH PXFK JUHDWHU WKDQ IRU WKRVH ZRPHQ ZLWK QR VXFK VNLOOV RU RSSRUWXQLWLHV

PAGE 90

7KH UHVXOWV RI DQ LPSRUWDQW ORQJLWXGLQDO VWXG\ f RI =LPEDEZHDQ ZRPHQ VXSSRUW WKHVH SURSRVLWLRQV ,Q WKDW VDPSOH RI ZRPHQ SHUFHQW KDG DWWDLQHG VHFRQGDU\ HGXFDWLRQ SHUFHQW ZHUH HPSOR\HG SHUFHQW RI WKH HPSOR\HG ZHUH HQJDJHG LQ FOHULFDO SRVLWLRQV DQG SHUFHQW LQ WHFKQLFDO SURIHVVLRQDO DQG PDQDJHULDO SRVLWLRQVf $PRQJ WKH ZRPHQ LQ WKLV VDPSOH WKH 7)5 ZDV DERXW KDOI WKH QDWLRQDO UDWH RI 7,336 3URMHFW f ,URQLFDOO\ ZRPHQ ZKR FRPSOHWH VHFRQGDU\ HGXFDWLRQ KDG WKHLU ILUVW FKLOG HDUOLHU WKDQ WKRVH ZKR GR QRW FRPSOHWH VHFRQGDU\ VFKRRO 7KLV LV FRQVLVWHQW ZLWK GDWD IURP RWKHU $IULFDQ FRXQWULHV VHH Sf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f KDV D VLJQLILFDQW HIIHFW RQ IHUWLOLW\ ,Q D VPDOO VDPSOH VXUYH\ 0D]XU IRXQG WKDW XUEDQ ZRPHQ DJH DQG XS ZKR ZRUNHG DW KRPH KDG DERXW WZR PRUH FKLOGUHQ RQ DYHUDJH WKDQ WKRVH ZKR ZRUNHG DZD\ IURP KRPH 0D]XU DQG 0KOR\L f 6LQFH WKH GUDPDWLF IHUWLOLW\ GHFOLQH WKDW EHJDQ LQ WKH PLGV =LPEDEZHDQ ZRPHQ KDYH LQFUHDVLQJO\ VRXJKW WR OLPLW ELUWKV 7KH DERYH GDWD LQGLFDWHV WKDW IHUWLOLW\ GHFOLQH EHJDQ LQ WKH V EHIRUH PRGHP PHWKRGV RI FRQWUDFHSWLRQ ZHUH LQWURGXFHG LQ WKH V DQG EHIRUH PDVV HGXFDWLRQ LQ WKH V )HUWLOLW\ GHFOLQH LV FRUUHODWHG ZLWK LQIUDVWUXFWXUDO

PAGE 91

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f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nV VKDUH RI WKH JURVV GRPHVWLF RXWSXW GURSSHG IURP SHUFHQW WR SHUFHQW VXJDU DFFRXQWHG IRU OHVV WKDQ SHUFHQW RI QDWLRQDO HPSOR\PHQW E\ +DQGZHUNHU f ,Q UHVSRQVH WR WKH GHFOLQH LQ WKH VXJDU LQGXVWU\ %DUEDGRV EHJDQ WR DFWLYHO\ SXUVXH DQ H[SRUWGULYHQ GHYHORSPHQW SROLF\ 7KH H[SRUWGULYHQ GHYHORSPHQW PRGHO ZDV SLRQHHUHG E\ 7LDZDQ DQG RWKHU (DVW$VLDQ FRXQWULHV ZKLFK LQFLGHQWO\ KDYH DOVR XQGHUJRQH LQIUDVWUXFWXUDO HFRQRPLF WUDQVIRUPDWLRQ DQG GUDPDWLF IHUWLOLW\ GHFOLQHVf 3URWHFWLYH WDULIIV

PAGE 92

DQG LQFHQWLYH OHJLVODWLRQ DW KRPH FRPELQHG ZLWK D UHDGLO\ DFFHVVLEOH ZHDOWK\ FRQVXPHU PDUNHW IRU LWV SURGXFWV LQ WKH 8QLWHG 6WDWHV SURSHOOHG %DUEDGRV LQWR WKH PDQXIDFWXULQJ DJH ,Q WKH V DQG V WKH H[SRUWGULYHQ PDQXIDFWXULQJ VHFWRU JUHZ WR LQFOXGH JDUPHQWV IXUQLWXUH FHUDPLFV SKDUPDFHXWLFDOV SKRQRJUDSK UHFRUGV ZRRG SURFHVVLQJ SDLQWV DQG D YDULHW\ RI FRQVWUXFWLRQ PDWHULDOV LQ WKH V WKH PDQXIDFWXULQJ VHFWRU H[SDQGHG IXUWKHU WR LQFOXGH SHWUROHXP UHILQLQJ SDSHU SURGXFWV GDWD SURFHVVLQJ DQG HOHFWURQLFV FRPSRQHQWV DVVHPEO\ LELGf 'XULQJ WKLV SHULRG RI LQIUDVWUXFWXUDO HFRQRPLF FKDQJH QHZ MREV ZHUH FUHDWHG ZKLFK GHPDQGHG QHZ VNLOOV RI WKH %DUEDGLDQ ZRUN IRUFH WKH ODERU PDUNHW LQFUHDVLQJO\ UHZDUGHG DFTXLUHG VNLOOV DQG SHUVSHFWLYHV WKXV PLQLPL]LQJ WKH YDOXH RI FKLOG ODERU DQG LPSURYLQJ WKH HPSOR\PHQW RSSRUWXQLWLHV IRU VNLOOHG ZRPHQ DOVR VHH +DQGZHUNHU Df +DQGZHUNHU ZULWHV *URZWK LQ PDQXIDFWXULQJ GLG QRW FKDQJH WKH IHPDOH ZRUN SDUWLFLSDWLRQ UDWH +RZHYHU LW UDGLFDOO\ FKDQJHG WKH ZRUN RSSRUWXQLWLHV DYDLODEOH IRU ZRPHQ :KHUHDV LQ IHPDOH HPSOR\PHQW LQ PDQXIDFWXULQJ ZDV b RI WKH ODERU IRUFH DQG HYHQ WKHQ LW ZDV HPSOR\PHQW RQO\ LQ FRWWDJH LQGXVWU\ FUDIWVf E\ WKH ODWH V ZRPHQ KHOG PRUH WKDQ b RI WKH MREV LQ WKH PDQXIDFWXULQJ VHFWRU f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

PAGE 93

7$%/( 0($685(6 2) )(57,/,7< (&2120,& *52:7+ ('8&$7,21 $1' :20(1f6 )(57,/,7< 9$/8(6 ,1 %$5%$'26 3HULRG 7RWDO )HUWLOLW\ *URZWK RI ,QGXVWULDO 0DQXIDFWXULQJ f *URZWK RI 7RXULVW 6SHQGLQJ f :RPHQ :KR 9LHZ &KLOGEHDULQJ DV DQ ,QYHVWPHQW $FWLYLW\r bf :RPHQ DJHG ZKR &RPSOHWHG 6HFRQGDU\ 6FKRRO bf r7KLV LQGH[ PHDVXUHV ZRPHQfV GHVLUH WR SXW FKLOGEHDULQJ DKHDG RI FDUHHU 6RXUFH &RPSLOHG IURP +DQGZHUNHU f 0RUH QRQDJULFXOWXUDO HFRQRPLF RSSRUWXQLWLHV EDVHG RXWVLGH WKH KRPH DQG RQ VNLOO DQG SHUIRUPDQFH LQVWHDG RI RQ SDWHUQDOLVPf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fV 7KRXJK 0DXULWLXV GLG QRW XQGHUJR D SURORQJHG FLYLO ZDU DV GLG =LPEDEZH SROLWLFDO OLEHUDWLRQ LQ WKH VSULQJ RI ZDV ODUJHO\ WKH UHVXOW RI RSSRVLWLRQ WR WKH VRFLDOO\ DQG ILVFDOO\ FRQVHUYDWLYH HFRQRPLF SROLFLHV RI WKH SDVW $V LQ =LPEDEZH SROLWLFDO OLEHUDWLRQ FUHDWHG H[SHFWDWLRQV IRU PRUH HFRQRPLF DQG HGXFDWLRQDO RSSRUWXQLWLHV

PAGE 94

0DXULWLXV KDV H[SHULHQFHG VWULNLQJO\ VLPLODU HFRQRPLF DQG GHPRJUDSKLF FKDQJH WR %DUEDGRV 7ZHQW\ \HDUV DJR %HQHGLFW f ZURWH f 7KH LVODQG LV HQWLUHO\ GHSHQGHQW RQ DJULFXOWXUH DQG RQH FURS VXJDU DFFRXQWV IRU PRUH WKDQ SHU FHQW RI DOO H[SRUWVf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f (;3257 +27(/6 <($5 $*5,&8/785( 352&(66,1* =21( $1' 5(67$85$176 f§ 6RXUFH %RZPDQ f 7KH 0DXULWLDQ HFRQRP\ JUHZ UDSLGO\ DIWHU LQGHSHQGHQFH EHFDXVH RI WKUHH SULQFLSOH IDFWRUV f JHQHURXV WUDGH SUHIHUHQFHV JUDQWHG E\ GHYHORSHG FRXQWULHV f D UHDG\ VXSSO\ RI FKHDS DQG UHODWLYHO\ VNLOOHG ODERU HQFRXUDJHG IRUHLJQ LQYHVWPHQW DQG f EHDXWLIXO EHDFKHV SURYLGHG ZHDOWK\ (XURSHDQ DQG 6RXWK $IULFDQ WRXULVWV ZLWK D XQLTXH +ROLGD\ HQYLURQPHQW 7UDGH SUHIHUHQFHV JDYH 0DXULWLXV D FRPSHWLWLYH DGYDQWDJH LQ PDUNHWV LQ WKH GHYHORSHG ZRUOG WKH ODUJHVW LPSRUWHUV RI 0DXULWLDQ WH[WLOHV DQG RWKHU SURGXFWV ZHUH (XURSHDQ (FRQRPLF &RPPXQLW\ ((&f FRXQWULHV DQG WKH 8QLWHG 6WDWHV 7KHVH WUDGH SUHIHUHQFHV VWLPXODWHG WKH GHYHORSPHQW RI ([SRUW 3URFHVVLQJ =RQHV (3=f DQG WKH GUDPDWLF LQFUHDVH RI

PAGE 95

OLJKW PDQXIDFWXULQJ EXVLQHVVHV 7KH (3= EHJDQ IXQFWLRQLQJ LQ %HWZHHQ DQG WKH QXPEHU RI (3= ILUPV JUHZ IURP WR WRWDO H[SRUWV LQFUHDVHG IURP PLOOLRQ UXSHHV WR RYHU WULOOLRQ UXSHHV %RZPDQ f 7KLV (3= JURZWK FUHDWHG D GUDPDWLF LQFUHDVH LQ PRGHP VHFWRU HPSOR\PHQW %\ QHZ HQWHUSULVHV SURYLGHG VNLOOHG DQG VHPLVNLOOHG MREV WR RYHU HPSOR\HHV PRVWO\ WR IHPDOH WH[WLOH ZRUNHUVf ,Q WKH HDUO\ V WKH JRYHUQPHQW FUHDWHG DERXW SXEOLF VHFWRU MREV %HWZHHQ DQG *13 JUHZ SHUFHQW SHU \HDU DQG PRGHP VHFWRU HPSOR\PHQW JUHZ SHUFHQW SHU \HDU LQ WRWDO EHWZHHQ DQG QHZ MREV ZHUH FUHDWHG LELG f 5DSLGO\ JURZLQJ WRXULVP DOVR EURXJKW IRUHLJQ FXUUHQF\ LQWR WKH QDWLRQDO PDUNHW DQG FUHDWHG VNLOOHG HPSOR\PHQW RSSRUWXQLWLHV ,Q RQO\ WRXULVWV YLVLWHG 0DXULWLXV EXW DIWHU WKH RSHQLQJ RI D QHZ LQWHUQDWLRQDO DLUSRUW FDSDEOH RI KDQGOLQJ MXPER MHWV E\ WKH ODWH V RYHU WRXULVWV YLVLWHG 0DXULWLXV DQQXDOO\ ,Q DOPRVW WRXULVWV DUULYHG LQ 0DXULWLXV LELG f 7KH JURZWK RI OLJKW LQGXVWU\ DQG WRXULVP OHG WR D GUDPDWLF LQFUHDVH LQ HPSOR\PHQW RSSRUWXQLWLHV LQ WKH PRGHP VHFWRU IRU ERWK PHQ DQG ZRPHQ RI DOO HWKQLF EDFNJURXQGV /HVV WKDQ WZHQW\ILYH \HDUV DJR WKH 7LWPXVV &RPPLVVLRQ DQG WKH 0HDGH 5HSRUW FRPSODLQHG WKDW WKHUH ZDV D ODFN RI VRFLDO DQG HFRQRPLF PRELOLW\ 7LWPXVV DQG 6PLWK 0HDGH f %RWK VWXGLHV FRQFOXGHG WKDW VRFLDO DQG HFRQRPLF UHVRXUFHV ZHUH ZDVWHG EHFDXVH HWKQLFLW\ ZDV D PRUH LPSRUWDQW FULWHULD WKDQ DELOLW\ %HQHGLFW f 7KHVH SUREOHPV KDYH EHHQ PLQLPL]HG E\ HFRQRPLF FKDQJHV ZKLFK KDYH VHOHFWHG IRU VNLOOHG ODERU LQFUHDVLQJO\ DELOLW\ KDV UHSODFHG HWKQLFLW\ DQG JHQGHU DV D FULWHULD IRU HPSOR\PHQW 7KLV WUHQG KDV FRQWLQXHG WR WKH SUHVHQW 7RGD\ 0DXULWLXV LV FDOOHG WKH OLWWOH WLJHUf LQ GHIHUHQFH WR WKH IRXU WLJHUVf RI (DVW $VLD 7DLZDQ 6RXWK .RUHD 6LQJDSRUH DQG +RQJ

PAGE 96

.RQJf DQG WKHUH LV PXFK VSHFXODWLRQ WKDW 0DXULWLXV KRSHV WR EHFRPH WKH f+RQJ .RQJf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f ,Q DGGLWLRQ WR HWKQLF PLQRULWLHV WKH ODUJHVW EHQHIDFWRUV RI WKLV VHFWRUDO UHGHSOR\PHQW RI ODERU KDYH EHHQ ZRPHQ %HWZHHQ DQG WKH WRWDO QXPEHU RI ZRPHQ HQWHULQJ WKH ODERU IRUFH LQFUHDVHG SHUFHQW FRPSDUHG ZLWK SHUFHQW IRU PHQ WKH IHPDOH ODERU IRUFH SDUWLFLSDWLRQ UDWH E\ SHUFHQWDJH RI WRWDO ODERU IRUFHf KDV PRUH WKDQ GRXEOHG )RUW\WZR SHUFHQW RI 0DXULWLDQ ZRPHQ ZHUH DW ZRUN RXWVLGH WKH KRPHf LQ WKH PRGHP VHFWRU LQ 7KLV LV FRPSDUDEOH WR WKH IHPDOH ODERU IRUFH SDUWLFLSDWLRQ UDWH RI GHYHORSHG FRXQWULHV 7DEOH SURYLGHV GDWD RQ HPSOR\PHQW E\ JHQGHU LQ 0DXULWLXV 7$%/( 0$85,7,86 02'(51 6(&725 (03/2<0(17 %< 6(&725 0 0DOHV ) )HPDOHVf 0 ) 7 0 ) 7 (PSOR\HG f 3DUWLFLSDWLRQ 5DWH bf 6RXUFH 0LQLVWU\ RI (FRQRPLF 3ODQQLQJ DQG 'HYHORSPHQW +XPDQ 5HVRXUFHV 'LYLVLRQ DGDSWHG IURP 7DEOH LQ :RUOG %DQN Ef 7KLV WUHQG KDV DFFHOHUDWHG UHFHQWO\ 7KH :RUOG %DQN UHSRUWV ,QGHHG RQH RI WKH PRVW SURPLQHQW DQG VLJQLILFDQW IHDWXUHV RI WKH 0DXULWLDQ GHYHORSPHQW LQ UHFHQW \HDUV LV WKH H[WHQW WR ZKLFK LW KDV EHHQ GHSHQGHQW XSRQ GUDZLQJ ZRPHQ LQWR WKH ODERU PDUNHW 2I WKH RYHUDOO LQFUHDVH LQ HPSOR\PHQW EHWZHHQ DQG RI VRPH ZRUNHUV URXJKO\ SHUFHQW UHIOHFWV LQFUHDVHV LQ WKH

PAGE 97

SDUWLFLSDWLRQ RI ZRPHQ DQG DERXW SHUFHQW LV DFFRXQWHG IRU E\ WKH UHGXFWLRQ LQ XQHPSOR\PHQW *URZWK LQ WKH ZRUNLQJDJH SRSXODWLRQ DQG LQFUHDVHG PDOH SDUWLFLSDWLRQ UDWHV FRQWULEXWHG RQO\ SHUFHQW DQG OHVV WKDW SHUFHQW UHVSHFWLYHO\ LELGf $V LQ =LPEDEZH DQG %DUEDGRV 0DXULWLDQ ZRPHQ ZHUH HQFRXUDJHG WR FRQWURO IHUWLOLW\ DQG WR REWDLQ PRUH HGXFDWLRQ LQ RUGHU WR PHHW QHZ HPSOR\PHQW RSSRUWXQLWLHV 7DEOH VKRZV WKH FRQFRPLWDQW HGXFDWLRQDO DGYDQFHPHQW RI ZRPHQ LQ WKH ZRUN IRUFH EHWZHHQ DQG 7$%/( 0$85,7,86 ',675,%87,21 2) (03/2<(' 3238/$7,21 %< ('8&$7,21$/ $77$,10(17 $*( *5283 $1' 6(; SHUFHQWDJHVf f f f 0 ) 0 ) 0 ) 0 ) 0 ) 0 ) 1LO 3ULPDU\ 6HFRQGDU\ 7HUWLDU\ 6RXUFH &HQWUDO 6WDWLVWLFV 2IILFH +RXVLQJ DQG 3RSXODWLRQ &HQVXV RI 0DXULWLXV $QDO\VLV 5HSRUW 9ROXPH ,9 $SULO f 7DEOH S IURP 7DEOH LQ :RUOG %DQN Ef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

PAGE 98

7$%/( 0$85,7,86 &58'(%,57+ 5$7( <($5 %,57+6 3(5 3(5&(17 &+$1*( 7+286$1' ,1 7(1 <($56 r r &DOFXODWHG IURP GDWD ZKHQ WKH FUXGH ELUWK UDWH LV UHSRUWHG DW 6RXUFH &HQWUDO 6WDWLVWLFV 2IILFH 'LJHVW RI 'HPRJUDSKLF 6WDWLVWLFV IRXQG LQ :RUOG %DQN E f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fV GLUH FRQFOXVLRQ WZHQW\ \HDUV DJR ,Q PDQ\ ZD\V 0DXULWLXV FDQ EH YLHZHG DV D PLFURFRVP RI WKH HDUWKfV SRSXODWLRQ SUREOHP 7KH HUDGLFDWLRQ RI GLVHDVH DQG LPSURYHG KHDOWK VHUYLFHV KDYH OHG WR DQ XQSUHFHGHQWHG LQFUHDVH LQ SRSXODWLRQ ZKLFK FRQWLQXHV WR JURZ DW D GDQJHURXV UDWH 7KLV SRSXODWLRQ JURZWK KDV RXWVWULSSHG WKH FRXQWU\fV DELOLW\ WR VXSSRUW LWVHOI 8QHPSOR\PHQW LV ULIH DQG LQFUHDVLQJ DQG WKLV LV OHDGLQJ WR SROLWLFDO XQUHVW ,W LV SUREDEO\ WRR ODWH WR DYRLG D GHPRJUDSKLF GLVDVWHU LQ 0DXULWLXV DQG WKH UHVW RI WKH ZRUOG PD\ KDYH WR UHVFXH WKLV LVODQG SHRSOH IURP WKH FRQVHTXHQFHV RI WKHLU RYHUEUHHGLQJ f 6LQFH %HQHGLFWf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

PAGE 99

0RUH QRQDJULFXOWXUDO HFRQRPLF RSSRUWXQLWLHV EDVHG RQ VNLOO DQG SHUIRUPDQFH UHVXOWHG LQ PRUH HJDOLWDULDQ SRZHU UHODWLRQV EHWZHHQ WKH VH[HV DQG PRUH RSSRUWXQLWLHV IRU ZRPHQ WR SXUVXH JRDOV LQGHSHQGHQWO\ RI WKHLU FKLOGEHDULQJ FDSDFLW\ ,QFUHDVLQJO\ ZRPHQ EHJDQ WR ZHLJK WKH RSSRUWXQLW\ FRVWV RI WKHLU UHSURGXFWLYH FDUHHUV DJDLQVW WKH JURZLQJ SRWHQWLDO RI WKHLU SURGXFWLYH FDUHHUV $V D UHVXOW RI WKHVH FKDQJHV SDUHQWV VWUHVVHG HGXFDWLRQDO DGYDQFHPHQW IRU WKHLU GDXJKWHUV DQG \RXQJ FDUHHU RULHQWHG ZRPHQ KDG IHZHU FKLOGUHQ 7UDQVLWLRQ LQ .XZDLW :RPHQ OLYLQJ LQ $UDE ,VODPLF VWDWHV WUDGLWLRQDOO\ KDYH HQMR\HG OLWWOH DXWRQRP\ ,Q VRPH VWDWHV ZRPHQ DUH FRQVLGHUHG WKH SURSHUW\ RI PHQ WKHLU SULPDU\ UROH LV WKDW RI FKLOGEHDUHU 0DUVKDOO f QRWHV ff0XVOLP ZRPHQ KDYH EHHQ OHVV LQYROYHG LQ WUDGLWLRQDO DJULFXOWXUDO DQG WUDGLQJ DFWLYLWLHV DQG KDYH VLJQLILFDQWO\ ORZHU UDWHV RI OLWHUDF\ HGXFDWLRQDO DFKLHYHPHQW QRQDJULFXOWXUDO ODERU IRUFH SDUWLFLSDWLRQ WKDQ ZRPHQ LQ RWKHU GHYHORSLQJ DUHDV DW VLPLODU OHYHOV RI LQGXVWULDOL]DWLRQf ,W LV QRW VXUSULVLQJ WKDW ff$PRQJ OHVV GHYHORSHG FRXQWULHV WRGD\ IHUWLOLW\SHU FDSLWDLQFRPH JURXSLQJV VKRZ 0RVOHP FRXQWULHV WR EH DW\SLFDO KDYLQJ KLJK IHUWLOLW\ DFURVV D EURDG UDQJH RI LQFRPH OHYHOVf 'RQDOGVRQ f ,QGHHG 5HHYHV DVVHUWV 5HDFWLRQDU\ UHOLJLRXV IRUFHV ZLWKLQ WKHVH VRFLHWLHV GR DOO WKH\ FDQ WR SUHYHQW ZRPHQ IURP DWWDLQLQJ JUHDWHU VRFLDO VWDWXV ,GHDOO\ WKH\ ZRXOG OLNH WR VHH ZRPHQ EDFN LQ KDUHPV ZKHUH WKH\ EHOLHYH ZRPHQ EHORQJ IXOILOOLQJ SXUHO\ GRPHVWLF UHVSRQVLELOLWLHV DQG DFWLQJ DV SOHDVXUH REMHFWV DQG UHSURGXFWLYH PDFKLQHV f +RZHYHU HYHQ LQ WUDGLWLRQDOO\ PDOH GRPLQDWHG $UDE ,VODPLF VRFLHWLHV ZKHQ ZRPHQ KDYH PRUH HTXDO DFFHVV WR HPSOR\PHQW DQG HGXFDWLRQ WKH\ DUH WUHDWHG OHVV DV VXEPLVVLYH REMHFWV DQG PRUH DV HTXDO VXEMHFWV ,Q VSLWH RI FXOWXUDO REVWDFOHV ZRPHQ HYHU\ZKHUH DUH OHVV OLNHO\ WR EH WUHDWHG DV ffSOHDVXUH REMHFWVf DQG ffUHSURGXFWLYH PDFKLQHVf ZKHQ RXWVLGH HFRQRPLF RSSRUWXQLWLHV IUHH WKHP IURP GRPHVWLF ERQGDJH DQG GHSHQGHQFH RQ PHQ DQG

PAGE 100

FKLOGUHQ IRU WKHLU ZHOOEHLQJ $V ZRPHQ JDLQ EHWWHU DFFHVV WR UHVRXUFHV DQG FRQWULEXWH PRUH WR IDPLO\ LQFRPH WKH\ DWWDLQ JUHDWHU SRZHU YLVDYLV PHQ LQ PDNLQJ UHSURGXFWLYH GHFLVLRQV 7KHVH FKDQJHV DUH EHJLQQLQJ WR EH IHOW LQ VRPH $UDE ,VODPLF FRXQWULHV 5HHYHV f GLYLGHV WKH $UDE ,VODPLF VWDWHV LQWR WZR JHQHUDO FDWHJRULHV EDVHG RQ WUHDWPHQW RI ZRPHQ )LUVW WKHUH DUH WKH VWDWHV ZKHUH VHFOXVLRQ DQG YHLOLQJ DUH VWULFWO\ SUDFWLFHG DQG ZKHUH ZRPHQ KDYH IHZ LI DQ\ ULJKWV 7KHVH VWDWHV LQFOXGH 6DXGL $UDELD 2PDQ 4DWDU WKH 8QLWHG $UDE (PLUDWHV
PAGE 101

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f ff)HZ LI DQ\ SHUVRQV DUH EHORZ WKH DEVROXWH SRYHUW\ OHYHO DQG PDOQXWULWLRQ KDV EHHQ HIIHFWLYHO\ HOLPLQDWHGf &RXQWU\ 5HSRUWV f 7KH WUDQVIRUPDWLRQ RI .XZDLW LQWR D PDMRU RLO H[SRUWHU EHJDQ DIWHU WKH HQG RI WKH 6HFRQG :RUOG :DU %HWZHHQ DQG RLO H[SRUWV URVH IURP WRQV WR PLOOLRQ WRQV PDNLQJ .XZDLW WKH VHFRQG ODUJHVW RLO H[SRUWHU LQ WKH ZRUOG EHKLQG 9HQH]XHODf )URP WR .XZDLWV RLO UHYHQXHV JUHZ DW DQ DYHUDJH UDWH RI SHUFHQW SHU \HDU 3URILWV KDYH VN\URFNHWHG VLQFH WKH HDUO\ V DIWHU WKH 2UJDQL]DWLRQ RI 3HWUROHXP ([SRUWLQJ &RXQWULHV 23(&f ZDV IRUPHG DQG KDYH UHPDLQHG KLJK :LWK WKH LQIOX[ RI RLO UHYHQXHV DIWHU WKH 6HFRQG :RUOG :DU .XZDLW KDV DJJUHVVLYHO\ FRQVWUXFWHG D PRGHP LQIUDVWUXFWXUH LH HOHFWULFLW\ SLSHG ZDWHU DQG VHZDJH D KXJH GHVDOLQDWLRQ V\VWHP PRGHP KRXVLQJ VFKRROV DQG KRVSLWDOV GHHSZDWHU SRUWV DLUSRUWV DQG SDYHG URDGV +RZHYHU WKH ODFN RI PHWDOOLF PLQHUDOV WKH VPDOO VL]H RI LWV GRPHVWLF PDUNHW DQG WKH KLJK FRVW RI ODERU KDV OLPLWHG LQGXVWULDO LQYHVWPHQW DQG GHYHORSPHQW 2LO UHYHQXHV KDYH DOORZHG .XZDLW WR GHYHORS LWV LQIUDVWUXFWXUH DQG VRFLDO ZHOIDUH V\VWHP ZLWKRXW WKH GHYHORSPHQW RI D VXEVWDQWLDO LQGXVWULDO EDVH ,QGXVWU\ H[FOXGLQJ RLO UHILQLQJ

PAGE 102

EXW LQFOXGLQJ HOHFWULFLW\ DQG ZDWHU GHVDOLQDWLRQf KDV H[SDQGHG VORZO\ FRQWULEXWLQJ RQO\ SHUFHQW RI *'3 LQ WKH HDUO\ V OLWWOH PRUH WKDQ LW KDG D GHFDGH HDUOLHU 1\URS f 7KXV WKH HFRQRPLF FKDQJHV LQ .XZDLW ZKLFK KDYH UHVXOWHG LQ LQFUHDVLQJ GHPDQG IRU VNLOOHG ZRUNHUV ZHUH QRW WKH UHVXOW RI UDSLG LQGXVWULDOL]DWLRQ DV LV WKH FDVH LQ PRVW GHYHORSLQJ FRXQWULHV EXW ZHUH WKH UHVXOW RI JRYHUQPHQW VSHQGLQJ RQ VRFLDO VHUYLFHV $ERXW WKUHHTXDUWHUV RI WKH MREV LQ .XZDLW DUH LQ WKH VHUYLFH VHFWRU RI WKH HFRQRP\ DSSUR[LPDWHO\ SHUFHQW RI DOO ZRUNLQJ ZRPHQ DUH HPSOR\HG LQ WKH VHUYLFH VHFWRU $O6KDPRXEL f 7KH YDOXH RI FKLOG ODERU LV QLO .XZDLW KDV DJJUHVVLYHO\ LQVWLWXWHG RQH RI WKH ZRUOGfV PRVW HQFRPSDVVLQJ KHDOWK HGXFDWLRQ DQG ZHOIDUH V\VWHPV VHH .KRXMD DQG 6DGOHU 1\URS f )URP KDYLQJ RQO\ IRXU GRFWRUV LQ 0DQVILHOG f WRGD\ .XZDLW KDV RQH GRFWRU IRU HYHU\ UHVLGHQWV DQG RQH QXUVH IRU HYHU\ UHVLGHQWV 1\URS f ,QIDQW PRUWDOLW\ IHOO IURP SHU WKRXVDQG LQ WR SHU WKRXVDQG LQ 7KHVH ILJXUHV DUH QRZ FRPSDWLEOH ZLWK WKRVH LQ WKH DGYDQFHG LQGXVWULDOL]HG FRXQWULHVf 0DQVILHOG f +HDOWK FDUH DQG HGXFDWLRQ DUH IUHH KRXVLQJ ZDWHU DQG HOHFWULFLW\ VXSSOLHV DUH KHDYLO\ VXEVLGL]HG DQG WKH VWDWH ZKLFK HPSOR\V DERXW D WKLUG RI WKH SRSXODWLRQ SD\V XQXVXDOO\ KLJK VDODULHV LELGf 6RFLDO VHFXULW\ EHQHILWV DUH RIIHUHG WR .XZDLWL FLWL]HQV ZKR DUH HLWKHU RYHU \HDUV RI DJH RU ZKR KDYH ZRUNHG IRU \HDUV RU PRUH SHQVLRQV DUH SDLG WR ZLGRZV DQG WKH GLVDEOHG 0DQVILHOG LELGf REVHUYHV f$W WKH LQVWLWXWLRQ RI VRFLDO VHFXULW\ ZKLFK ZDV IRXQGHG LQ WKHUH DUH URZV RI EULJKW DQG HIILFLHQW \RXQJ .XZDLWL JLUOV ZLWK GLUHFW DFFHVV WR FRPSXWHUL]HG ILOHV RQ HDFK .XZDLWL IDPLO\ ZKR DUH UHDG\ WR LQIRUP DQ\RQH RI KLV RU KHU HQWLWOHPHQWVf (YHQ XQPDUULHG ZRPHQ RYHU WKH DJH RI HLJKWHHQ DUH VXEVLGL]HG 1\URS f

PAGE 103

7KH FRPELQHG IRUFHV RI LQIUDVWUXFWXUDO GHYHORSPHQW DQG WKH ULVH RI WKH ZHOIDUH VWDWH KDYH UHVXOWHG LQ GUDPDWLF GHPRJUDSKLF FKDQJHV 1HZ ODUJH VFDOH FRQVWUXFWLRQ SURMHFWV DQG WKH H[SDQVLRQ RI SXEOLF VHUYLFHV FUHDWHG D ODUJH GHPDQG IRU ERWK VNLOOHG DQG XQVNLOOHG ODERU 0LJUDQWV IURP VXUURXQGLQJ $UDE QDWLRQV IORZHG LQ %HWZHHQ DQG WKH VL]H RI .XZDLWV SRSXODWLRQ LQFUHDVHG PRUH WKDQ WHQIROG IURP WR RYHU RQH PLOOLRQ WKH FRPSRXQGHG JURZWK UDWH RI PRUH WKDQ SHUFHQW ZDV DOPRVW GRXEOH WKH QDWXUDO JURZWK UDWH RI RWKHU FRXQWULHV LQ WKH UHJLRQ GXULQJ WKLV SHULRG 7KH UDSLG LQIOX[ RI ZRUNHUV IURP RWKHU FRXQWULHV ZDV UHVSRQVLEOH IRU WKLV SKHQRPHQDO JURZWK .KRXMD DQG 6DGOHU f 7DEOH VKRZV WKDW ODERU PLJUDWLRQ LQWR .XZDLW RI QRQ.XZDLWLV LQFUHDVLQJO\ IHPDOHVf KDV EHHQ FRQVLGHUDEOH 7$%/( 121.8:$,7,6 %< 6(; $1' 3(5&(17$*( 2) 3238/$7,21 ,1 .8:$,7 &(1686 121.8:$,7,6 727$/ <($5 b0$/(6 b )(0$/(6 b727$/ 3238/$7,21 r r9LWDO 6WDWLVWLFV IRU .XZDLW KDYH RQO\ EHHQ DYDLODEOH VLQFH 6RXUFHV .KRXMD DQG 6DGOHU 1\URS &RXQWU\ 5HSRUWV f $V WDEOH VKRZV .XZDLWfV HFRQRPLF GHYHORSPHQW ZDV DFKLHYHG LQ ODUJH SDUW E\ LPSRUWLQJ IRUHLJQ ZRUNHUV ,Q QRQ.XZDLWLV UHSUHVHQWHG SHUFHQW RI WKH HPSOR\HG ODERU IRUFH DQG KHOG SHUFHQW RI WKH SURIHVVLRQDO WHFKQLFDO DQG PDQDJHULDO MREV 1\URS f 7KRXJK MREV DUH DEXQGDQW .XZDLWL PHQ DQG ZRPHQ DUH DERXW IRXU WLPHV DV OLNHO\ WR EH FODVVLILHG DV HFRQRPLFDOO\ LQDFWLYH WKDQ DUH QRQ.XZDLWL PHQ DQG ZRPHQ 2I FRXUVH WKLV

PAGE 104

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f %HWZHHQ DQG WKH SHUFHQWDJH RI .XZDLWL ZRPHQ LQ WKH ODERU IRUFH RQO\ LQFUHDVHG IURP WR SHUFHQW DQG IURP SHUFHQW WR RYHU SHUFHQW IRU QRQ.XZDLWL ZRPHQ LELGf ,W LV REVHUYHG WKDW DOWKRXJK .XZDLWL ZRPHQ ZHUH FOHDUO\ PRUH HPDQFLSDWHG WKDQ RWKHUV LQ WKH *XOI DQG PDQ\ KDG WDNHQ DGYDQWDJH RI WKH RSSRUWXQLWLHV IRU HGXFDWLRQ WKHLU HQWUDQFH LQWR WKH ODERU IRUFH ZDV VORZ ,Q .XZDLWL ZRPHQ FRQVWLWXWHG RQO\ SHUFHQW RI DOO HPSOR\HG .XZDLWLV 1\URS f +RZHYHU LQ UHFHQW \HDUV WKH HFRQRPLF SDUWLFLSDWLRQ RI ERWK .XZDLWL DQG QRQ.XZDLWL ZRPHQ KDV LQFUHDVHG IRU DOO DJH JURXSV 7DEOH VKRZV WKDW HFRQRPLF DFWLYLW\ LV KLJKO\ FRUUHODWHG ZLWK OHYHO RI HGXFDWLRQ DPRQJ IHPDOH .XZDLWL FLWL]HQV 7$%/( ('8&$7,21 $1' (&2120,& $&7,9,7< 2) )(0$/( .8:$,7, &,7,=(16 /(9(/ 2) b (&2120,&$//< ('8&$7,21 $&7,9( ,OOLWHUDWH ,QWHUPHGLDWH 6HFRQGDU\ 8QLYHUVLW\ 6RXUFH $O6KDPRXEL f (GXFDWLRQDO RSSRUWXQLWLHV KDYH ULVHQ DORQJ ZLWK RLO SURILWV 7DEOH VKRZV WKH GUDPDWLF LQFUHDVH LQ VWXGHQW HQUROOPHQWV VLQFH

PAGE 105

7$%/( 678'(17 (152//0(17 <($5 (152//0(17 6RXUFHV 0DQVILHOG .KRXMDDQG 6DGOHU :LQVWRQ DQG )UHHWK f %HWZHHQ DQG WKH QXPEHU RI WHDFKHUV LQFUHDVHG IURP WR 7KH UHDVRQ IRU WKLV GUDPDWLF LQFUHDVH LQ VWXGHQW HQUROOPHQWV DQG WHDFKHUV LV WKDW WKH .XZDLWL JRYHUQPHQW KDV PDGH HGXFDWLRQ D WRS SULRULW\ 1\URS f QRWHV WKDW ff3XEOLF HGXFDWLRQ LV IUHH WR .XZDLWL FLWL]HQV DQG PDQ\ IRUHLJQHUV IURP WKH NLQGHUJDUWHQ WKURXJK WKH XQLYHUVLW\ OHYHO 7KH JRYHUQPHQW DEVRUEV WKH FRVWV RI ERRNV FORWKLQJ PHDOV DQG WUDQVSRUWDWLRQ DQG SD\V SDUHQWV DQ DOORZDQFH WKDW LQFUHDVHV ZKHQ D FKLOG UHDFKHV WKH VHFRQGDU\VFKRRO OHYHOf 7KLV IRFXV RQ HGXFDWLRQ KDV KHOSHG DGYDQFH OLWHUDF\ 0RGHP PHDVXUHV RI OLWHUDF\ UDWHV UHIOHFW D JURZLQJ HTXDOLW\ LQ HGXFDWLRQDO RSSRUWXQLW\ IRU ZRPHQ $PRQJ SHRSOH DQG ROGHU SHUFHQW RI WKH PHQ DQG RQO\ SHUFHQW RI WKH ZRPHQ DUH OLWHUDWH WKLV LV FRPSDUHG ZLWK FKLOGUHQ DJHG ZKHUH SHUFHQW RI WKH PHQ DQG SHUFHQW RI WKH ZRPHQ DUH OLWHUDWH 0DQVILHOG f (GXFDWLRQDO HTXDOLW\ LV DOVR IRXQG DW WKH 8QLYHUVLW\ OHYHO $PRQJ WKH RYHU VWXGHQWV ZKR ZHUH HQUROOHG DW WKH 8QLYHUVLW\ RI .XZDLW LQ WKH HDUO\ V SHUFHQW ZHUH ZRPHQ LELGf $ SRUWLRQ RI WKLV LV H[SODLQHG E\ WKH IDFW WKDW ZRPHQ DUH GLVFRXUDJHG IURP DWWHQGLQJ FROOHJH RYHUVHDV ZKLOH PHQ DUH HQFRXUDJHG 7KXV PRUH PHQ WKDQ ZRPHQ DWWHQG FROOHJH RXWVLGH .XZDLW +RZHYHU DV HDUO\ DV WKH PLGV WKH PLQLVWU\ RI HGXFDWLRQ GLVFULPLQDWHG SRVLWLYHO\ LQ IDYRU RI IHPDOHV VHWWLQJ D OLPLW RQ WKH QXPEHU RI VFKRODUVKLSV IRU ER\V EXW QRW JLUOV LELGf 7KLV QHZ JHQHUDWLRQ RI KLJKO\ HGXFDWHG ZRPHQ LV H[SHFWHG WR HQWHU WKH ZRUN IRUFH LQ ODUJH QXPEHUV LQ WKH QHDU IXWXUH

PAGE 106

0DQVILHOG FRQWHQGV WKDW .XZDLWL ZRPHQ KDYH H[SHULHQFHG D PXFK PRUH UHYROXWLRQDU\ VRFLDO FKDQJH WKDQ PHQ LQ WKH SDVW IRUW\ \HDUV HVSHFLDOO\ LQ WHUPV RI HGXFDWLRQDO DQG HPSOR\PHQW RSSRUWXQLWLHV +H ZULWHV ff)URP EHLQJ YLUWXDOO\ XQHGXFDWHG WKH\ QRZ KDYH D KLJKHU SURSRUWLRQ RI 8QLYHUVLW\ GHJUHHV ZLWK EHWWHU OHYHOVf WKDQ WKH PDOHV 7KH\ SOD\ DQ DFWLYH UROH LQ SXEOLF OLIH DV VHQLRU FLYLO VHUYDQWV KHDGV RI XQLYHUVLW\ GHSDUWPHQWV GRFWRUV DQG ODZ\HUVf LELG DOVR VHH 6DSVWHG f ,QFUHDVHG HGXFDWLRQDO RSSRUWXQLWLHV KDYH HQFRXUDJHG ZRPHQ LQ .XZDLW WR GHOD\ PDUULDJH DQG VWD\ LQ VFKRRO ORQJHU 7KHUH KDV EHHQ DQ LQFUHDVLQJ WHQGHQF\ WRZDUG SRVWSRQHPHQW RI PDUULDJH %HWZHHQ DQG WKH PHDQ DJH DW PDUULDJH IRU .XZDLWL ZRPHQ LQFUHDVHG IURP WR \HDUV WR \HDUV IRU QRQ.XZDLWL ZRPHQ $O 6KDPRXEL f 6RPH .XZDLWLVf DUH FRQFHUQHG DERXW ODWHU PDUULDJH DQG E\ WKH GHFOLQLQJ ELUWK UDWH WKH\ EHOLHYH WKH JRYHUQPHQW VKRXOG GR PRUH WR HQFRXUDJH \RXQJ ZRPHQ WR KDYH ODUJHU IDPLOLHV DQG WR PDUU\ HDUOLHU $O6DEDK f DVVHUWV ff0HDVXUHV WR HQFRXUDJH PDUULDJH LQ RUGHU WR LQFUHDVH WKH ELUWK UDWH ZRXOG FRQWULEXWH LQ WKH ORQJ UXQ WR UDLVLQJ WKH LQGLJHQRXV ODERXU VXSSO\ 6XFK PHDVXUHV FRXOG LQFOXGH PDUULDJH ORDQV DQG D KRXVLQJ ORDQ VFKHPH ZKLFK IDYRUV ODUJH IDPLOLHVf 6HYHUDO PRQWKV DIWHU WKH *XOI :DU WKH &RXQFLO RI 0LQLVWHUV RIIHUHG \RXQJ PHQ GROODUV GRXEOH WKH SUHYLRXV UDWHf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

PAGE 107

RXWVSRNHQ LQ WKHLU GHPDQG IRU D EURDGHU UROH LQ VRFLHW\ ,Q FRQWUDVW WR WKH SUDFWLFH LQ VRPH QHLJKERULQJ FRXQWULHV D .XZDLWL ZRPDQ LV SHUPLWWHG WR GULYH D FDU PD\ ZHDU :HVWHUQ GUHVV LQ SXEOLF DQG KDV OHJDO DFFHVV WR KLJKHU HGXFDWLRQ LQVLGH DQG RXWVLGH WKH FRXQWU\ $OWKRXJK ZRPHQ KDYH \HW WR MRLQ WKH ZRUN IRUFH LQ ODUJH QXPEHUV WKH\ DUH DEOH WR FRPSHWH IRU JRYHUQPHQW DQG FRUSRUDWH HPSOR\PHQW DQG KDYH WKH ULJKW WR OLWLJDWH DJDLQVW PHQ IRU H[DPSOH LQ FKLOG FXVWRG\ VXLWVf 0DQ\ ZRPHQ KDYH DFFXPXODWHG VXEVWDQWLDO SHUVRQDO ZHDOWK &RXQWU\ 5HSRUWV f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f 0DQVILHOG FRQWLQXHV ,W LV TXLWH ZURQJ WR VXSSRVH WKDW WKRVH LQ WKH KLMDE DUH VK\ RU XQGXO\ GHIHUHQWLDO LQ WKHLU DWWLWXGHV WRZDUGV PHQ 2Q WKH FRQWUDU\ WKH\ DUH IXOO RI D VHOIFRQILGHQFH ZKLFK PDNHV FOHDU WKDW LW ZDV WKHLU GHFLVLRQ DORQH WR DGRSW LW
PAGE 108

SDWWHUQ RI LQGXVWULDO EDVHG HFRQRPLF WUDQVIRUPDWLRQ ZKLFK LV FRPPRQ LQ PRVW RWKHU UDSLGO\ GHYHORSLQJ FRXQWULHV .XZDLWf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

PAGE 109

HQFRXUDJH WKHLU GDXJKWHUV WR VWD\ LQ VFKRRO ORQJHU DQG WR GHOD\ VHWWLQJ XS D IDPLO\
PAGE 110

,Q =LPEDEZH LQFUHDVHG HGXFDWLRQDO DQG QRQDJULFXOWXUDO HPSOR\PHQW RSSRUWXQLWLHV IRU ZRPHQ DQG LQFUHDVLQJ OHJDO DQG HFRQRPLF LQGHSHQGHQFH IURP PHQ KDYH JLYHQ ZRPHQ PRUH DELOLW\ WR FKDUW WKHLU RZQ FRXUVH ,QGHHG D JURZLQJ FRQWURYHUV\ RYHU EULGHSULFH UHIOHFWV WKH ULVH RI ZRPHQfV SRZHU DQG LQGHSHQGHQFH DQG VXJJHVWV IXQGDPHQWDO VRFLDO FKDQJHV LQ H[SHFWDWLRQV EHWZHHQ PHQ DQG ZRPHQ DQG LQ WKH REOLJDWLRQV WKH\ IHHO WR WKHLU SDUHQWV DQG WKH H[WHQGHG IDPLO\ VHH ,YHUVRQ f :KHQ DVNHG =LPEDEZHDQ ZRPHQ f+RZ KDYH ZRPHQfV UROHV FKDQJHG VLQFH LQGHSHQGHQFH"f RYHUZKHOPLQJO\ WKH\ VDLG WKDW VLQFH LQGHSHQGHQFH WKHUH DUH PRUH HGXFDWLRQDO RSSRUWXQLWLHV DQG MREV IRU ZRPHQ ZLWK HTXDO SD\f $OVR WKH\ FRPPRQO\ VDLG ff0HQ GRQfW GHPDQG WKH SD\ D ZRPDQ EULQJV KRPH DV WKH\ XVHG WRf 2Q WKH LVVXH RI FKLOG VXSSRUW ZRPHQ DJUHHG WKDW ffPHQ DUH PRUH UHVSRQVLEOH WKHVH GD\Vf KRZHYHU WKH\ DOVR DJUHHG WKDW QRWKLQJ KDV FKDQJHG IRU KRXVHZLYHV ff(TXDO ULJKWV GRHVQfW ZRUN LQ WKH KRXVHKROG PHQ VWLOO RSSUHVV ZRPHQ LQ WKH KRPHf LELG f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

PAGE 111

EDVH RI QDWXUDO UHVRXUFHV LQ =LPEDEZH DQG LWV LQDFFHVVLELOLW\ WR WKH VHD LW LV XQGHUVWDQGDEOH WKDW HFRQRPLF GHYHORSPHQW ZDV IXHOHG E\ D SROLF\ RI LPSRUW VXEVWLWXWLRQ ZKHUHDV LQ %DUEDGRV DQG 0DXULWLXV LW ZDV IXHOHG E\ D SROLF\ RI H[SRUWOHG LQGXVWULDO H[SDQVLRQ 7KH VDPH LQIUDVWUXFWXUDO UHVRXUFHV WKDW OHG .XZDLW WR FKDQJH LWV PRGH RI SURGXFWLRQ IURP D SDVWRUDO WR SHWURFKHPLFDO EDVLV UHVXOWHG LQ WKH HVWDEOLVKPHQW RI D JHQHURXV DQG FRPSUHKHQVLYH VRFLDO VHFXULW\ V\VWHP 5HJDUGOHVV RI DSSURDFK WKHVH SROLFLHV OHG WR UDSLG VWUXFWXUDO HFRQRPLF WUDQVIRUPDWLRQ D GHPDQG IRU VNLOOHG ODERU DQG JUHDWHU DFFHVV WR UHVRXUFHV IRU ZRPHQ ,QFUHDVLQJ HGXFDWLRQDO UHTXLUHPHQWV RI QHZ HPSOR\PHQW RSSRUWXQLWLHV HQFRXUDJHG SDUHQWV WR HGXFDWH WKHLU FKLOGUHQ DQG JDYH LQFHQWLYH IRU ZRPHQ WR DFKLHYH LQ VFKRRO DQG WR SUDFWLFH IHUWLOLW\ FRQWURO %HFDXVH WKHVH QHZ HPSOR\PHQW SRVLWLRQV UHTXLUHG VRFLDO DQG DEVWUDFW VNLOOV HGXFDWHG ZRPHQ ZHUH VHOHFWHG IRU WKHP RQ D PRUH HTXDO EDVLV ZLWK PHQ :LWK D JURZLQJ GHPDQG IRU VNLOOHG ODERU FKLOG ODERU DQG SDWHUQDOLVWLF KLULQJ SUDFWLFHV GHFOLQHG DQG ODUJH QXPEHUV RI ZRPHQ HQWHUHG WKH PRGHP ZRUN IRUFH IRU WKH ILUVW WLPH ,QFUHDVLQJO\ ZRPHQ ZHUH IRUFHG WR ZHLJK WKH RSSRUWXQLW\ FRVWV RI WKHLU UHSURGXFWLYH FDUHHUV DJDLQVW QHZ RSSRUWXQLWLHV IRU SURGXFWLYH FDUHHUV 7KLV KDV UHVXOWHG LQ GUDPDWLF IHUWLOLW\ GHFOLQH 7KHVH DUH SUHFLVHO\ WKH FKDQJHV WKDW KDYH RFFXUUHG LQ =LPEDEZH %DUEDGRV DQG 0DXULWLXV RYHU WKH ODVW TXDUWHU FHQWXU\ 'HPRJUDSKLF WUDQVLWLRQ LQ .XZDLW KDV DOVR EHHQ FDXVHG E\ LQIUDVWUXFWXUDO HFRQRPLF FKDQJHV ZKLFK KDYH UHVXOWHG LQ JUHDWHU LQGHSHQGHQFH IRU ZRPHQ IURP PHQ DQG FKLOGUHQ +RZHYHU XQOLNH WKH WKUHH SUHYLRXV H[DPSOHV .XZDLWL ZRPHQ KDYH QRW QHHGHG WR HQWHU WKH PRGHP ODERU IRUFH WR REWDLQ DFFHVV WR UHFRXUFHV 7KH H[LVWHQFH RI D JHQHURXV ZHOIDUH VWDWH KDV DOORZHG .XZDLWL ZRPHQ D KLJK GHJUHH RI IUHHGRP DQG VHFXULW\ ZLWKRXW REWDLQLQJ HPSOR\PHQW RXWVLGH WKH KRXVHKROG )LQDQFLDO VHFXULW\ LV JXDUDQWHHG WR \RXQJ VLQJOH ZRPHQ ZLWKRXW FKLOGUHQ WKXV .XZDLWL ZRPHQ GR QRW QHHG WR

PAGE 112

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f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

PAGE 113

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

PAGE 114

*LYHQ WKH GLIIHUHQFHV LQ WKH SUHWUDQVLWLRQ GHPRJUDSKLF UDWHV RI WKH LQGXVWULDOL]HG DQG GHYHORSLQJ FRXQWULHV WKH UDSLGLW\ RI FXUUHQW PRUWDOLW\ GHFOLQH LQ WKH GHYHORSLQJ ZRUOG DQG WKH PXFK JUHDWHU UROH RI VRFLDO FXOWXUDO DQG HFRQRPLF LQIOXHQFHV DW WKH LQWHUQDWLRQDO OHYHO LQ WRGD\fV ZRUOG LW LV GLIILFXOW WR MXGJH WR ZKDW H[WHQW WKH FRXUVH RI WKH GHPRJUDSKLF WUDQVLWLRQ LQ WKH GHYHORSLQJ UHJLRQV ZLOO UHVHPEOH WKH H[SHULHQFH RI WKH LQGXVWULDOL]HG FRXQWULHV f ,QGHHG IHUWLOLW\ LQ PRVW GHYHORSLQJ FRXQWULHV LV KLJKHU DW WKH EHJLQQLQJ RI WUDQVLWLRQ WKDQ LW ZDV LQ SUHLQGXVWULDO (XURSH 7KLV LV XVXDOO\ H[SODLQHG E\ HDUO\ DQG QHDU XQLYHUVDO PDUULDJH LQ GHYHORSLQJ FRXQWULHV GLVWLQFW IURP WK&HQWXU\ (XURSHDQ SDWWHUQV RI ODWHU PDUULDJH DQG H[WHQVLYH QRQPDUULDJH )HUWLOLW\ GHFOLQHV KDYH DOVR EHHQ PRUH UDSLG LQ VRPH GHYHORSLQJ FRXQWULHV WKDQ WKH KLVWRULF GHFOLQHV LQ (XURSH 'HPRJUDSKLF WUDQVLWLRQ KDV DOVR EHJXQ DW XQH[SHFWHGO\ ORZ SHU FDSLWD LQFRPH OHYHOV %HDYHU f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

PAGE 115

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

PAGE 116

%RWK HGXFDWLRQ DQG IDPLO\ SODQQLQJ DUH PHDQV WR HQGV IRU ZRPHQ (GXFDWLRQ OHDGV WR HFRQRPLF VHFXULW\ DQG ORZHU IHUWLOLW\f RQO\ ZKHQ MREV DUH DYDLODEOH ,QFUHDVHG DFFHVV WR IDPLO\ SODQQLQJ OHDGV WR FRQWUDFHSWLYH XVH DQG ORZHU IHUWLOLW\f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f 7KH WKUHH ELOOLRQ GROODUV VSHQW DQQXDOO\ RQ IDPLO\ SODQQLQJ LQ GHYHORSLQJ FRXQWULHV RQO\ SHUFHQW RI DOO GHYHORSPHQW DVVLVWHQFHf LV QRW QHDUO\ HQRXJK 7KH SHUFHQWDJH RI *13 GHGLFDWHG WR HGXFDWLRQ LV DOVR DE\VPDOO\ ORZ LQ PDQ\ SDUWV RI WKH GHYHORSLQJ DQG GHYHORSHGf ZRUOG ,Q QR ZD\ GR ,

PAGE 117

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fV FRQWURO RI ZRPHQ LV H[WUHPHLW KDV EHHQ IRXQG WKDW IHUWLOLW\ UDWHV DQG FKLOG VXUYLYDO DUH H[WUHPHO\ UHVLVWDQW WR FKDQJH (YHQ QRUPDOO\ SRZHUIXO IDFWRUV OLNH PRWKHUVf HGXFDWLRQ DV ZHOO DV IDPLO\ LQFRPH DQG WKH DYDLODELOLW\ RI FRQWUDFHSWLRQf KDYH PXFK OHVV RI DQ HIIHFW LQ WKHVH VRFLHWLHV ,W LV DV WKRXJK ZRPHQ DUH DOORZHG WR VHH WKH SRVVLELOLWLHV EXW QRW WR WUDQVODWH ZKDW WKH\ KDYH OHDUQHG LQWR LPSURYHPHQWV LQ WKHLU OLYHV 81)3$ f ^DOVR VHH &DLQ 2SSRQJ `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

PAGE 118

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fV HFRQRP\ ZKLFK LQ WXUQ PD\ OHDG WR IHUWLOLW\ WUDQVLWLRQ EXW WKHUH LV QR HYLGHQFH WKDW IUHHPDUNHW V\VWHPV DUH HLWKHU WKH GLUHFW RU WKH RQO\ PHDQV WR IHUWLOLW\ GHFOLQH $ UHODWHG DQG PLVOHDGLQJ FRQFOXVLRQ GUDZQ DW WKH &RQIHUHQFH RQ 3RSXODWLRQ LQ 0H[LFR &LW\ LV WKDW SRSXODWLRQ JURZWK LV D ffQHXWUDO SKHQRPHQRQf 8QLWHG 6WDWHV f 7KLV FRQFOXVLRQ VHHPV WR KDYH EHHQ GUDZQ PRUH IURP WKHRUHWLFDO FRQIXVLRQ WKDQ IURP HPSLULFDO GDWD :KLOH LW KDV EHHQ VKRZQ WKDW PRUH HIILFLHQW DJULFXOWXUDO V\VWHPV RI SURGXFWLRQ KDYH KLVWRULFDOO\ UHVXOWHG IURP WKH VWUHVVHV RI UDSLG SRSXODWLRQ JURZWK DQG KLJKHU SRSXODWLRQ GHQVLWLHV %RVHUXS +D\DPL DQG 5XWWDQ f WKHUH LV QR HYLGHQFH WR VXJJHVW WKDW WKHVH FRQGLWLRQV DUH UHTXLUHG IRU WHFKQRORJLFDO LQQRYDWLRQ DV 6LPRQ DQG RWKHUV KDYH DVVHUWHG 6LPRQ .HOO\ :LOOLDPVRQ DQG &KHHWKDP f ,QGHHG WKH &RPPLWWHH RQ 3RSXODWLRQ UHSRUWV 7KHUH LV QRWKLQJ LQ WKHVH DUJXPHQWV WR VXJJHVW WKDW GHQVHU RU PRUH UDSLGO\ JURZLQJ SRSXODWLRQV DUH EHWWHU RII UDWKHU WKH\ VKRZ WKDW WKH FKRLFH RI >SURGXFWLRQ@ V\VWHP DQG GLUHFWLRQ RI WHFKQRORJLFDO FKDQJH W\SLFDOO\ DGMXVW WR WKH QHJDWLYH HIIHFWV RI KLJKHU GHQVLW\ DQG PRUH UDSLG JURZWKf f

PAGE 119

0RUH UHFHQW UHVHDUFK KDV SURYLGHG VRPH HYLGHQFH ZKLFK VXJJHVWV WKDW IHUWLOLW\ GHFOLQH GRHV QRW LQKLELW HFRQRPLF JURZWK LQ GHYHORSLQJ FRXQWULHV &RPPLWWHH RQ 3RSXODWLRQ f DQG PD\ KDYH D SRVLWLYH HFRQRPLF LPSDFW (YHQVRQ +HVV f 5HGXFLQJ IHUWLOLW\ LV PRUH LPSRUWDQW LQ VRPH UHJLRQV WKDQ RWKHUV EXW PRVW DJUHH WKDW ORZHU IHUWLOLW\ VKRXOG EH RQH JRDO RI GHYHORSPHQW 7KHUHIRUH ZRXOG VXJJHVW WKDW HYHU\ GHYHORSPHQW SURMHFW SURSRVDO EH UHTXLUHG WR VXEPLW D GHPRJUDSKLF LPSDFW VWDWHPHQW VLPLODU WR UHTXLUHPHQWV IRU HQYLURQPHQWDO LPSDFW VWDWHPHQWVf $QRWKHU FRQVHTXHQFH RI WKH HUURQHRXV DVVXPSWLRQ WKDW IHUWLOLW\ LV D ffQHXWUDO SKHQRPHQRQf LV WKDW WKHUH KDV EHHQ OLWWOH UHVHDUFK LQWR WKH VRFLDO DQG HFRQRPLF HIIHFWV RI IHUWLOLW\ GHFOLQH 7KH &RPPLWWHH RQ 3RSXODWLRQ UHSRUWV f f7KH VFLHQWLILF OLWHUDWXUH FRQWDLQV IHZ DGHTXDWH VWXGLHV RI WKH HIIHFWV RI VORZHU SRSXODWLRQ JURZWK LQ GHYHORSHG FRXQWULHV DQG VWLOO IHZHU RQ WKH HIIHFWV LQ GHYHORSLQJ FRXQWULHVf 7KHUH KDYH DOVR EHHQ IHZ VWXGLHV RI WKH GHPRJUDSKLF LPSDFW RI GHYHORSPHQW SURMHFWV 7KH ZRUNV RI %DUORZ f DQG 2EHUDL f DUH DPRQJ WKH IHZ H[FHSWLRQV 2EHUDL f QRWHV ff9HU\ OLWWOH LV FXUUHQWO\ NQRZQ DERXW WKH GHPRJUDSKLF LPSDFW RI PRVW GHYHORSPHQW SURMHFWV $V D UHVXOW SODQQHUV ODFN PHWKRGRORJLHV IRU SURMHFWLQJ PRQLWRULQJ DQG DQDO\]LQJ WKH SUREDEOH GHPRJUDSKLF FRQVHTXHQFHV RI GHYHORSPHQW SURMHFWVf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

PAGE 120

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f KDV UHFHQWO\ FRPSOHWHG D V\QWKHVLV RI FRXQWU\ VWXGLHV DVVHVVLQJ WKH GHPRJUDSKLF LPSDFW RI GHYHORSPHQW SURMHFWV LQFOXGLQJ UXUDO HOHFWULILFDWLRQ DQG LUULJDWLRQ SURMHFWV ODQG UHIRUP DQG DJULFXOWXUDO UHVHWWOHPHQW VFKHPHV ZRPHQfV FRn RSHUDWLYHV DQG LQFRPHJHQHUDWLQJ VFKHPHV SURPRWLRQ RI VPDOOVFDOH LQGXVWU\ DQG UXUDO MRE FUHDWLRQ SURJUDPV ,Q VSLWH RI XQLQWHQGHG FRQVHTXHQFHV DQG LQFRQVLVWHQW GHPRJUDSKLF ILQGLQJV LQ HDFK GHYHORSPHQW SURMHFW H[FHSW LQ D UHIRUHVWDWLRQ SURJUDP LQ 7KDLODQG ZKHUH ZRPHQ ZRUNLQJ RXWVLGH WKH KRPH KDG IHZHU FKLOGUHQf 2EHUDL f FRQFOXGHV ff7KH PRUH LQWHJUDWHG D GHYHORSPHQW LQWHUYHQWLRQ LV WKH JUHDWHU DUH LWV FKDQFHV RI VXFFHVVf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

PAGE 121

GRHVQfW KH RIIHU WKLV DV D SRVVLEOH VSHFLILF VROXWLRQ WRZDUG LQWHJUDWLQJ GHPRJUDSKLF DQG HFRQRPLF GHYHORSPHQW REMHFWLYHV" 7KH FXUUHQW ZRUOG SRSXODWLRQ LV HVWLPDWHG DW ELOOLRQ DQG LV JURZLQJ DW D UDWH RI PLOOLRQ HDFK \HDU +RZHYHU WRWDO IHUWLOLW\ UDWHV DUH GHFOLQLQJ LQ UHJLRQV ZKHUH SHUFHQW RI WKH ZRUOGV SHRSOH OLYH 7)5f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f 7KURXJKRXW WKLV PDQXVFULSW KDYH PDGH WKH SRLQW WKDW GHPRJUDSKLF DQG HFRQRPLF IDFWRUV DUH LQWHJUDOO\ UHODWHG 'HPRJUDSKLF DQG SROLWLFDOHFRQRPLF FKDQJHV DUH LQWHUUHODWHG LQ WKH 8QLWHG 6WDWHV DQG DURXQG WKH ZRUOG 7KH FDSLWDO IOLJKW IURP LQQHU FLWLHV GHFOLQLQJ MRE RSSRUWXQLWLHV LQ XUEDQ DUHDV DQG WKH LQDGHTXDF\ RI JRYHUQPHQW VXSSRUWV HIIHFWV IHUWLOLW\ EHKDYLRU $V 0DPGDQL KDV DUJXHG SHRSOH DUH QRW SRRU EHFDXVH WKH\ KDYH ODUJH IDPLOLHV WKH\ KDYH ODUJH IDPLOLHV EHFDXVH WKH\ DUH SRRU :RPHQ KDYH FKLOGUHQ WR JHW DFFHVV WR UHVRXUFHV ZKHQ WKH\ KDYH IHZ RWKHU PHDQV RI JHWWLQJ WKHP DP QRW FRQWHQGLQJ WKDW LPSRYHULVKHG LQQHU FLW\ ZRPHQ LQ WKH 8QLWHG 6WDWHV KDYH FKLOGUHQ WR LQFUHDVH WKH DPRXQW RI WKHLU JRYHUQPHQW DLG FKHFN 6XFK LQFUHDVHV DUH PHDJHU DW EHVW 7KHUH DUH PDQ\ RWKHU UHVRXUFHV WKHVH ZRPHQ PD\ KRSH WR REWDLQ WKURXJK SURFUHDWLRQ

PAGE 122

LQFOXGLQJ WKH VXSSRUW RI D SRWHQWLDO KXVEDQGIDWKHU DQG KLV IDPLO\f 0\ SRLQW LV WKDW KLJK IHUWLOLW\ DQG UHOLDQFH RQ PHQ DQG FKLOGUHQ WR REWDLQ DFFHVV WR UHVRXUFHVf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

PAGE 123

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fV FDSDFLW\ WR GHFLGH KHU RZQ IXWXUHKHU DFFHVV WR HGXFDWLRQ WR ODQG WR DJULFXOWXUDO H[WHQVLRQ VHUYLFHV WR FUHGLW WR HPSOR\PHQWDV DQ LQGLYLGXDO LQ KHU RZQ ULJKW KDV D SRZHUIXO HIIHFW QRW OHDVW RQ KHU IHUWLOLW\ :RPHQ ZKR KDYH PDQDJHG WR DFTXLUH D PHDVXUH RI VHOIGHWHUPLQDWLRQ WHQG WR KDYH VPDOOHU IDPLOLHV WKDQ ZRPHQ ZLWK QR VXFK DVVHWV 81)3$ f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f HFRQRPLF FRQGLWLRQV RU HPSOR\PHQW RSSRUWXQLWLHV WKDW FRQIOLFW ZLWK FKLOGUHDULQJ DQG f ZRPHQfV DFFHVV WR PDWHULDO UHVRXUFHV LQGHSHQGHQW RI PHQ DQG FKLOGUHQ 7KLV LV WUXH LQ WKH 8QLWHG 6WDWHV DQG DEURDG 'RPHVWLF DQG LQWHUQDWLRQDO GHYHORSPHQW DLG FDQ KDYH D SRVLWYH HIIHFW RQ UHGXFLQJ IHUWLOLW\ LI LW VSHFLILFDOO\ WDUJHWV WKHVH VRFLRHFRQRPLF REMHFWLYHV

PAGE 124

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

PAGE 125

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f FDXVHV RI IHUWLOLW\ EHKDYLRU DQG GHPRJUDSKLF WUDQVLWLRQf IURP WKH 3OHLVWRFHQH WR WKH SUHVHQW 'UDPDWLF FKDQJH LQ WKH PDWHULDO FRQGLWLRQV RI OLIH RFFXUUHG DW WZR PDMRU SXQFWXDWLRQ SRLQWV LQ FXOWXUDO HYROXWLRQ FKDQJLQJ PRGHV RI UHSURGXFWLRQ GXULQJ WKH ILUVW DQG VHFRQG GHPRJUDSKLF WUDQVLWLRQV FRUUHODWH ZLWK GUDPDWLF FKDQJHV LQ PRGHV RI SURGXFWLRQ KDYH VKRZQ KRZ FKDQJLQJ LQIUDVWUXFWXUDO FRQGLWLRQV IRUFHG KXPDQV WR DGRSW QHZ VXUYLYDO VWUDWHJLHV DQG QRYHO RSWLPL]LQJ EHKDYLRUV WKLV UHVXOWHG LQ HFRQRPLF DQG WHFKQRORJLFDO LQQRYDWLRQ DQG GUDPDWLF HFRORJLFDO DQG GHPRJUDSKLF DGDSWDWLRQ %DVHG RQ WKHVH REVHUYDWLRQV KDYH IRUPXODWHG DQ HYROXWLRQDU\ GHPRJUDSKLF WUDQVLWLRQ WKHRU\ WR H[SODLQ WKH XQGHUO\LQJ FDXVHV RI IHUWLOLW\ EHKDYLRU DQG GHPRJUDSKLF WUDQVLWLRQ %RUURZLQJ IURP WKH UHVHDUFK WUDGLWLRQV RI EHKDYLRULVP FXOWXUDO PDWHULDOLVP DQG SXQFWXDWHG HYROXWLRQLVP KDYH VKRZQ KRZ IHUWLOLW\ RXWFRPHV DUH VHOHFWHG IRU E\ FRQVHTXHQFHV LQ PDWHULDO UHDOLW\ DQG FKDQJH LQ SDWWHUQHG DQG SUHGLFWDEOH ZD\V WR

PAGE 126

GHPRWHFKQRHFRQRHQYLURQPHQWDO RSSRUWXQLWLHV DQG FRQVWUDLQWV KDYH DUJXHG WKDW FXOWXUDO VHOHFWLRQ IROORZV WKH VDPH FRVWEHQHILW SULQFLSOHV DV ELRORJLFDO VHOHFWLRQ DQG WKDW IHUWLOLW\ EHKDYLRU DQG FXOWXUDO HYROXWLRQ DUH SUREDELOLVWLFDOO\ GHWHUPLQHG E\ PDWHULDO FRQGLWLRQV $FFRUGLQJ WR HYROXWLRQDU\ GHPRJUDSKLF WUDQVLWLRQ WKHRU\ IHUWLOLW\ EHKDYLRU LV GHWHUPLQHG E\ KRZ LQGLYLGXDOV FDQ EHVW RSWLPL]H WKHLU PDWHULDO ZHOOEHLQJ ZLWKLQ OLPLWHG DQG FKDQJLQJ PDWHULDO FRQGLWLRQV KDYH IRXQG LQ P\ UHVHDUFK WKDW WKH PRVW LPSRUWDQW FDXVDO IDFWRUV LQ PRGHP IHUWLOLW\ GHFOLQH DUH f HFRQRPLF FRQGLWLRQV RU HPSOR\PHQW RSSRUWXQLWLHV WKDW FRQIOLFW ZLWK FKLOGUHDULQJ DQG f ZRPHQf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

PAGE 127

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
PAGE 128

%HFNHU *DU\ 6 DQG + *UHJJ /HZLV ,QWHUDFWLRQ %HWZHHQ 4XDQWLW\ DQG 4XDOLW\ RI &KLOGUHQ -RXUQDO RI 3ROLWLFDO (FRQRP\ f %HQHGLFW %XUWRQ &RQWUROOLQJ 3RSXODWLRQ *URZWK LQ 0DXULWLXV ,Q 7HFKQRORJ\ DQG 6RFLDO &KDQJH %HUQDUG + 5XVVHOO DQG 3HUWK 3HOWR HGV 3S 1HZ
PAGE 129

%OHGVRH &DUROLQH 7KH 0DQLSXODWLRQ RI .SHOOH 6RFLDO )DWKHUKRRG (WKQRORJ\ 7KH 3ROLWLFV RI &KLOGUHQ )RVWHUDJH DQG WKH 6RFLDO 0DQDJHPHQW RI )HUWLOLW\ $PRQJ WKH 0HQGH RI 6LHUUD /HRQH ,Q %LUWKV DQG 3RZHU 6RFLDO &KDQJH DQG WKH 3ROLWLFV RI 5HSURGXFWLRQ : 3HQQ +DQGZHUNHU HG 3S %RXOGHU &RORUDGR :HVWYLHZ 3UHVV %RJXH 'RQDOG 3ULQFLSOHV RI 'HPRJUDSK\ 1HZ
PAGE 130

%RXUJHRLV3LFKDW 7KH *HQHUDO 'HYHORSPHQW RI WKH 3RSXODWLRQ LQ )UDQFH 6LQFH WKH (LJKWHHQWK &HQWXU\ ,Q 3RSXODWLRQ LQ +LVWRU\ *ODVV DQG (YHUVOH\ HGV 3S *UHDW %ULWDLQ $OYD %RZPDQ /DUU\ : 0DXULWLXV 'HPRFUDF\ DQG 'HYHORSPHQW LQ WKH ,QGLDQ 2FHDQ %RXOGHU &RORUDGR :HVWYLHZ 3UHVV %UDXGHO )HUQDQG 7KH :KHHOV RI &RPPHUFH 9RO &LYLOL]DWLRQ DQG &DSLWDOLVP WKWK &HQWXU\ 1HZ
PAGE 131

D 7KH 0HFKDQLVPV RI 'HPRJUDSKLF &KDQJH LQ +LVWRULFDO 3HUVSHFWLYH 3RSXODWLRQ 6WXGLHV E )HUWLOLW\ LQ $IULFD ,Q )HUWLOLW\ 'HFOLQH LQ WKH /HVV 'HYHORSHG &RXQWULHV 1LFN (EHUVWDGW HG 3S 1HZ
PAGE 132

&KRZGKXU\ $OODXGGLQ $.0 DQG /LQFROQ & &KHQ 7KH ,QWHUDFWLRQ RI 1XWULWLRQ ,QIHFWLRQ DQG 0RUWDOLW\ 'XULQJ WKH 5HFHQW )RRG &ULVLV LQ %DQJODGHVK )RRG ,QVWLWXWH 5HVHDUFK 6WXGLHV &ODSKDP -+ (FRQRPLF 'HYHORSPHQW RI )UDQFH DQG *HUPDQ\ WK HG &DPEULGJH &DPEULGJH 8QLYHUVLW\ 3UHVV &ODUN & 3RSXODWLRQ *URZWK DQG /DQG 8VH 1HZ
PAGE 133

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
PAGE 134

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
PAGE 135

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
PAGE 136

*LRUJLV %HONLV :ROGH 7KH 6WDWXV RI :RPHQ DQG 3RSXODWLRQ 3ROLF\ LQ $IULFD ,Q $IULFDQ 3RSXODWLRQ &RQIHUHQFH 'DNDU /LHJH%HOJLXP ,QWHUQDWLRQDO 8QLRQ IRU 6FLHQWLILF 6WXG\ RI 3RSXODWLRQ ,8663f *RXOG 6WHSKHQ -D\ DQG 1LOHV (OGUHGJH 3XQFWXDWHG (TXLOLEULD 7KH 7HPSR DQG 0RGH RI (YROXWLRQ 5HFRQVLGHUHG 3DOHRELRORJ\ *2=*RYHPPHQW RI =LPEDEZH )LUVW )LYH
PAGE 137

)LVFDO &RUUXSWLRQ DQG WKH 0RUDO (FRQRP\ RI 5HVRXUFH $FTXLVLWLRQ 5HVHDUFK LQ (FRQRPLF $QWKURSRORJ\ :RPHQfV 3RZHU DQG 6RFLDO 5HYROXWLRQ )HUWLOLW\ 7UDQVLWLRQ LQ WKH :HVW ,QGLHV ,Q )URQWLHUV RI $QWKURSRORJ\ 6HULHV 9RO 1HZEXU\ 3DUN &DOLIRUQLD 6DJH :RPHQfV 3RZHU DQG )HUWLOLW\ 7UDQVLWLRQ LQ $IULFD DQG WKH :HVW ,QGLHV 3DSHU 3UHSDUHG IRU WKH 0HHWLQJ RI WKH $PHULFDQ $VVRFLDWLRQ IRU WKH $GYDQFHPHQW RI 6FLHQFH 1HZ 2UOHDQV +DUSHQGLQJ +HQU\ DQG /X$QQ :DQGVQLGHU 3RSXODWLRQ 6WUXFWXUHV RI *KDQ]L DQG 1JDPLODQG .XQJ ,Q &XUUHQW 'HYHORSPHQWV LQ $QWKURSRORJLFDO *HQHWLFV 0 &UDZIRUG DQG 0LHONH HGV 3S 1HZ
PAGE 138

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
PAGE 139

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
PAGE 140

/)6/DERXU )RUFH 6XUYH\ 0DLQ 5HVXOWV RI WKH /DERXU )RUFH 6XUYH\ )ODUDUH =LPEDEZH &HQWUDO 6WDWLVWLFV 2IILFH /HYLQH 5REHUW $ 0DWHUQDO %HKDYLRU DQG &KLOG 'HYHORSPHQW LQ +LJK)HUWLOLW\ 3RSXODWLRQV )HUWLOLW\ 'HWHUPLQDQWV 5HVHDUFK 1RWHV 6HSWHPEHU 1HZ @ $Q (VVD\ RQ WKH 3ULQFLSOH RI 3RSXODWLRQ 1HZ @ $ &RQWULEXWLRQ RI WKH &ULWLTXH RI 3ROLWLFDO(FRQRP\ 1HZ
PAGE 141

0F1LFROO *HRIIUH\ ,QVWLWXWLRQDO 'HWHUPLQDQWV RI )HUWLOLW\ &KDQJH 3RSXODWLRQ DQG 'HYHORSPHQW 5HYLHZ 0HDGH -( 7KH (FRQRPLF DQG 6RFLDO 6WUXFWXUH RI 0DXULWLXV /RQGRQ 0HWKXHQ 0HDGRZV '+ '/ 0HDGRZV 5DQGHUV DQG :: %HKUHQV ,,, 7KH /LPLWV WR *URZWK 1HZ
PAGE 142

1HUORYH 0 +RXVHKROG DQG (FRQRP\ 7RZDUG D 1HZ 7KHRU\ RI 3RSXODWLRQ DQG (FRQRPLF *URZWK -RXUQDO RI 3ROLWLFDO (FRQRP\ f 1HZHOO :LOOLDP +HQU\ 3RSXODWLRQ &KDQJH DQG $JULFXOWXUDO 'HYHORSPHQW LQ 1LQHWHHQWK &HQWXU\ )UDQFH 1HZ
PAGE 143

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
PAGE 144

6FKHSHU+XJKHV 1DQF\ ,QIDQW 0RUWDOLW\ DQG ,QIDQW &DUH &XOWXUDO DQG (FRQRPLF &RQVWUDLQWV RQ 1XUWXULQJ LQ 1RUWKHDVW %UD]LO 6RFLDO 6FLHQFH DQG 0HGLFLQH 6FKXOW] 7: 7KH +LJK 9DOXH RI +XPDQ 7LPH -RXUQDO RI 3ROLWLFDO (FRQRP\ 6FKXOHU 6LGQH\ 5XWK DQG 0HOY\Q & *ROGVWHLQ )DPLO\ 3ODQQLQJ IURP WKH 8VHUfV DQG 1RQXVHUfV 3HUVSHFWLYH 5HSURGXFWLYH 'HFLVLRQ0DNLQJ LQ 1DSDO 6WXGLHV LQ )DPLO\ 3ODQQLQJ f 6FRWW &KULVWRSKHU 62 DQG 9& &KLGDPEDUDP :RUOG )HUWLOLW\ 6XUYH\ 2ULJLQV DQG $FKLHYHPHQWV ,Q 5HSURGXFWLYH &KDQJH LQ 'HYHORSLQJ &RXQWULHV ,QVLJKWV IURP WKH :RUOG )HUWLOLW\ 6XUYH\ -RKQ &OHODQG DQG -RKQ +REFUDIW HGV 3S 1HZ
PAGE 145

6LPSVRQ ** 7HPSR DQG 0RGH LQ (YROXWLRQ 1HZ
PAGE 146

7DQ -HH 3HQJ DQG 0LFKDHO +DLQHV 6FKRROLQJ DQG 'HPDQG IRU &KLOGUHQ +LVWRULFDO 3HUVSHFWLYHV :RUOG %DQN 6WDII :RUNLQJ 3DSHU QR :DVKLQJWRQ '& :RUOG %DQN 7HLWHOEDXP 0LFKDHO 5HOHYDQFH RI 'HPRJUDSKLF 7UDQVLWLRQ 7KHRU\ IRU 'HYHORSLQJ &RXQWULHV 6FLHQFH 7LHQ +< 0RELOLW\ 1RQ)DPLOLDO $FWLYLW\ DQG )HUWLOLW\ 'HPRJUDSK\ 7,336 3URMHFW &,0$6 %XVLQHVV $QDO\VLV 6XPPDU\ RI 5HVXOWV &RPPHUFLDO DQG ,QGXVWULDO 0HGLFDO $LG 6RFLHW\ 2I =LPEDEZH 7HFKQLFDO ,QIRUPDWLRQ RQ 3RSXODWLRQ IRU WKH 3ULYDWH 6HFWRU 7,336f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
PAGE 147

:DOOVWHQ 76 &RJQLWLYH 3URFHVVHV LQ &KRLFH DQG 'HFLVLRQ %HKDYLRU +LOOVGDOH 1/DZUHQFH (UOEDXP $VVRFLDWHV :DUH +HOHQ 0RWLYDWLRQV IRU WKH 8VH RI %LUWK &RQWURO (YLGHQFH IURP :HVW $IULFD 'HPRJUDSK\ f :RPHQfV :RUN DQG )HUWLOLW\ LQ $IULFD ,Q 7KH )HUWLOLW\ RI :RUNLQJ :RPHQ $ 6\QWKHVLV RI ,QWHUQDWLRQDO 5HVHDUFK 6 .XSLQVN\ HG 3S 1HZ
PAGE 148

:LQVWRQ +9( DQG )UHHWK = 3URVSHFW DQG 5HDOLW\ 1HZ
PAGE 149

%,2*5$3+,&$/ 6.(7&+ 6KHSKHUG ,YHUVRQ JUDGXDWHG ZLWK D %$ LQ KLVWRU\ IURP %URZQ 8QLYHUVLW\ LQ +H UHFHLYHG KLV 0$ LQ FXOWXUDO DQWKURSRORJ\ DW WKH 8QLYHUVLW\ RI )ORULGD LQ ,Q KH FRQGXFWHG ILHOG UHVHDUFK LQ =LPEDEZH $IULFD

PAGE 150

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r ‘ ‘ $EUDKDP & *ROGPDQ O $VVLVWDQW 3URIHVVRU RI *HRJUDSK\ FHUWLI\ WKDW KDYH UHDG WKLV VWXG\ DQG WKDW LQ P\ RSLQLRQ LW FRQIRUPV WR DFFHSWDEOH VWDQGDUGV RI VFKRODUO\ SUHVHQWDWLRQ DQG LV IXOO\ DGHTXDWH LQ VFRSH DQG TXDOLW\ DV D GLVVHUWDWLRQ IRU WKH GHJUHH RI 'RFWRU RI 3KLORVRSK\ DVVLVWDQW 3URIHVVRU RI 3V\FKRORJ\ 7KLV GLVVHUWDWLRQ ZDV VXEPLWWHG WR WKH *UDGXDWH )DFXOW\ RI WKH 'HSDUWPHQW RI $QWKURSRORJ\ LQ WKH &ROOHJH RI /LEHUDO $UWV DQG 6FLHQFHV DQG WR WKH *UDGXDWH 6FKRRO DQG ZDV DFFHSWHG DV SDUWLDO IXOILOOPHQW RI WKH UHTXLUHPHQWV IRU WKH GHJUHH RI 'RFWRU RI 3KLORVRSK\ 'HFHPEHU 'HDQ *UDGXDWH 6FKRRO

PAGE 151

81,9(56,7< 2) )/25,'$



EVOLUTIONARY DEMOGRAPHIC TRANSITION THEORY:
COMPARATIVE CAUSES OF PREHISTORIC, HISTORIC
AND MODERN DEMOGRAPHIC TRANSITIONS
By
SHEPHERD IVERSON
A DISSERTATION PRESENTED TO THE GRADUATE SCHOOL
OF THE UNIVERSITY OF FLORIDA IN PARTIAL FULFILLMENT
OF THE REQUIREMENTS FOR THE DEGREE OF
DOCTOR OF PHILOSOPHY
UNIVERSITY OF FLORIDA
1992

ACKNOWLEDGMENTS
I wish to thank my Ph.D committee: Drs. H. Russell Bernard, Ronald Cohen, Abe
Goldman, Tim Hackenberg and Marvin Harris. I extend my appreciation to Dr. Goldman
(geography) and Dr. Hackenberg (psychology) for joining my committee from outside my
department. I also wish to thank Dr. W. Penn Handwerker. His book on the causes of the
demographic transition in Barbados has had a large impact on me. Ms. Gwendolyn
Wynne, Ms. Elizabeth Miller, and especially Dr. Jack Blatherwick have been a constant
support. I also want to mention my closest friend during these graduate school years, Haba
Musengezi (from Zimbabwe). It is largely due to his diverse knowledge of Africa and his
friendly promptings that I chose to conduct field research in Zimbabwe and selected Sub-
Saharan Africa as my geographic region of expertise. The three anthropologists on my
committee, Drs. Bernard, Cohen, and Harris, are recognized as tireless educators and
productive scholars; the creative wisdom and genuine love of discovery of Dr. Bernard, the
rigorous and insightful queriousness of Dr. Cohen, and the intellectual integrity and
passionate humanitarianism of Dr. Harris have made an indelible impression upon me (and
many other young anthropologists). It is an honor to have such distinguished gentlemen on
my Ph.D committee. It is with my deepest gratitude and admiration that I thank my advisor,
friend, mentor, and chair of my Ph.D committee, Dr. H. Russell Bernard. His unwavering
belief in me confirms once again the power of the Pygmalian Effect. Finally, none of this
would have been possible without the unconditional support and encouragement of my
mother, Ms. Inga lone Iverson. Her loving independent spirit, reasonableness, and
sensibilities have deeply influenced my life. This work is dedicated to her.
u

PREFACE
Theories of demographic transition have been forwarded almost exclusively by
social scientists trained in the field of demography. Some theoretical and empirical work
has been offered by psychologists, sociologists, biologists, historians, economists, and
anthropologists. Demographers form their theories of fertility transition by adopting
different combinations of these perspectives. This interdisciplinary interest has greatly
advanced our scientific understanding.
Within anthropology, an array of subfields contribute to demographic knowledge.
These include biological anthropology, archeology, ethnology, cross-cultural studies, and
cultural evolutionary theory. What binds these specialties together and best describes the
anthropological perspective is their comparative cross-cultural method and evolutionary
framework.
Unfortunately, the anthropological perspective has not gained the intersubjective
recognition it deserves within the social sciences in general and among demographic
transition theorists in particular. In spite of this, new contributions to demographic
transition research and theory made by trained demographic anthropologists are
accumulating. The growing consensus that demographic theory should be incorporated into
evolutionary theory is the inspiration for this book.
m

TABLE OF CONTENTS
page
ACKNOWLEDGMENTS ü
PREFACE üi
ABSTRACT v
CHAPTERS
1INTRODUCTION 1
2EPISTEMOLOGY AND DEMOGRAPIC KNOWLEDGE 4
Etic Behavioral & Emic Mentalist Models 5
Consciousness and Fertility 15
Cultural Materialism, Behaviorism, Evolutionism and Fertility 20
3THEORIES OF DEMOGRAPHIC TRANSITION 26
Modernization and Westernization Theories 27
Wealth Flows Theory 33
Resource Access Hypothesis 35
Evolutionary Demographic Transition Theory 40
4PREHISTORIC AND HISTORIC EVIDENCE 49
Prehistoric Demographics 50
The First Demographic Transition 53
The Second Demographic Transition 57
Comparative Causes of Demographic Transition 62
5MODERN EVIDENCE 68
Education and Fertility 69
Employment and Fertility 74
Transition in Zimbabwe 78
Transition in Barbados 84
Transition in Mauritius 86
Transition in Kuwait 92
Summary 101
6DISCUSSION 106
7CONCLUSION 117
BIBLIOGRAPHY 120
BIOGRAPHICAL SKETCH 142
IV

Abstract of the Dissertation Presented to the Graduate School
of the University of Florida in Partial Fulfillment of the
Requirements for the Degree of Doctor of Philosophy
EVOLUTIONARY DEMOGRAPHIC TRANSITION THEORY:
COMPARATIVE CAUSES OF PREHISTORIC, HISTORIC
AND MODERN DEMOGRAPHIC TRANSITIONS
By
SHEPHERD IVERSON
December 1992
Chairman: Dr. H. Russell Bernard
Major Department: Anthropology
The objective of this work is threefold: 1) to show how epistemological assumptions
influence fertility research methods, theory, data analysis, and population policy; 2) to
present a unified theory for understanding the causes of fertility behavior; and, 3) to show
how this theory can explain the underlying causes of demographic transition from
prehistoric to present times.
Reviewing the literature on reproductive decision-making, it is shown how emic
mentalist and etic behaviorist epistemological approaches lead to divergent explanations in
fertility research. Cultural idealist and cultural materialist fertility theories are contrasted;
assumptions about consciousness and deliberate fertility control are discussed. It is argued
that etic behavioral and cultural materialist approaches avoid the biases of modernization
and westernization theories that are often associated with emic mentalist and cultural idealist
approaches.
v

The rise of demographic transition theories is presented, beginning with
modernization and westernization theories, followed by Caldwell’s ’’wealth flows theory"
and Handwerker’s "resource access hypothesis.” Finally, the synergism of cultural
materialist, radical behaviorist, and punctuated evolutionist theories is formulated as the
basis for "evolutionary demographic transition theory.”
Evidence from the first and second demographic transitions is presented;
corresponding changes in modes of production and reproduction are explained and
changing costs and benefits of childbearing are analyzed. Assumed causes of modem
fertility decline, i.e., western style education, modem health care, family planning, and
employment opportunities, are subjected to the scrutiny of the research literature. Only
increased employment opportunities for women outside the household stands as an
independent cause of fertility decline. Zimbabwe, Barbados, Mauritius, and Kuwait are
selected as country examples of changing material forces leading to demographic transition.
It is concluded from the Pleistocene to the present, in developing and developed
countries, reproductive behavior is an adaptive response to material conditions; fertility
outcomes reflect women’s struggle to make the best of their lives given a set of external
circumstances completely beyond their control. The most important causal factors in
modem fertility decline are 1) economic conditions or employment opportunities that
conflict with childrearing and 2) women’s access to material resources independent of men
and children.
vi

CHAPTER 1
INTRODUCTION
Since Ehrlich’s The Population Bomb (1968) and Meadows’ The Limits to Growth
(Meadows et al 1972), there has been a growing popular perception that rapid global
population growth is endangering the natural ecological systems of finite earth. Almost
twenty years later, Ehrlich has appropriately redirected his blame to the high
consumption/pollution patterns of the one-forth of the worlds population who live in
industrialized countries (Omstein and Ehrlich 1989). If population growth is no longer a
global danger, why are social scientists still concerned about the causes of high fertility?
The answer is that rapid population growth is still endangering finite natural human-
ecosystems in certain parts of the developing world. The fate of the earth may not be in
immediate danger by population growth in developing countries, but the local livelihood,
health and welfare of many millions of people is in danger. Many more populations are
politically and geographically circumscribed today than ever before. In cases of
circumscription, rapid population growth eventually leads to environmental depletions;
standards of living decline and levels of malnutrition increase. This, in turn, may lead to
political instability and eventually to a civil revolt in which many more people suffer.
In spite of these developments, the very notion that overpopulation exists is
controversial. Rapid population growth has been viewed by some as a prerequisite to
market development and entrepreneurial initiative. Others are convinced that a focus on
overpopulation as the cause of environmental degredation, declining living standards,
malnutrition, civil unrest, etc., is like ’’blaming the victim.” It is argued that these
1

2
developing world problems are not caused by overpopulation but are caused instead by
local and international economic exploitation and sanctioned by cormpt political regimes.
Why study the causes of fertility decline and demographic transition if the real problems are
political and economic?
The answer is that political, economic and demographic factors are interrelated and
interdependent; a better solution to any one will help in the solution to the others. New
interdisciplinary approaches to knowledge (such as this one) are more keenly aware of the
dynamic causal relationships between material (and nonmaterial) factors in cultural
evolutionary change. Also, since millions of dollars of international development aid is
disbursed annually, any research that can enhance its intended positive impact on people
(and minimize possible unintended negative impacts) is of value. Finally, for me there is a
personal excitement of discovery and satisfaction in formulating a new solution to an old
question that I feel has not yet been convincingly answered.
This manuscript is divided into seven chapters. Chapter one is the introduction. In
chapter two, I focus on the epistemological basis for understanding theories of reproductive
decision-making and demographic transition; I describe the epistemological underpinnings
for two different models of reproductive decision-making and describe materialist and
behaviorist perspectives in greater detail. In the third chapter, I describe the leading
demographic transition theories beginning with the generalist modemizationAvestemization
theory, followed by Caldwell’s wealth flows theory and Handwerker s resource access
hypothesis; in the final section of this chapter I introduce evolutionary demographic
transition theory. In chapter four, I review and compare empirical evidence from prehistoric
and historic demographic transitions. Chapter five is a review of research which pertains to
modem demographic transition, the causal relationships between education, employment,
and fertility, and a description of several recent demographic transitions in terms of these

3
factors. In chapter six, I discuss the implications of an etic materialist approach to
understanding the causes of demographic transition and the possible applications of
evolutionary demographic transition theory for domestic and international aid and
development policy. Chapter seven is the conclusion.

CHAPTER 2
EPISTEMOLOGY AND DEMOGRAPHIC KNOWLEDGE
One common research assumption is that knowledge of micro phenomena will lead to
an understanding of macro phenomena. On the basis of this assumption it is believed that
understanding the causes of reproductive decisions will lead to an understanding of
demographic transition. However, it has also been argued that the underlying basis for
reproductive decisions is culture-specific, and therefore, data derived from one culture
cannot be applied to understanding how reproductive decisions are made in another culture.
Others argue that while there are clear differences in fertility preferences, values and beliefs
cross-culturally, reproductive outcomes are determined by various external material
conditions which act similarly on all individuals.
In this chapter, I will describe two different approaches to reproductive decision¬
making and demographic transition model building beginning with their epistemological
assumptions. I will show how these approaches lead to divergent explanations of fertility
transition and explain why the epistemological assumptions of one approach lead to a more
rigorous cross-cultural and evolutionary basis for understanding the causes of reproductive
behavior. Also, I will show how this approach avoids ethnocentric and western-centric
assumptions about the causes of sociocultural change.
4

5
Etic Behavioral and Emic Mentalist Models
Efforts to model reproductive decision-making have taken two very different
approaches-mentalist and behaviorist. Mentalist models stress subjective, unpredictable,
consciousness driven reproductive decisions. Behaviorist models stress reproductive
selection-by-consequences with objective material conditions. These two models originate
from very different epistemological positions.
Epistemology is often overlooked, yet a fatal flaw to many a cleverly constructed theory
begins at the level of epistemology. Indeed, epistemology largely determines methods,
theory, and interpretation. As Lett (1987:36) writes, ’’Epistemology is the common ground
in all debates, whether the debate involved commensurable or incommensurable theoretical
positions. Eventually, all unresolved substantive issues boil down to a disagreement about
epistemology.” Therefore, understanding epistemological differences is critical to judging
the value of methods, theories, interpretations and analysis.
A working definition of the difference between emic and etic approaches will help
illuminate the epistemological differences between mentalist and behaviorist models (also
see Headland et al. 1990). This distinction is made necessary by a situation unique to
human scientists; we are at once observers and participants-the object and subject of
inquiry-usually with deeply enculturated biases and views.
Emic operations have their hallmark in the elevation of the native
informant to the status of ultimate judge of the adequacy of the
observer’s descriptions and analyses. The test of the adequacy of the
emic analyses is their ability to generate statements the native accepts
as real, meaningful, or appropriate. In carrying out research in the
emic mode, the observer attempts to acquire a knowledge of the
categories and rules one must know in order to think and act as a
native (Harris 1979:32).
The mentalist orientation of an emic approach is evident; what is important is how or
what the native respondent thinks. Research on fertility decision-making that uses an emic
mentalist approach tends to rely on what native informants say or believe about themselves.

6
For example, to find out why some women have eight children or why others stop after
having two, it is important to learn about indigenous cultural value systems, the diffusion
of information, and to simply ask why they had two or eight children. On the other hand:
Etic operations have as their hallmark the elevation of observers to
the status of ultimate judges of the categories and concepts used in
descriptions and analyses. The test of the adequacy of etic accounts
is simply their ability to generate scientifically productive theories
about the causes of sociocultural differences and similarities. Rather
than employ concepts that are necessarily real, meaningful, and
appropriate from the native point of view, the observer is free to use
alien categories and rules derived from the data language of science
(Harris 1979:32).
The behaviorist orientation of the etic approach is evident in its mistrust for what people
might say about the reasons for their reproductive behavior. What is important in the etic
approach is not how or what the native respondent thinks, but rather, what external
conditions influence their fertility behavior. Etic behaviorist approaches rely on
observations of fertility behavior vis-a-vis external conditions; it is material circumstances
which motivate the fertility decision-making process. With this approach, to find out why
some women have eight children and why others have two children, it is important to
understand the external material factors which reward and/or punish women for having two
or eight children.
Mentalist models of reproductive decision-making are expressly emic in orientation.
They model what is going on inside the mind of the individual or the group-mind of the
culture. Thus, emic mentalist explanations rely on unobservable private thoughts, i.e.,
goals, motives, and meanings. On the other hand, behaviorist models of reproductive
decision-making are expressly etic in orientation; they model the effects external conditions
have on behavior. Thus, etic behavioral explanations rely on observable public behavior in
the context of material and environmental conditions.

7
From an emic mentalist perspective, it is important to ask people how they make
reproductive choices and to delve into the social context in which their decisions are made;
changing values and culturally motivated behavior is of paramount interest. For instance,
Knodel and van de Walle (1979) stress that the diffusion of information on contraception
and the communication of normative beliefs were influential agents for the spread of
fertility limitation in Europe. On the other hand, from an etic behavioral perspective, it is
important to observe fertility behavior in the context of essential physical needs; changing
contingencies and materially motivated behavior is of paramount interest.
The differences between emic and etic approaches and mentalist and behaviorist
perspectives are epistemological; as paradigms of understanding, they are incommensurable
(see Kuhn 1970; Lett 1987:31-37). Emic mentalists are cultural idealists; etic behaviorists
are cultural materialists. Emic research approaches do not combine well with behaviorist
perspectives; etic approaches do not combine well with mentalist perspectives. These
differences will become more apparent as we look at their theoretical offspring.
One of the first etic models of reproductive decision-making was introduced by Nobel
laureate Gary Becker in 1960. In his ’’new home economics” theory (the Chicago-
Columbia theory), Becker assumed a rational consumer and believed that the preference
ordering of consequences is the most important determinant of decisions and behavior
(Becker 1960; 1981; also see Boulding 1966). He was the first to apply this microeconimic
framework to demographic theory. Essentially, Becker proposed that fertility decisions are
guided by the same materialist principles that guide economic decisions in the household.
Becker’s reasoning is that since children contribute utility, but at a price, fertility decisions
should be based on the same basic principles as consumer decisions. Crosbie explains:
Becker argued that children were a household commodity and that the
desire for children should be subject to the economic laws of
demand. More specifically, he argued that households would be
rational in their reproductive decision-making, and thus, the demand

8
for children and reproduction would increase as the price of children
decreased or as household income, the taste for children, or the
prices of other household goods increased (1986:32).
Mincer (1963) expanded Becker’s model to include the value of a woman’s time.
According to Mincer, women would be less likely to have children when their time is
valuable to them (opportunity costs) and more likely to have children when it is not. Also, a
woman should be more likely to have children when children can reduce her time spent on
household and food production duties, and when children can benefit households
economically.
These propositions were substantiated by a series of time-allocation studies and more
detailed micro-economic research of domestic economies (see Becker 1965; Ben-Porath
1974; Schultz 1974; Nerlove 1974; Mueller 1982). One important finding from micro-
economic research is that children in many developing countries make a variety of valuable
contributions to the household from a very early age (White 1975; Mueller 1976; Cain
1977; 1980; Rosenzweig 1978; Nag et al. 1978; Ho 1979). It is not surprising to find that
early household contributions made by children in these countries correlates strongly with
high fertility.
Another refinement of the new home economics model is commonly referred to as the
’’quantity-quality tradeoff.” Becker and Lewis (1973) hypothesized that if parents expected
greater advantage investing limited resources in fewer children (quality) than in many
children (quantity), they would have fewer children (also see DeTrey 1973). The material
basis for this hypothesis can also be applied to differential investments in male and female
offspring where there are expectations of greater advantage investing limited resources in
one sex (see Chowdhury and Chen 1977; Miller 1981; Chen et al. 1981; Greenhalgh 1982;
1985; Scheper-Hughes 1984).
Recognizing that parental reproductive preferences may vary, Ben-Porath has argued
that conjugal pairs be viewed as self-interested individuals in the marriage contract rather

9
than as a single entity. In his ’’transactions framework”, Ben-Porath (1978) asserts that the
short and long term cost and benefits of children are not the same for both parents (also see
Ben-Porath 1980; Cain 1981; Nugent 1985). For instance, there is little incentive for men
to have fewer children when they can pass on the costs of child support to wives or an
extended family (see Boserup 1985). Fapohunda and Todaro explain the family
transactions framework:
Perceived child-related benefits and costs are assumed to depend on
the characteristics of the following three implicit family contracts: the
parent-child contract, the husband-wife contract, and the spouse-
extended family contract. The evolution of these implicit family
contracts is assumed to determine the benefit flows from children, the
resources available to support parental reproductive decisions, and
which parent bears the cost of children (1988:575).
From a materialist perspective, Fapohunda and Todaro (ibid:579) continue, ’’The locus
of the fertility decision-making process is determined by who controls and allocates the
economic resources within the family. A change in intrafamilial asset control could
precipitate a change in decision-making prerogatives leading to altered fertility behavior.”
In addition to altered fertility behavior, it is not surprising that socio-economic forces that
affect the value of children also affect the social construction of fatherhood. Bledsoe (1990)
found that in rural areas of Liberia, where fatherhood is often in doubt, men carefully
weigh the material cost of benefits of parentage before claiming it. About her research,
Bledsoe writes:
In traditional areas, where labor is crucial to subsistence production
and outside resources are scarce, men are eager to claim fatherhood
to children they believe to be their own biological offspring as well as
those whose paternity is in doubt. But an increasing loss of
subsistence farmland in the modem sector to cash cropping and
private ownership is undermining the economic importance of young
children and making them expensive to raise. Therefore, men are
reluctant to claim fatherhood until it is clear that the child has
survived and shows promise as an economic investment (1980:41-
42).

10
As economic growth occurs, the relative values of land, labor, and capital change.
Also, new expenses associated with urban industrial living change the costs of raising
children at the same time new employment opportunities for adult children alter economic
power relationships and change intergenerational benefit flows. Fapohunda and Todaro
assert:
The size of net intergenerational benefit flows from children to
parents is positively related to parental control of valuable physical
assets, primarily land. The rising price of children, induced by
reversed intergenerational benefit flows, is therefore a reflection of
the rising market value of human capital investments and the
diminished relative importance of parentally controlled physical
wealth (ibid:575).
In his ’’relative economic status hypothesis”, Easterlin (1975) posits that as household
income increases, there will be an increased demand for all goods, including children.
Easterlin believes that increased availability and consumption of consumer goods (within a
limited budget) will progressively reduce reproductive investments since children now
become one of many goods. However, what explains the fact that in the United States, the
baby boom occurred in tandem with expanding consumerism?
In Easterlin’s ’’experienced living standard” concept, the increased availability and
consumption of consumer goods will produce fertility decline over time as values inherent
in this process are passed down to children (Easterlin 1969; 1976abc; Easterlin, Pollack
and Wachter 1980). Also, as health improvements increase child survival and fecundity, an
excess supply of children reduces demand and increases motivation for fertility control
(Easterlin and Crimmins 1985).
In his ”lifestyle-norm/time constraint” approach, Donaldson contends that lifestyle
changes and shifts in normative values and time constraints during modernization lead to
changes in fertility; once a lifestyle standard is set, fertility will be altered to protect it.

11
Donaldson observes:
Overall, the broad span of modem history shows that societies strive
to maintain achieved standards, and that they control population in
the process of doing so. Not every subsector of the society is
successful in maintaining standards; but overall, once advance is
reached, it is protected (1991:36).
The theories outlined above share the common assumption that external economic and
material conditions are the original causal factors that determine aggregate fertility behavior;
the role of internal values and cultural beliefs is secondary. Though it is often assumed that
personal preferences, values and beliefs cause behavior, impersonal factors from outside
the individual determine the content of these preferences, values and beliefs. Thus,
impersonal factors from outside the individual ultimately determine family values and
fertility behavior.
However, many of these theorists assume a degree of proactive consciousness in their
models of rational choice. Though a degree of proactivity is always present, there is no
need to assume that people are conscious of the short-term or long-term costs and benefits
of their behaviors to find that they adapt to external contingencies in predictable ways. With
reference to large agrarian families, for instance, Epstein (1977:224) writes, ’’Their large
number of children were not the result of anything remotely approaching cost/benefit
considerations but were rather the result of a necessary part of the process of adaptation to
environmental conditions.” An epistemological discussion of the role of consciousness
(and proximate factors) in fertility outcomes is discussed more fully in the next section.
In spite of some overlap on the issue of the role of consciousness, etic and behavioral
methods and theories of reproductive decision-making have run counter to theories rooted
in emic and mentalist approaches. For instance, criticizing time allocation studies, Pedersen
(1985:20) writes, ’To assume such calculations seems to imply too strongly that people all

12
over the world act just like the IBM when they make their choices.” Critics of utility models
of fertility assert that the rational basis of life is quite different in the developed and the
developing world. Working from an emic mentalist epistemological perspective, Pedersen
asserts:
Even though the etic model of utility may show a net value of
children, people do not necessarily codify this in the same way as the
observer. That is, they may not take the observers variables into
account, they may not use the same model of utility or they may have
a definition of work different from that of the observer (1985:20).
It is thought that in pre-capitalist economies, free choice is less rational and less
optimizing; preferences and tastes are more whimsical and less predictable. H. Simon
(1980:75) observes, ’’Actual human choices depart radically from those implied by the
axioms (of rationality), except in the most transparent situations. Humans are unable to
choose consistently in the face of even moderate complexity or uncertainty.” Crosbie
(1986:57) asserts, ’’Current rationality models of reproductive decision-making are
deficient for they do not consider the full complexity and fallibility of the human decision
maker” (cf. Wallsten 1980).
For instance, in ’’subjective expected utility” theory it is argued that anticipated
consequences add a cognitive dimension of uncertainty to fertility decision-making
outcomes (Beach et al. 1976; Townes et al. 1980). In a similar model that relies primarily
on subjective states of mind, the ’’value of children” theory posits that the value of children
cannot be reduced to simple economics or any other single variable, and that reason is less
important than emotion in the reproductive decision-making process (Fawcett 1972; 1973;
Fawcett and Arnold 1973). Fawcett (1983:435) contends that, ”As children become less
valuable economically, they become more valued emotionally; and, as economic
development proceeds, children are in competition with other sources of satisfaction.”

13
Leibenstein (1977; 1981) has argued that psychological factors, i.e., personality and
individual identity, determine reproductive outcomes. Fawcett notes:
No single conceptual or theoretical framework guides research on
perceptions of the satisfactions and costs of children. Research on
this topic is eclectic, analyzing the perceived value of children
descriptively and incorporating this subjective orientation in various
frameworks to explain fertility (1983:429-430).
These emic mentalist theories share the assumption that subjective social and/or
personal factors are primary determinants in fertility decisions. Mentalists who claim they
hold a more eclectic approach to understanding reproductive decision-making argue that
reason itself is growing more inter-subjective. In the ’’theory of reasoned action”,
expectations and reflective normative standards explain contraceptive and reproductive
decision-making (see Davidson and Jaccard 1975; 1979; Fishbein et al. 1980). Crosbie
explains:
According to this theory, a person’s behavioral and normative beliefs
about some behavior jointly determine the person’s intention to
perform the behavior; this behavioral intention, in turn, serves as the
sole and direct determinant of the behavior itself. The more positive
the behavioral and normative beliefs, the greater the intention, and the
more likely the behavior is to be performed (1986:38).
It is argued that behavioral and normative beliefs are products of family and society.
Robinson and Harbison (1980:221) contend that high birthrates may be used to satisfy the
overriding social goal of group (family, tribe, nation) survival. Donaldson (1991:7)
observes, ’’When reproductive behavior is viewed over the long run from the perspective of
the family’s and society’s well being, the individual appears to be orchestrated toward
conformity in this fundamental sphere of life.” Blake asserts:
Fertility is determined by the characteristics of family and the general
norms and values attributed to the concept of family in the given
society, and the more fundamental changes of fertility are caused by
the changes in the institution of family; therefore a theory of
reproductive motivation is at the same time a theory of the family and
society (1968:24).

14
In McNicoll’s (1980) ’’institutional determinants” theory of fertility change he
postulates that desirable fertility behavior is institutionalized in a society; social norms
replace individual norms. Similarly, Caldwell (1983:473) claims that, ’’all aims are
ultimately social.” Citing the conforming effects of the past and current teachings of
missionaries, colonial administrators, secular schoolteachers, national school systems, the
mass media, and new national elites, Caldwell (ibid) asserts, ’’For fertility decline, the rapid
establishment of a global society is probably more important than the creation of a global
economy.”
In his theory of’’social influence groups,” Leibenstein (1974) contends that normative
standards and motivations for fertility and family size diffuse between social influence
groups, i.e., people of lower socioeconomic status emulate the fertility behaviors of people
of higher socioeconomic status. Along similar emic normative and diffusionary lines of
reasoning, an ’’international demonstration effect” is believed to take place, whereby
fertility norms in developed countries are emulated by developing countries (Teitelbaum
1975:423).
Demographic theorists who specialize in the understanding of subjective states of mind,
socialization processes, and the diffusion of normative beliefs have made valuable
contributions to fertility decision-making research. However, as we will see below, to be
satisfied with this level of understanding ’’quits early.” Thus, many demographic theorists
and researchers ignore the underlying material forces acting upon and changing individual
and cultural preferences, values, and beliefs. Even some economically oriented
demographic experts have underestimated the diversity and effects of these material forces.
Yet the discovery of original causes of fertility behavior is critical to the design of
international aid and development policies which seek to affect fertility outcomes.

15
An anthropological perspective is especially well suited to consider the effects of
diverse material conditions-original causes-on individual fertility behavior and cultural
evolution. I believe the next major contribution in fertility research will be in this area. Once
the effects of material circumstances on the development of fertility preferences, values,
and beliefs are understood, development policies can be designed to affect both material
and ideological changes which further lower fertility objectives.
Consciousness and Fertility
As noted in the previous section, an important and perplexing epistemological problem
related to the etic behaviorist and emic mentalist debate has to do with the notion of
consciousness. It is an a priori research assumption of cultural idealists that
consciousness, i.e., attitudes, preferences, values and beliefs, determines behavior.
Researchers who work from etic research strategies may also believe that behavior is the
result of conscious choice. For example, Becker assumes that individuals make conscious
fertility choices in his demand-related economic theory of fertility. Only cultural materialists
and behaviorists claim that knowing an individual’s mental state is untrustworthy in
determining the causes of their fertility behavior. This is why they use etic behaviorist
research strategies. This is also why cultural materialists and behaviorists do not speculate
about states of consciousness. This is explained further in the next section.
Related to the assumption of conscious choice is the notion of natural fertility.
Demographic theorists have assumed the existence of’’natural” versus ’’targeted” fertility.
Henry defined ’’natural fertility” as fertility which ’’exists or has existed in the absence of
deliberate birth control” (1961:81). It is estimated that natural fertility can reach a biological
maximum of about 15 births per woman (Bongaarts 1978). Bongaarts and Menken
(1983:31) expanded the notion of natural fertility to include: ’’The fertility that prevails in

16
the absence of deliberate attempts to limit the number of surviving children.” This takes into
account the proximate effects of prolonged breastfeeding and postpartum abstinence which
lower fertility while increasing rates of child survival. Bongaarts and Menken (ibid:28)
explain natural fertility as, ”a function of a set of behavioral and biological proximate
determinants.”
The proximate or intermediate variables approach to fertility was first introduced
independently by Henry (1953, cited in Bongaarts and Menken 1983) and Davis and Blake
(1956). Bongaarts (1978; 1982) later operationalized this approach by focusing on the
causal significance of a smaller set of intermediate variables linking social, psychological,
cultural and economic factors with total fertility rates. From analysis of data of 41 present-
day and historical populations Bongaarts (1982) found that 96 percent of the variation in
fertility is explained by four intermediate variables: proportion married among females,
contraceptive use and effectiveness, prevalence of induced abortion, and duration of
postpartum infecundability. It is argued that social, psychological, cultural and economic
factors operate through these intermediate variables to determine fertility.
There is no doubt that changes in these intermediate factors does affect fertility and
child survival. Research in this area has been of great value. However, changes in
intermediate factors will not result in demographic transition. Because natural fertility has
been seen as a function of a set of behavioral and biological proximate determinants, the
causal role of the perceived or actual costs and benefits to women of having children is
often overlooked. The status of deliberate intent and etic material causes is muddled
because it is assumed that some combination of social, psychological, cultural and
economic factors determines fertility through these intermediate variables.
Some researchers speculate there was little or no individual conscious choice in
premodem societies and there are higher degrees of conscious choice in developed than in

17
developing societies. For instance, while asserting that there is no individual choice in a
premodem society is too strong, Easterlin nonetheless believes evolution to a modem
society has entailed a change from social control to a more self-conscious individualized
control of fertility. Easterlin is trying to account for the differences in fertility behaviors
between traditional and modem cultures. Easterlin (1975:62) contends his "broader
economic framework”, "lends itself to greater recognition of such demographic concepts as
natural fertility, and to the formulation of alternative hypotheses frequently voiced by
sociologists, anthropologists, and other noneconomists.”
Demographers have assumed that couples do not deliberately control their fertility until
the end of a fertility transition, when women begin to use modem methods of contraception
and abortion to limit their childbearing capabilities. As the term ’’natural fertility” suggests,
it has been presumed that "precontracepting” people are simply behaving naturally and are
not aware of the means by which to control their fertility. The model assumption is that
targeted fertility and fertility control is a new invention of modem consciousness, evolving
along with "higher” forms of rationality (see Weber 1958). Indeed, Wrigley (1969)
describes new fertility patterns in terms of a change from unconscious rationality to
conscious rationality.
This cultural idealist assumption about the changing nature of consciousness is
incorrect. Demographic theorists who use this distinction are unfamiliar with
anthropological contributions to the knowledge of human and cultural evolution, and with
the many anthropological insights into fertility research. The assumption that modem
humans (and people in developed countries) are more conscious, and therefore are more
inclined to consciously control their fertility than earlier peoples (and people living in
developing countries) is unfounded at best, and western-centric at worst. The underlying
assumption is not only unprovable, but is reminiscent of the nineteenth-century version of

18
the evolution of’’civilized” consciousness. Implicit in this psychic evolutionary schema is
that there are ’’progressive” and ’’backward” peoples. Such propositions are challenged by
archeological evidence, behavioral data, and historical fact. Harris and Ross assert:
The origin of this assumption lies in ethnocentric and especially in
Eurocentric idealizations of the behavior of’’progressive” post¬
demographic societies in comparison with the reproductive behavior
of’’backward,” pre-demographic societies. Only post-demographic
transition contracepting societies are viewed as having the capacity to
make rational calculations concerning the rearing of optimum
numbers of children. Hence, evidence of the use of an array of
culturally patterned procedures which demonstrably have the effect of
controlling fertility in non-contracepting societies--abortion,
abstinence, lactation-is categorically demoted to the status of
behavior whose ’’goal” had nothing to do with fertility control, and
which therefore could not be true fertility control in the full noble
idealist sense (1987:16).
Unquestioned acceptance of this notion has contributed to the design of ineffectual
international programs designed to reduce fertility. Cultural idealist demographers and
sociologists were convinced that the transmission of’’rationalistic” western knowledge and
family planning would enlighten "backward” people and lead to fertility decline in the high
fertility regimes of the developing world. This was the basis of knowledge from which
family planning programs were originally designed and administered. This emic mentalist
approach led to the belief that modem education in family planning and contraception
would change the preferences, values, and beliefs of ”pre-contracepting” peoples according
to new fertility goals and desires; with new information they would begin to take deliberate
steps to limit fertility.
Mamdani was one of the first to criticize these cultural idealist assumptions of western
trained social scientists. Mamdani was involved in the Khanna Study, the first longitudinal
study (1954-1969) of a birth control program to have a control as well as a test population.
The findings of the study were either inconclusive or showed that the birth control program

had no effect on fertility. Mamdani observed that the emic mentalist model used by his
colleagues led them to believe:
19
if only the ’’right” information can be given to the people they will be
convinced; if only the leaders can be contacted and convinced, they
will use their influence with the people to change their behavior. The
underlying assumption is that the behavior of the population, given
the environment and its constraints, is not rational (Mamdani
1973:40).
However, Mamdani found the fertility behavior of these people was quite rational
considering their desperate economic circumstances. Mamdani asserts:
The failure of the birth control program was not a failure in
execution, but a failure in understanding. No program would have
succeeded, because birth control contradicted the vital interests of the
majority of villagers. To practice contraception would have meant to
willfully court economic disaster (ibid:21). . . people are not poor
because they have large families. Quite the contrary: they have large
families because they are poor (ibid: 14).
In a restudy of the same Indian village a decade later, Nag and Kak (1984) documented
widespread attitude and behavior changes with regard to controlling births. They found that
economic development and technological changes in agriculture in the region since the
previous study had changed the opportunity structure of the people. Caste systems of
institutionalized inequality were in the process of breaking down. Skills and perspectives
developed in formal education were increasingly rewarded with higher paying jobs. If the
economy wasn’t growing fast, the state was. It was now ’’rational” for parents to invest in
fewer children in order to pay for their education, which, in turn, was expected to benefit
families in the long run.
The lesson to be learned from this example is that women who have access to family
planning services but choose not to use contraceptives are no less rational, individualized or
conscious of their fertility behavior than are women who use contraceptives. If women in
developing countries have less control over their fertility it is because of inferior

20
contraceptive technologies, not because they are ignorant. If they have more children, it is
not because their culture tells them what to do; it is because having more children is in their
personal best interest. If they have fewer children, it is not because western education and
family values convinced them to have fewer children; it is because having smaller families
is more beneficial.
As soon as the benefits of small families outweigh the costs, people all over the world
are quite willing to have fewer children; until then, they are not. As the failure of so many
well intentioned family planning efforts attests, people are not duped into behaving contrary
to their material interests. A cultural materialist, etic behavioral, and evolutionary approach
to understanding fertility transition would have avoided these past policy errors, and
indeed, is a prerequisite to the design and implementation of effective development and
fertility reduction programs in the future.
Cultural Materialism. Behaviorism. Evolutionism, and Fertility
An etic, behavioral and diachronic approach to fertility research uses methods and
theories derived from materialism, behaviorism and evolutionism. Unlike cultural idealist
and historical-interpretivist approaches, cultural materialist, behaviorist and evolutionist
approaches to knowledge acquisition are explicitly scientific. As formulated by Harris:
Cultural materialism shares with other scientific research strategies an
epistemology which seeks to restrict fields of inquiry to events,
entities, and relationships that are knowable by means of explicit,
logico-empirical, inductive-deductive, quantifiable public procedures
or ’’operations” subject to replication by independent observers
(1979:27).
Cultural materialist knowledge claims must be founded on the following conditions:
1) operationalizable; 2) parsimonious; 3) empirically testable, replicable, and falsifiabile;
4) logically coherent and interpenetrating; 5) retrodictive and predictive. Beyond the
scientific method, the need for a clear data language lies at the heart of attempts to create a

21
social science about human beings. For this reason the epistemological basis of cultural
materialism also relies on the distinctions between mental and behavioral fields and between
emics and etics. In opposition to emic mentalist and other non-positivistic approaches,
Harris (1964) argues for the development of an observer-oriented (etic) analysis of
behavioral events that precludes the need to know the actor’s mental state (emics).
Similarly, in Skinner’s (1963) behaviorist psychology, the only scientifically acceptable
data are public events accessible to observation. The fundamental tenet of behaviorism is
that individuals are conditioned by their environment through contingencies of
reinforcement. Individuals do not have absolute free-will to determine their behavior
independent of environmental conditions; behavior is selected for by consequences in an
environment. Indeed, Skinner asserts:
The discovery that the environment, in acting upon the organism,
could be regarded as a causal agent in the direction and control of
behavior, and the realization that it was therefore possible to dispense
with fictitious inner controls marked the beginning of a science of
behavior (1947:26-27).
For Harris and Skinner, behavior speaks for itself and is predictable from events and
contingencies taking place outside the skin. Mental processes, including preferences,
values and beliefs, are responses to external stimuli, not the causes of overt behavior.
Thus, observing behavior in a material context is more likely to predict preferences, values
and beliefs than eliciting preferences, values and beliefs is to predict behavior. Indeed,
research on informant accuracy has clearly shown that people do not always do what they
say or think they do; behavior is often understood through various biases and memory
lapses (Bernard et al. 1984). This is true whether an individual is conscious or unconscious
of the intentional or unintentional consequences of their behavior.
Accuracy is not the only problem with informant reports; sometimes they misrepresent
the truth. Informants often tell researchers what they want to hear in order to stay on their

22
good side. This is exactly what happened in the Khanna study referred to above.
Researchers were puzzled that fertility remained high though women reported they were
using the contraceptives given them. Mamdani (1973) later found that women were simply
telling the researchers what they thought they wanted to hear so that no feelings were hurt.
In a more recent example of researcher confusion, in interpreting the World Fertility
Survey, Scott and Chidambaram (1985:21) puzzle over the fact that ’’the consistent Finding,
in almost every country, of large numbers of women, who, while expressing the desire for
no more children, are doing nothing to restrain their fertility even when contraception is
readily available.” Instead of questioning whether these women are telling the truth or not,
the behaviorist and cultural materialist would investigate the incentives for fertility and the
reinforcements present which might lead women to express a desire for no more children
while behaving in a contradictory manner.
Because of the impossibility of relying on what informants say or think, cultural
materialists and behaviorists posit a unified behavior stream. Skinner writes:
Science often talks about things it cannot see or measure. . . . An
adequate science of behavior must consider events taking place
within the skin of the organism, not as physiological mediators of
behavior, but as part of behavior itself. It can deal with these events
without assuming that they have any special nature or must be known
in any special way (1963:953).
Behaviors that are rewarded will increase, those punished will decrease. Behavioral
change is often concomitant with changes in the mental state of the individual, but need not
be. Since mental states do not determine the external material contingencies of
reinforcement and punishment, they do not determine behavior.
An etic behavioral and evolutionary understanding of fertility decisions predicts that
people adjust their fertility behavior to the contingencies and metacontingencies of
punishment and reinforcement. At the individual level of analysis, some individuals may
adjust their fertility behavior more or less quickly and appropriately to the etic (versus

23
perceived) contingencies and metacontingencies of reinforcement and punishment. But in
the aggregate and in the long run, i.e., the evolution of a culture or species, it is the
contingencies and metacontingencies of reinforcement and punishment that mold cultural
and biological evolution.
Cultural materialists have taken these behaviorist assumptions about the causes of
individual behavior and used them to explain the probable determinants of reproductive
behavior for aggregates of individuals, i.e., cultures. As Skinner argues that individuals do
not have absolute free-will to determine their behavior independent of material conditions,
neither do cultures. Cultural behavior is also selected for by the consequences of interacting
with material conditions. The reason for taking this lesson from behavioral psychologists
became clear from an anthropological understanding of biological and cultural evolution.
Behaviorists have shown that most individuals seek positive stimuli and optimal
lifestyles. Similarly, ecologists and anthropologists have shown that hunters and collectors
maximize the rate of caloric return for their efforts (Chamov 1976; Smith 1983).
Anthropologists have also explained why aggregate reproductive rates correlate with the
costs and benefits of childbearing for individuals living in different modes of production
(Handwerker 1983; 1986a). From an anthropological focus on prehistorical and historical
cross-cultural phenomena, analogous processes of individual and cultural evolution were
evident.
However, in spite of an underlying allegiance to behaviorist psychology, and
grounding in the individual, it is not the intention or goal of cultural materialist and
evolutionary approaches to explain individual fertility behavior. The goal of cultural
materialism and an etic behavioral research strategy is to understand the probabilistic causes
of behavior stream events (such as reproduction) for aggregates of individuals conditioned
by the various material circumstances in which they live.

Therefore, reproductive decision-making and demographic transition must be
understood from an etic behavioral epistemological perspective in a nomothetic,
24
comparative and evolutionary context. Indeed, Skinner (1981; 1984) asserts that parallel
processes of selection-by-consequences occurs in biological, behavioral and cultural
evolution. Skinner (1953:430) writes, ”In certain respects operant reinforcements
resembles the natural selection of evolutionary theory. Just as genetic characteristics which
arise as mutations are selected or discarded by their consequences, so novel forms of
behavior are selected or discarded through reinforcement.”
In agreement, Harris and Ross paraphrase Skinner’s observation:
Sociocultural systems evolve in conformity with the consequences
for individuals and groups who do or do not adopt innovations. We
invite those who find it difficult to comprehend how such systems
can embody a rational or optimizing calculus in the absence of
conscious calculation to examine the occurrence of optimizing
relations established through selection-by-consequences in the
evolution of species, in the behavior patterns of a single species of
organism, and in the behavior of communities of diverse species
organized into ecosystems (1987:14).
Etic behaviorist, cultural materialist and evolutionary models of reproductive decision¬
making and demographic transition assert that prehistorical data is not irrelevant, cross-
cultural understanding is not impossible, and that an emic mentalist understanding is not
necessary. Selection-by-consequences implies that optimizing behaviors can be
independent of conscious awareness; selection occurs in all realms of life whether we
realize it or not.
On the other hand, emic mentalist epistemological approaches obscure the etic material
basis of reality by assuming that the level and the contents of conscious apprehension
determines behavior. Not only does the difficulty of getting inside another person’s head
make this approach untenable from a research standpoint, but such an approach also leads
to a mistrust of scientific research strategies and more parsimonious causal explanations.

25
Mentalists seek to invalidate theories and approaches that do not conform to idealist tenets
because they believe utility calculations are dehumanizing. In doing so, they deny objective
reality and reject the material necessities that unite all of humanity under one set of
contingencies. Moreover, cultural idealist and mentalist models of the causes of
reproductive behavior tend to range from being overly complex to espousing the futility of
modeling itself. Thus, they tend to be unproductive from a policy standpoint.
If reproductive behavior was not determined or lawful in any way, then research would
be unnecessary and prediction and control would be impossible. But this is simply not the
case. Strong correlations exist between reproductive behavior and objective material
conditions in the archeological record, in recorded history, and in contemporary cross-
cultural comparative data. Indeed, this makes etic behaviorist epistemologies and cultural
materialist, behaviorist, and evolutionary theoretical approaches a necessity if we are to
predict and control demographic patterns in the future.

CHAPTER 3
THEORIES OF DEMOGRAPHIC TRANSITION
Earlier in this century, the exponential growth of the earth’s population was thought to
be proof of the growing happiness and progress of mankind. In 1915, an eminent
American demographer concluded his presidential address to the American Economic
Association:
Both the increase of happiness and increase in numbers show a better
adaptation to environment, and where numbers have increased we
may infer the increase of human happiness. If this argument is
sound, the increase of the earth’s population in less than two
centuries by about two thirds of a billion persons is the only
quantitative test and proof of the progress of mankind (cited in
Demeny 1986:27).
This blind optimism that the growth of human happiness and the progress of
humankind are correlated with rapid population growth was soon disgarded.
Environmental depletion and increasing starvation became the quantitative test and proof of
the regress of mankind. In the 1940s and 1950s, as malnutrition and mass poverty was
becoming evident in certain parts of the world, social scientists began to look for the
determinants of high fertility and the factors that influence its decline. High fertility was
assumed to be a response to high infant mortality. A decrease in child mortality was one
product of modem medicine. This pair of observations laid the groundwork for the first
causal theory of demographic transition.
26

27
Modernization and Westernization Theories
From the 1940s, demographers who believed in the ’’modernization theory” of fertility
behavior held that demographic transition from high to low birth and death rates was
caused by western imports--such as professional health care, universal western education,
mass media and communication systems, urbanization, consumer goods and services, and
an increase in per capita income (Notestein 1945; Davis 1963). Reductions in mortality
were thought to lead to fertility decline after a short lag. This lag represents the time it took
people to begin to trust that their children would survive, thus, relieving them of the need to
bear more children than they actually desired. In the early 1960s, Freeman explained the
dominant view of fertility transition:
Most sociologists and demographers would probably agree . . . the
basic cause of the general [fertility] decline are: (a) a shift in functions
from the family to other specialized institutions, so that there was a
decrease in the number of children required to achieve socially valued
goals; and (b) a sharp reduction in mortality which reduced the
number of births necessary to have any desired number of children
(1961-1962:53).
Modernization was synonymous with the western notion of progress. From a policy
standpoint, there were two conflicting views on fertility transition in the early 1960s:
(1) fertility decline is the natural result of modernization, i.e., urbanization, better health
practices and lower mortality, universal education, industrialization and occupational
change. Therefore, government birth control policies are unnecessary; and, (2) because
modernization reduces mortality much faster than fertility, this rapid transitional population
growth impedes progress. Therefore, there is a need for deliberate programs to reduce
fertility (Coale and Treadway 1986). Neither group doubted that modernization would
reduce fertility. The underlying debate was about the legitimate promotion of contraception
and abortion on a world-wide basis.

Before 1963 scholars formed their views of demographic transition from
impressionistic generalizations of fertility declines associated with modernization in
28
Europe, North America, Australia, New Zealand, and Japan. However, a vital new source
of data was discovered. For over one-hundred years, European states had collected
socioeconomic and demographic data in more than six hundred provinces. The European
Fertility Project (also known as the Princeton Fertility Project) set out to analyze this
abundance of unanalyzed data. In summing up the results of the European Fertility Project,
Coale and Watkins write:
The demographic transition in Europe, then, was a transition from
approximate balance of birth and death rates at moderately high levels
to approximate balance at low levels.. . . Couples married late, or
postponed the next pregnancy for self-interested reasons, such as
waiting until attaining the economic position to form a viable
household or extending the birth interval until the survival of the
most recently bom would not be jeopardized.... Marital fertility fell
as agricultural and industrial production increased, and improved
environmental conditions and better medical knowledge and facilities
drastically reduced the incidence of fatal infectious disease. .. .
Nuptiality had been far from constant; but the dominant reason for
attainment of low fertility was the universal adoption of parity-related
limitations of births-the effective employment of contraception and
abortion in order to have no more than the small number of births
each couple wishes (1986:28-29).
Essentially, Coale and Watkins conclude that the dominant reasons for lower marital
fertility (demographic transition) in Europe are as follows: 1) better medical knowledge led
to reductions in mortality, which, in turn, led to fertility decline (a standard modernization
postulate of demographic transition); and, 2) during a period of growing agricultural and
industrial productivity more people wanted to limit births and were successful in doing so
through increased contraception and abortion (a standard westernization postulate of
demographic transition).

29
The causal legitimacy of the former postulate is very much in doubt, as we will see,
while the latter postulate is descriptive and of little value to population policy. While the
conclusions drawn by this generation of research have significantly contributed to the
advancement of knowledge, there are new signs of progress made in demographic research
which dispute many of its knowledge claims.
Within the general paradigm of modernization and westernization there has also been a
proliferation of contrasting theories of demographic transition. Simmons notes:
This situation encourages extended debate about policy alternatives,
where both alternative value structures and alternative theoretical
perspectives vie with empirical evidence in the complex process of
decoding research priorities and policy options. This reality heightens
our need for an understanding of the role of theory and of the specific
theoretical alternatives which have been proposed in the literature
(1985:10).
This accumulated puzzle-solving has created a large body of analysis and theory, most
of which has been produced by demographers relying on aggregate data sources such as
those used in the European Fertility Project. Demographic puzzles have been ’’solved”
through statistical correlation vis-a-vis the expectations of modernization theory: arrows of
causation have often been imputed rather than proven.
As we will see, research at less remote levels of analysis has provided evidence of
numerous cross-cultural anomalies in modemization/westemization theories of fertility
decline. However, intent on finding the cause of demographic transition within the
modernization paradigm, the response to these anomalies among demographic theorists has
been has been to expand the number of interacting variables and to propose threshold
effects. This has made standard demographic transition theory less parsimonious and less
useful from a policy perspective.

30
For instance, in a recent public policy paper written for the United Nations, Faroog and
DeGraff (1988:18-19) provide a laundry list of factors responsible for fertility decline in
developing countries:
1) the rise in urbanization and the increasing costs of raising children,
particularly education costs, associated with an urban life style;
2) the declining production value of children with compulsory education,
child labor laws and increasing demand for skilled labor;
3) increasing education and age of women at marriage;
4) changing roles of women in society and greater economic opportunities
for women outside the home;
5) a shift in religious and cultural values;
6) the shift in dependence from local, largely self-contained institutions
(e.g. the extended family system) to larger social and economic units,
allowing for greater individual control of fertility decisions, etc;
7) lower infant and child mortality;
8) the institutionalization of old-age support systems and insurance
schemes; and
9) the greater availability of family planning technology, information and
services, etc.
The necessary and sufficient conditions leading to fertility decline are not clearly
defined by Faroog and DeGraff in this large and complex model. Also, numerous attempts
to isolate some of these variables and measure their impact have not stood the test of cross-
cultural comparison. Moreover, some of these factors supposed to be ’’responsible” for
fertility transition have antecedent causes or are mutually inclusive.
For instance, urbanization cannot be a sufficient condition because it has proven
virtually unrelated to the fertility transitions that occurred in France, the United States and
Japan. And while there is considerable evidence that religious and cultural change result
from changing material conditions, there is no conclusive empirical evidence which
suggests religious and cultural values independently cause fertility decline. Indeed,
religious prohibitions to family planning seem to have no affect on contraceptive use cross-
culturally. Catholics now have fewer children than Protestants in the United States. Italy,
an almost entirely Catholic nation, has high levels of contraception, abortion, and below
replacement level fertility.

31
The availability of contraception is also in doubt as a cause of fertility decline. On the
relationship between the availability of birth control and fertility in the United States, Harris
(1981:89) asserts:
The idea that the baby boom collapsed because of the introduction of
the ’pill’ can be easily dismissed, since the bust began in 1957 while
the pill was not released for public use until June 1960. As late as
1964, when fertility was falling at unprecedented speed, only 10
percent of married women of childbearing age were using the ’pill’.
In developing countries a number of studies have shown that contraception is used to
replace traditional mechanisms of birth spacing and has little or no affect on limiting family
size (seeGiorgis 1988:8.1.7.; Bongaarts 1981; Ware 1976:480). In Kenya and Lesotho,
Mhloyi (1986) found that the availability of family planning services did not translate into
acceptance or use of such services. Indeed, Kenya introduced one of the first national
family planning services available in Africa over 20 years ago but presently has the highest
population growth rate in the world--estimated at close to 4 percent.
However, access to birth control technology humanizes the process by which births are
avoided. It also adds to the quality of life women may enjoy when they are reasonably
certain they will not become pregnant from sexual relations. In addition, by assisting
women to avoid high risk pregnancies (those which are too closely spaced and among
teenagers), family planning can help reduce morbidity and mortality levels among mothers
and their children.
In spite of much data to the contrary, one of the most consistently cited causes of lower
fertility is improvements in health care which results in declining infant mortality. This
conclusion is very much in doubt. Transition to low fertility has been observed to precede
infant mortality decline in certain areas of France and Hungary in the nineteenth century
(Caldwell 1976; 1982). There are historical examples of frontier regions in the United
States, Canada, Chile, Australia, New Zealand, and the Russian Empire where fertility

32
decline preceded mortality decline (Donaldson 1991:13). High levels of fertility have also
been shown to coincide with low levels of infant mortality in developing countries (Coale et
al 1979). Knodel and van de Walle (1979:224) write, ”At this stage, no definitive
conclusion can be reached on the role of declining mortality in the fertility transition of the
West.” Van de Walle (1986) has shown that there is no systematic association between
fertility and infant mortality levels of various historical European populations before,
during, and after demographic transition. Using modem aggregate data from Africa,
Cantrelle et al (1978) failed to find a relationship between total fertility rates and infant
mortality. Analyzing a sample of 98 contemporary developing countries, Hess (1988:132)
concludes, ’There is little empirical support for declining infant mortality’s contributing
directly to reducing fertility.” Indeed, high infant mortality and demand for family planning
services have been shown to coexist (Schuler and Goldstein 1986). Scrimshaw (1978) has
even found that under adverse material conditions infant mortality is a response to high
fertility rather than a stimulus to it.
However, the costs and benefits of childbearing have changed dramatically. Raising
children has become more expensive with new health, education, food and clothing
standards and with the increased costs of urban living. At the same time, the production
value of children has declined with urban residence, compulsory education, child labor
laws, new labor-saving technologies and the increased demand for adult skilled labor.
Further, greater economic opportunity outside the home causes young women to stay in
school longer, adopt fertility control measures sooner, marry later, expect less from their
children, and to cease reproducing earlier. These factors are central to the next three causal
models.

Wealth Flows Theory
In the early 1980s, Caldwell (1982) introduced a more parsimonious westernization
33
theory of the causes of demographic transition. In his ’’wealth flows theory”, Caldwell
posits:
In pretransition societies (i.e., before the onset of fertility decline),
the net value of intergenerational wealth flows (labor and services,
goods and money, and present and future guarantees, including old
age support) is upward, whereas in posttransitional societies it is
downward (1983:459).
Caldwell argues that cultural (emic mentalist) factors create moral changes in
intergenerational attitudes that lead to a reversal of economic family obligations (1976;
1978). He claims that western education creates new attitudes toward the family. This in
turn leads to a reversal of wealth flows within the family and subsequent adaptive changes
in fertility behavior (1980:231). Caldwell argues that fertility transition is a function of the
diffusion and assimilation of western attitudes, tastes, preferences, and values through
schooling and the mass media (1982).
This shift in moral responsibility corresponds with the emotional nucleation of the
family, the rising costs of education, and increased individualism. Caldwell posits that in
nuclear families, conjugal partners are no longer morally obliged to consider the wishes of
their extended family. Wealth begins to flow away from parents toward children. In
addition, since more education is required to gain employment in the modem sector of the
economy, parents are obliged to invest more in fewer children.
Ironically, these moral and economic changes also encourage children to strike out on
their own once they become free of parental supervision. Traditional patterns of high
fertility which emphasized quantity of children are no longer cost effective for parents who
may not expect their children to support them in old age (which was the normative moral

34
responsibility in the past). Each of these factors makes childbearing a more expensive and
economically speculative proposition.
Unfortunately, the Caldwells are not always consistent or clear about causation. For
instance, Caldwell and Caldwell (1987a) contend that this process of westernization is
delayed by deeply rooted African religious values which support the power of the elders
and ancestors. They assert, ”a discussion of prosaic material considerations understates the
essentially religious underpinning of high fertility” (ibid:421). In the same year the
Caldwells also presented an article which states, ’’Educational opportunities and subsequent
occupational opportunities are by far the most important factors in limiting family size”
(Caldwell and Caldwell 1987b: 11).
It is difficult to resolve the frequent contradictions in the Caldwells’ writings. Is it
’’religious underpinnings”, ’’educational and occupational opportunities”, or both factors,
which determine fertility behavior? The intended causal sequence the Caldwells suggest is:
(1) educated children become (2) secularized adults, and therefore, (3) have weaker ties to
traditional pronatalist beliefs. This is usually true. But is not the expectation of more old
age support one incentive for parents to educate their children? Therefore, is it not because
of’’prosaic material considerations” that parents invest more in their children’s education,
thereby encouraging their children’s break with traditional religious pressures for high
fertility?
Parents may in fact be consumers and investors without being conscious of how their
productive and reproductive behaviors relate to consumption and investment. Based on this
understanding, Handwerker has proposed that people get an education, have children, and
exploit each other to gain access to resources.

35
Resource Access Hypothesis
The ’’resource access hypothesis” is logically consistent, parsimonious, and does not
rely on mentalist or western ideological assumptions. The resource access hypothesis, as
formulated by Handwerker (1983; 1986a; 1986b; 1987; 1989), is founded on materialist
causal variables as they relate to women’s power-”specifically the opportunity to pursue
goals independently of their childbearing capacity” (Handwerker 1990:3). Handwerker’s
explicitly structural, political-economic and anti-patriarchal orientation is a feminist
approach to demographic transition theory. Handwerker writes:
The resource access hypothesis thus conceives fertility transition and
the revolution in social relationships that precipitate it as one effect of
a fundamental change in the costs that attach to resources and to the
means women can use to gain access to resources, and thus as one
effect of a fundamental change in women’s power (1989:22).
Handwerker’s theory is rooted in the following four relationships:
1) Fertility transition occurs when women are freed from economic
dependency on their children;
2) women may achieve this freedom by direct government manipulation of
resource access costs, as recently in China and Singapore;
3) women may also achieve this freedom once well-paying employment
opportunities open up to them as well as to men, and
4) these employment opportunities open to women when economic
power is decentralized and creates competition that selects
employees more on the basis of personal skills and competence than
on the basis of personal relationships with employers (1989:22).
Handwerker agrees with the materialist aspects of Caldwells’ wealth flows theory, i.e.,
the importance of the direction of intergenerational income flows. Handwerker (1986b:3)
asserts, ’’The adverse effect of this reversal of the intergenerational wealth flow on parental
material well-being provides the incentive for the sharp limitation of family size that has
been the singular feature of the modem demographic transition.”
However, contrary to Caldwell and Caldwell’s (1990) cultural idealist assertion that the
primary causes of high fertility in sub-Saharan Africa are kinship patterns and the
traditional socioreligious emphasis on replacing the lineage, Handwerker argues that high

36
fertility is a response to limited access to strategic resources. On a similar material basis,
contrary to Caldwell’s idealist belief in the education model, Handwerker asserts that
education alone will not fuel fertility transition; transition only proceeds ’’when changes in
opportunity structure and the labor market increasingly reward acquired skills and
perspectives” (Handwerker 1986a:400). Thus, Handwerker asserts:
The relative importance of kinship and other personal relationships
can change only when alternative lines of access to strategic
resources proliferate. Formal education and skill training, which
become of widespread importance only in the context of the industrial
system, offers for the first time in human history a criterion that can
be used independent of kin and other social relationships to gain
access to strategic resources. However, such proliferation cannot
occur unless this novel line of access to key resources yields greater
returns more reliably than the use of personal relationships.
Educationally-acquired skills and experiences can yield such returns
only with changes in the opportunity structure and the labor market.
Such changes in opportunity structure and the labor market have the
effect of constraining the income flows accessible solely through
children and the personal relationships (to kin, friends, and patrons)
they can create.
Hence, fertility transition should not follow from the onset of mass
education, as Caldwell claims, but from the conjunction of mass
education with changes in opportunity structure that increasingly
reward educationally-acquired skills and perspectives (1986b: 15-16).
According to Handwerker, this depends on fundamental structural economic change
which creates more nonagricultural economic opportunities (especially for women) and
selects for more democratic hiring practices. This results in more egalitarian power relations
between the sexes and more opportunities for women to pursue goals independently of
their childbearing capacity. Increasing meritocratic access to economic opportunities creates
the material incentives for women to stay in school longer and to achieve economic
independence from children and men.
The industrial mode of production relies on an expanding base of technicians, workers
and consumers. New educational, career, and employment opportunities offer women and
their young adult children greatly expanded access to economic resources. Under these new

37
cultural-material conditions, achieved status increasingly replaces ascriptive status as
education and technical skill are rewarded. Kinship and other personal relationships which
traditionally were used to secure access to resources are increasingly replaced by alternative
means. In Barbados, Handwerker points out:
Prior to 1960, the Barbadian economy was characterized by an
uncompetitive and oligopolistic resource structure the primary effects
of which was to allocate opportunities largely on the basis of
personal relationships, and these on the basis of sex, class, and
color. . . . Between 1955 and 1965, the Barbadian economy
underwent a major structural discontinuity marked by the decline in
the importance of sugar and the ascendancy of industrial
manufacturing and tourism. The economic well-being of these
sectors was subject to selection on the basis of quality and cost
factors set in international markets; they opened up new resource
access channels for both men and women, and, by the 1980s,
Barbadian women were able to chart their own course in life in ways
that had been denied to their mothers and grandmothers (1990:8).
The introduction of western style education, modem health care, and family planning
programs were not responsible for this new freedom; women’s independence came after
structural economic developments opened new resource channels which offered women
new socioeconomic roles. New freedoms were not the result of an aggressive equality
movement among women who self-consciously struggled for their rights. Barbadian
women did not plan the economic and social revolution; impersonal factors selected for
these changes. Selection was based on quality and cost factors set in international markets.
Barbados’ close geographical proximity to the United States also contributed, as we will
see below.
Handwerker is critical of demographic transition theories which posit interdependent
processes of’’modernization” (Bulatao and Lee 1983; Easterlin and Crimmins 1985) and
the ’’westernization” of family values by mass education (Caldwell 1982). Handwerker
claims that most indices of development and modernization, e.g., improvements in public
health care, the availability of new goods and services, and growth in per capita income,

38
are factors whose putative linkages with fertility are either spurious or inconsistent.
Indeed, in summing up his research of demographic change in Barbados--where total
fertility fell from around 5.0 in the mid-1950s to a low of about 2.0 in 1980 (Handwerker
1989:202)--Handwerker writes, ’’The Barbadian fertility transition was completed in only
20 years, and it occurred demonstrably independently of changes in the level of women’s
education, rising standards of living, women’s worker participation rates, urbanization,
westernization, or the existence of the Barbadian Family Planning Association” (1990:8).
Beyond his criticisms of cultural idealist explanations of demographic transition,
Handwerker questions the essential assumptions of contemporary social thought--which he
believes were profoundly influenced by Adam Smith. Criticizing Smith’s image of people
and society, Handwerker writes:
This image, of people who competitively pursue their own interests
and improve the well being of a society in the process, has given rise
to the presumption that human history is decided by purposeful,
rational thought and action. This view has become an essential
assumption of contemporary social science and the modernization
hypothesis it uses to interpret social and demographic change in the
contemporary world (1989:212).
Handwerker has two major complaints with Smith’s thesis. First, Smith’s description
of social processes assumes a state of equilibrium and cannot be used to describe changes
in system states, the circumstances of change, or the direction change may take; second, it
is unrealistic and utopian to conceive of human history as the product of foresight,
intentions, and rationality when it is clear that people muddle affairs, mistake best interests,
and when human rationality cannot effectively sort through problems of even moderate
complexity (e.g., Hogarth and Reder 1987). Also, the complexities of power relationships
makes it impossible to plan and direct the course of human events (e.g., Skocpol 1979).
Handwerker cites the influences of Charles Darwin’s evolutionism and Karl Marx’s
materialism as most important to his development of resource access theory. According to

39
Darwin (1859), the direction of change is independent of foresight, intentions, rationality,
and purpose; the forces of nature are impersonal. The driving force of biological evolution
is found in the interaction between mutation and changing natural conditions. Similarly, the
driving force in social evolution is found in the interaction between human innovation (see
Barnett 1953) and changing material conditions. Selection eliminates innovations and
behaviors that interfere with the process of resource acquisition and favors innovations and
behaviors that improve or optimize resource access. Arguing that the interaction between
innovation and material selective criteria drives cultural evolution, Handwerker asserts:
Selection must favor any property that improves or optimizes
resource access, that selection will concentrate conceptual and
behavioral innovations that do so, and that selection will build
relatively advantageous means of acquiring resources and will
eliminate innovations that interfere with the process of resource
acquisition. .. . The changes in social relationships and reproductive
behavior that mark this moment in human history thus must reflect
specific power relationships grounded on specific resource access
cost structures (1989:20-21).
Handwerker contends that Marx’s central conclusions about the causes of historical
changes in power and resource access are correct-that beliefs, behaviors, and social
relationships are determined by how people can best access resources. Handwerker notes:
Technical innovations in energy use, transportation, information
processing and dissemination, agriculture, construction, and
manufacturing (see Braudel, 1979; Barnett, 1961) radically changed
the cost structure of resource access and thus constitute the core of
the contemporary world social revolution (1989:215).
Handwerker (1989:215) observes, ’’The distinctive qualities of the contemporary world
social revolution reflects fundamental change in the costs that attach to resources and to
means women can use to gain access to resources.” Thus, according to Handwerker,
modem demographic transition is associated with a revolution in social relationships;
specifically, changes in women’s power relationships with men, their children, and their
parents.

40
Evolutionary Demographic Transition Theory
As the title suggests, evolutionary demographic transition theory has much in common
with Handwerker’s resource access hypothesis; it is merely an addition and expansion.
Added to the contributions of Darwin and Marx are the modem insights of Harris, Skinner,
and Eldredge and Gould. The theoretical cornerstones of evolutionary demographic
transition theory are cultural materialism, radical behaviorism, and punctuated
evolutionism. No other theory of fertility behavior and demographic transition is explicitly
grounded on the synergism of these three scientific research traditions.
In chapter two I introduced the epistemological similarities of cultural materialism and
behaviorism, and their relationship to evolutionism. Evolutionary demographic transition
theory holds that reproductive decision-making and demographic transition must be
understood from an etic behavioral epistemological perspective in a nomothetic,
comparative, and evolutionary context. Joining Skinner’s radical behaviorism and Harris’
cultural materialism, it is asserted that fertility behaviors and outcomes are selected by their
consequences in material reality.
What is meant by material conditions and causes in these statements? Marx’s form of
materialism has already been referred to as one of the theoretical foundations of
Handwerker’s resource access hypothesis. However, Marx was a political-economist and
his notion of materialism was adopted to explain the causes of political and economic
change. Marx blatently ignored Malthusian demographic processes (Malthus 1817); he also
underestimated the potential of technology (see White 1949; 1959) to raise the standards of
material living for the masses, thereby transforming the desperate proletariat into a satisfied
middle-class. Environmental determinants of political culture change (see Wittfogel 1957)
were also inconvenient to Marx’s political theories. Finally, Marx was a Lamarkian;
principles of Darwinian selection (Darwin 1859) were incompatible with his notion of

41
historical determinism. Thus, Marx’s understanding of the material causes of change were
narrow and limited.
On the other hand, Harris is a cultural anthropologist and his notion of materialism is
guided by his attempt to explain a much broader phenomenon--the causes of cultural
evolutionary change. Thus, in cultural materialism, Harris includes a broader set of material
causal factors of change. In addition to Marx’s economic factors of material change, the
descriptive components of Harris’ materialism include demographic, technological, and
environmental causal factors. These four factors comprise the infrastructure. Cultural
materialism describes the causes of cultural evolutionary change in terms of demo-techno-
econo-environmental probabilistic determinism.
These conclusions formulated by Harris and other cultural materialists are derived from
critical analysis of cultural evolution from the Pleistocene to the present; of the dynamic
cultural changes wrought by materialist forces such as ecological catastrophies,
technological innovations, demographic transitions, and economic patterns of exploitation;
and of the causal relationship between these material factors and structural phenomena such
as class stratification, sociocultural integration, and political centralization.
In spite of their different versions of materialism, cultural materialism and dialectical
materialism share similar theoretical principles. For example, both Marx and Harris view
social and political processes as structural and/or superstructural characteristics of material
causes. Especially relevent to Harris’ formulation of cultural materialism is Marx’s now
famous assertion:
The mode of production in material life determines the general
character of the social, political, and spiritual processes of life. It is
not the consciousness of men that determines their existence, but on
the contrary, their social existence determines their consciousness
(1970 [ 1859]:21).

42
Cultural materialism is indebted to Marx on this point. Harris writes:
The cultural materialist version of Marx’s great principle is as
follows: The etic behavioral modes of production and reproduction
probabilistically determine the etic behavioral domestic and political
economy, which in turn probabilistically determine the behavioral
and mental emic superstructure (1979:55-56).
The fundamental theoretical principle of cultural materialism is this principle of
infrastructural determinism. It is argued that modes of production and reproduction—
infrastructure-should be given highest priority in efforts to formulate and test theories of
sociocultural causation. Demographic, technological, economic, and environmental change
is infrastructural change; changes in these material conditions result in structural and
superstructural change.
The etic behavioral mode of reproduction is defined by Harris (1988:135) as, ’’The
technology and the practices employed for expanding, limiting, and maintaining population
size.” The etic behavioral mode of production is defined by Harris (ibid) as, ’The
technology and the practices employed for expanding or limiting basic subsistence
production, especially the production of food and other forms of energy, given the
restrictions and opportunities provided by a specific technology interacting with a specific
habitat.” For example, infrastructural change is represented by the increasing technological
exploitation of the natural environment and new economic practices and demographic
strategies associated with the evolution from foraging to agricultural to industrial modes of
production. These infrastructural changes have resulted in structural and superstructural
changes.
The etic and behavioral components of structure are defined in terms of the organization
of the domestic and political economy. In short, this includes the domestic and political
organization of order and control, the division of labor, the organization of socialization,
enculturation and education, and the roles ascribed to age, gender and class. By these

43
definitions, the "structural discontinuities” Handwerker refers to in his Barbadian example
are caused by infrastructural economic changes, e.g., a world market selecting for
manufactured products over raw sugar. Unfortunately, Handwerker does not use the
theoretical framework of cultural materialism and does not employ infrastructure as an
explanatory category. In evolutionary demographic transition theory, infrastructural change
is critical to understanding the dynamic causes of demographic change.
The strategic priority of infrastucture--modes of production and reproduction--is based
on the fact that human beings cannot change ecological, chemical and physical laws, but
can only strike a balance between production, reproduction, and consumption of energy.
These relationships are universal material absolutes that affect each individual, consciously
or unconsciously, and all cultures, past, present, and future. Lett (1987:91) asserts,
"Cultural materialists have demonstrated incontrovertibly that sociocultural systems adjust
themselves in patterned and predictable ways to ecological and demographic constraints.”
A fundamental tenet of cultural materialism is that cultures behave creatively and
rationally, but always in response to material opportunities and constraints. Thus, cultural
evolution is probabilistically determined by material conditions. For example, cultural
selection follows the same cost-benefit principles as biological selection. Illustrating the
primacy of infrastructure and of materialist (in this case, ecological) evolutionary selection,
Harris (1979:137) asserts that "ecological conditions embodied in the infrastructure raise
and lower the bio-psychological costs and benefits of innovative responses . . Certain
innovative behaviors rather than others are retained and propogated . . because they
maximize bio-psychological benefits and minimize bio-psychological costs.”
Anthropologists have successfully accounted for cultural evolutionary change from the
Pleistocene to the present using the causal heirarchy introduced above. In evolutionary
demographic transition theory, prehistoric data adds comparative strength to historic data,

44
while a focus on the material causes of fertility behavior offers more explanatory power.
Not only are etic behavioral and evolutionary approaches to understanding the causes of
demographic transition more scientifically grounded than emic mentalist and historical-
interpretive approaches, but they offer an empirically testable theory within a larger
temporal frame of reference. As Harris and Ross (1987:4) assert, ”A proper understanding
of history and prehistory cannot be achieved by reading arbitrary slices of time, but only by
reading forward from the paleolithic or from the junction between major types of social
formations.”
Evolutionary demographic transition theory also avoids the cultural idealist biases
inherent in modernization and westernization theories. From materialist and behaviorist
foundations, evolutionary demographic transition theory asserts the causal priority of etic
material conditions and contingencies and metacontingencies of reinforcement and
punishment over emic mentalist factors. Instead of causal references to tastes, preferences,
values, cultural ideals, and other mental or culturally specific superstructural processes,
evolutionary demographic transition theory refers to the dynamic causal interaction between
economic, technological, environmental and demographic factors. As outlined above, these
infrastructural factors determine structural and superstructural change.
Therefore, according to evolutionary demographic transition theory, fertility behavior is
determined by how individuals can best optimize their material well-being within limited
and changing material conditions, not by the mimicking of western attitudes and behavioral
norms. Ethnocentric notions of evolving states of consciousness, reasoning and
individualism are discarded; misleading and western-centric notions of natural fertility and
precontraceptive peoples are abandoned.
Evolutionary demographic transition theory holds that mentalist approaches are
unproductive in explaining the causes of differences and similarities in fertility behaviors

45
because they ignore the material incentives and disincentives which underlie behavior and
value formation. All available prehistoric, historic, and contemporary data suggest that
material opportunities and constraints determine reproductive outcomes. This is not true for
educational, health care or family planning efforts.
However, this is not to say that the provision of better access to education, health care,
and family planning should not be a critical goal of development efforts. Evolutionary
demographic transition theory merely predicts that these humanitarian development projects
will not independently reduce fertility and family size. Such a statement should not be
misconstrued; it merely attempts to clarify the role of those factors which have indirect
affects orare dependent on other factors of change. Indeed, in high fertility regimes in the
developing world today, women access health care and family planning programs in order
to have more, not fewer, children. Evolutionary demographic transition theory would
predict that the employment opportunities created by the introduction of broad-based
educational, health care, and family planning programs would dramatically change the
fertility goals and behaviors only for those women who work outside the home providing
these services. This is because large families conflict with their employment positions.
Family size is determined by the direct and indirect (opportunity) costs and benefits to
women of having children. Thus, family size is smaller when higher fertility conflicts with
access to material resources. For example, family size was small during the Pleistocene
when children contributed little to food production and were a burden because survival
depended on constant migration; and in historic and modem times, when children become
more expensive and are a burden for women who seek economic (material) opportunities
outside the household.
On the other hand, family size is larger when higher fertility enhances access to material
resources. For example, under agricultural modes of production family size increased

46
because children became less of a material burden and more of a material asset; they were
easier to feed and valued for their productive labor, for politically motivated marital
alliances, and for defense of property if necessary.
A fundamental tenet of evolutionary demographic transition theory is that individuals
(and cultures) behave practically and creatively, but always in response to material
opportunities and constraints. Thus, fertility behavior and demographic change are
determined by material conditions. As we will see in the next chapter, new fertility patterns
correspond with changes in the way humans access material resources.
Cultural selection of reproductive behaviors follows the same cost-benefit principles as
biological selection. Demographic changes from the Pleistocene, through the Neolithic, to
the present, suggest a pattern of punctuated equilibrium, similar to Eldredge and Gould's
(1972) theory of biological evolutionary change (also see Simpson 1944; Gould and
Eldredge 1977).
The theory of punctuated equilibrium is a refinement of neo-Darwinian evolutionary
theory that has gained a large consensus of support within the scientific community over
the past twenty years (Mayr 1992). Many consider it a new paradigm for evolutionary
thought (Ruse 1992). Somit and Peterson (1992:4) explain: "At its most basic, punctuated
equilibrium involved two key propositions: first, that species undergo long periods of little
or no evolutionary change; second, that these lengthy intervals of stasis (i.e., equilibrium)
are broken (i.e., punctuated) by relatively rapid speciation events.” Essentially, it is argued
that biological evolution does not always proceed in a gradual manner, but that catastrophic
environmental events have led to sudden changes in natural selective criteria. This would
explain large gaps in the fossil record and the process of speciation.
Eldredge (1992: 111) queries, "To what extent are these changes in paleontological
thinking relevant to a consideration of the histories and evolution of social systems in

47
general and to the study of human history and archaeology in particular?” These questions
have just recently been asked and are being discussed in a diversity of fields, including,
economics, sociology, psychology, psychobiology, political science, archeology, and
physical and cultural anthropology (Somit and Peterson 1992).
Somit and Peterson believe that the theory of punctuated equilibrium already has
considerable metaphorical and heuristic value (if not eventually hard scientific validity).
They assert, ’’Theories as metaphors or models can also be substantial aids for advancing
our comprehension of social reality” (ibid: 11). Under this auspices, the theory of
punctuated equilibrium has been used to explain changes in American electoral behavior
(Carmines and Stimson 1989), to model political socialization (Ra 1988, cited in Somit and
Peterson 1992), and to speculate on changes in the relationship between the biosphere and
the sociosphere (Boulding 1992).
How does the theory of punctuated equilibrium relate to human behavior and
demographic processes? When dramatic environmental change creates a punctuation point
in biological evolution, survival is suddenly contingent upon a different set of biological
abilities. Organisms that already have biological make-ups which allow them to live (to
produce and reproduce) in these new conditions survive; organisms that do not, perish.
Similarly, when dramatic environmental change created a punctuation point in human
cultural evolution, survival suddenly was contingent upon a different set of productive
abilities and reproductive behaviors. Human groups that adopted new productive and
reproductive strategies survived; others groups perished.
By analogy, when dramatic infrastructural change creates a punctuation point in cultural
evolution, the success of individual survival strategies is contingent upon a new set of
productive and reproductive behaviors. As the costs of childbearing begin to outweigh the
benefits, some women become demographic innovators and cultures become more

48
antinatalist. This can occur gradually or dramatically, depending on how gradual or
dramatic the infrastructural change. Punctuation points in human cultural evolution reflect
dramatic changes in productive and reproductive behaviors.
As we will see below, there have been two major punctuation points in demographic
history and prehistory. The first occurred during the Paleolithic after an ecological
catastrophe forced humans to adopt (invent) a new strategy for survival--the domestication
of plants and animals. Population growth rates which had reached equilibria at low levels
during foraging modes of production suddenly rose to new heights. The second major
punctuation point occurred after humans learned to harness energy from fossil fuels. Under
the agricultural mode of production population growth rates reached equilibria at high
levels, then suddenly dropped with the onset of industrial modes of production.
As recent country examples suggest, once the material incentives for demographic
transition are present it can occur in a generation or two. Incorporating the theory of
punctuated equilibrium into evolutionary demographic transition theory emphasizes the fact
that once the necessary material conditions are present, demographic transition will proceed
rapidly in spite of traditional pronatalist cultural institutions and beliefs.

CHAPTER4
PREHISTORIC AND HISTORIC EVIDENCE
From an evolutionary perspective, there have been two major well documented
demographic transitions since the emergence of Homo sapiens sapiens 100,000 years ago;
the first toward increasing and the second toward decreasing population growth. New
fertility patterns followed dramatic changes in survival strategies which were made
necessary by fundamental changes in the way humans could access material resources.
Productive and reproductive (demographic) transitions represent punctuation points in
cultural evolution. The first demographic transition corresponds with the Neolithic
Revolution, when humans domesticated plants and animals. This innovative new food
production technology created an abundance of new food resources which could be
harvested without migrating. The second demographic transition corresponds with the
Industrial Revolution, when humans captured enormous new energy reserves in fossil
fuels and used them in conjunction with machines to produce work. This innovative new
production technology created abundant food resources and an almost unlimited array of
commodities for human consumption.
Revolutionary changes in human reproduction coincide with revolutionary changes in
production. This ’’coincidence” has led to research examining the affects of basic resource
characteristics on reproduction. This chapter looks at the dynamic feedback between modes
of production and modes of reproduction. Surrounding these two periods of reproductive
49

50
transition and productive revolution there are three periods of relative productive and
reproductive stasis or equilibrium--the foraging, agricultural, and industrial production
periods. These periods are also referred to as the prehistoric, historic, and modem periods.
Prehistoric Demographics
During the Pleistocene, population growth was slow, but steady, as homo sapiens
populated the earth. These early human pioneers were organized in nuclear families and
small bands of 20-50 individuals. They survived by cooperatively hunting wild animals
and gathering food from plants. Population densities among paleolithic hunter-gatherers
seldom rose above one person per square mile.
Thomas Hobbes supposed the lives of these prehistoric peoples were ’’solitary, poor,
nasty, brutish, and short.” Similarly, without empirical evidence, demographers have
assumed that high fertility and mortality accounted for low population growth rates during
most of human history. This assumption was based on three popular, but erroneous,
speculations about the conditions of prehistorical humankind: 1) the Hobbesian notion that
prehistorical peoples were inherently aggressive ’’killers” living in a world of’’all against
all”; 2) the Rousseauean notion that prehistoric peoples lived in a ’’state of nature” where
birth and death rates occurred naturally, without active regulation; and, 3) the Malthusian
notion that pre-historical peoples were preconscious, promiscuous, and uncivilized. These
notions are contrary to diverse sources of anthropological evidence.
It is now believed that adequate nutrition (though periodically deficient in calories) and
a relatively low incidence of infectious disease helped keep child and infant mortality down
during most of the Pleistocene (Truswell and Hansen 1976; Segraves 1977). Judging from
archeological evidence of healthy bones and teeth, mortality may not have been higher
30,000 years ago than it was in presently developed countries immediately before the

51
introduction of modem sanitation and medical practices (Angel 1975). The general well¬
being of modem hunter-gatherer populations support this archeological finding (Lee 1968).
Indeed, Sahlins’ (1972) calls our Pleistocene ancestors the ’’original affluent society.”
Assuming low to moderate mortality (in order to account for low population growth)
fertility also must have been low. Johnson and Earle (1987:28) cite biological (intermediate
factors-see Bongaarts 1982) and environmental factors to account for moderate to low
fertility and low population growth among hunter-gatherers:
First, a chronic caloric deficiency lowers fertility rates; because of
seasonal cycles in food availability and limited capabilities for
storage, periods of food shortage were common. Second, a long
nursing period delays renewed ovulation; since most wild foods are
apparently not well suited to ween young infants, nursing among
foragers typically remains a child’s main food source for the first
two or three years. Third, the intense physical exercise required for
mobile foraging may lower female fertility (Frisch et al. 1980).
Fourth, because closely spaced children are an economic hardship
in a mobile society, infanticide may have been used to space births
(Birdsell 1968).
Poor nutrition during periods of breastfeeding prolongs postpartum amenorrhea, hence,
infecundability (Wilmsen 1981; 1986). In addition, dietary stress probably increased the
incidence of infanticide (Harris and Ross 1987:21-35; Scrimshaw 1978; 1983). There is
also evidence that the composition of the paleolithic diet may have created lactational
afertility. Based on the high protein consumption and the postpartum practices of hunter-
gatherers, Harris surmises that:
prolonged and intensive lactation was an important means of
fertility control throughout much of the paleolithic. The
effectiveness of the lactation method for spacing births appears to
be related to the balance between protein calories and carbohydrate
calories in the diet (Frisch and McArthur 1974; Frisch 1975;
Trussel 1978; Frisch 1978). A diet high in protein and low in
carbohydrates is optimal for the lactation method because it
prevents the accumulation of body fat, the putative signal for the
resumption of postnatal ovulation, while sustaining the health of
the mother through the strain of producing milk for three or four
years at a time (1979:82).

Some researchers dispute this ”fat hypothesis” (see Bongaarts 1980; Menken et al.
1981), but it is probable that lactation-induced amenorrhea was an important factor in
52
spacing and reducing births during the Pleistocene. Handwerker notes:
We now have abundant evidence that lactation-induced amenorrhea is
a singularly important determinant of birth spacing, that, together
with relatively minor misadjustments of coital frequency and timing
relative to ovulation, can account for natural fertility levels in the
neighborhood of four to six live births (1983:17).
Birth rates probably were also reduced somewhat because of interruptions in coital
frequency when men went on long hunting trips. When the whole family moved,
dependent children were a burden to care for and carry (Sussman 1972). Also children
offered little return to parents for many years; returns from children of modem hunter-
gatherers per unit of energy expended are low (Hayden 198 lab).
Cooperative social relations among hunter-gatherer groups also limited the social and
political value of children. Handwerker writes:
The flexibility of kin ties, residential rules, criteria for group
membership and sharing among foragers meant that it was not
important for children to provide care and food for parents, and
children were not assets that could be used to extend political power,
or to expand control over a specific resource base (1983:16).
Indeed, total fertility among living foraging groups is low; the mean TFR is 4.716 for
five groups for which data are available (Howell 1979; Jones 1963; Brainard and Overfield
1981, cited in Handwerker 1983; Harpending and Wandsnider 1981). By the end of the
paleolithic, Dumond (1975) and Hassan (1978:78) estimate there were only 5 million
people on the planet. Cohen (1977:54) estimates there were no more than 15 million.
The above data suggest that low to moderate fertility, small families, and low to
moderate population growth was the norm during the paleolithic. This helped foragers
maintain an equilibrium between population and resources (Dumond 1975:714). These
conditions lasted until they were disrupted by climatic change and ecological catastrophe.

53
At the end of the paleolithic, improved hunting technologies also led to massive
predation of large-bodied food resources. Hayden (1986:178-9) describes these vulnerable
K-selected large-bodied plants and animals with five important attributes: (1) take a long
time to mature; (2) have very low biological productivity (as populations, they do not
produce much edible tissue in a year); (3) exhibit low overall densities; (4) have low
biomass; and, (5) produce relatively few offspring. Thus, the food supplied by these large¬
bodied species could easily be depleted.
Over-predation combined with global warming and a subsequent ecological catastrophe
led to the final extinction of the Pleistocene megafauna (see Martin 1984). The collapse of
the food resource base which supported the foraging mode of production, in turn, set the
stage for the invention of the agricultural mode of production in both the old and new
world. This new mode of production is associated with a new mode of reproduction and
represents a punctuation point in human cultural evolution.
The First Demographic Transition
Agriculture was independently invented in different parts of the world and spread over
thousands of years; it was practiced in the Middle East 10,000 -12,000 B.P. and in North
America 5,000 years ago. Where people lived under an agricultural mode of production,
population growth resulted. Cameiro and Hilse (1966) estimate a thirtyfold population
increase in the Middle East between 10,000 - 6,000 B.P-- from 100,000 to 3.2 million.
Deevey (1960) estimates that human population multiplied about sixteen times during this
period.
People settled and began to domesticate small-bodied plants and animals. Hayden
(1986:184) describes five special characteristics of these r-selected small-bodied plants and
animals: (1) they are short lived (usually less than a year); (2) they produce prodigious

54
numbers of offspring, sometimes in the hundreds or thousands per parent; (3) they have
very high potential biological productivity (the amount of edible tissue they are capable of
producing is enormous); (4) in some areas they occur in extremely numerous and dense
concentrations; (5) with potentially very high biomass. The new potential food supply from
these small-bodied plants and animals was enormous.
Population increased with settlement and domestication principally because infant
mortality declined (Harpending and Wandsnider 1981; Brainard 1980, cited in Handwerker
1983:19). Infant mortality and infanticide declined because new resource abundance
substantially improved nutrition. Handwerker (1983:21) has calculated that, ”a mere 10%
reduction in infant mortality (from 231-208) alone would result in an intrinsic rate of
increase of. 1% per year, the conventional estimate of the population ’explosion’
experienced in the Neolithic.” Although there is no clear evidence, fertility may also have
increased because abundant food combined with more sedentary lifestyles would reduce the
fertility inhibiting affects of biological factors.
Parents also came to view children differently than their Pleistocene ancestors because
children provided more economic and political benefits to settled agriculturalists. Securing
access to strategic resources such as land and labor became a dominant survival strategy.
Large families were a benefit on both accounts. Children provided household and
agricultural labor at an early age and offered security to parents in old age (Polgar 1964;
1972; Dumond 1975). Growing territorialism increased the risk of social conflict. Through
the marriage of children, parents formed political and economic alliances with other families
to help them in land disputes and with seasonal labor demands. Weighing these large
benefits against the small costs of feeding and caring for children among settled
agriculturalists, it was advantageous to have large families.

55
However, population did not increase unabated in a Malthusian fashion. Long-standing
stationary populations existed in the environmentally and politically circumscribed states of
historical India (Davis 1951; Clark 1967:75-76), China (Bielenstein 1947), and Egypt
(Butzer 1971; Butzerand Freeman 1976). Once population densities reached the limits of
environmental carrying capacity, standards of living declined; mortality and infanticide
probably increased, fertility decreased, and population growth leveled off.
Social ideologies conformed to the political climate set by the prevailing demographic
and material conditions. Harris and Ross (1987:79-84) cite positive associations between
antinatalist tolerance of infanticide and non-reproductive sexual behavior (e.g.,
homosexuality) with abundant slave-labor in ancient Rome and Greece; and conversely,
pronatalist intolerance of infanticide and homosexuality with high mortality and demand for
warriors during the disintegration of the Roman Empire. This suggests that death and
fertility control mechanisms were becoming more institutionalized in early state systems;
fertility behavior was increasingly influenced by the new prerogatives of political
hegemony over land and economic control over labor.
Global population rose steadily because agriculture could be practiced far beyond the
domains of early city-states. Agriculturalists migrated when political-economic pressures
rose or when population-resource conditions declined. The agricultural mode of production
led to the rise of the first state systems in Mesopotamia, Egypt, India, China, Mexico, and
Peru, the first claims to land as private property, and the beginning of a stratified
socioeconomic and political order based on the control of land, labor, and capital.
Between the fall of the Roman Empire and the rise of Western European feudalism,
populations spread across the open European frontier; hundreds of craft-oriented small
towns were established and centralized political and religious authorities reemerged.
Western Europe experienced dramatic economic expansion and population growth between

56
the 12th century and the onset of the Black Death in 1347-1351 and 1385. Close to one-
third of Europe’s population perished in the Plague; thereafter, standards of living
improved and population grew until the end of the 16th century. About this next period,
Harris and Ross write:
It is the beginning of a period that marks a critical and turbulent era in
Europe between late feudalism and the capitalist epoch, during which
time rural populations in particular were subjected to severe economic
and social pressures. It was an era of mercantile expansion overseas
and the first real assertion by the European bourgeoisie of its claims
to economic and political authority at home. In England, one sign
was the increased pace of the commercialization of agriculture. It was
marked by new enclosures and the wholesale dispossession of
peasants (1987:95).
These dispossessions were not without protest and persecution. Harris and Ross
(1987:96) note that the ’’Church and State made a general use of witchhunts to dampen
political opposition.” They estimate that witchcraft persecutions after 1500 may well have
been responsible for the death of over half a million women (ibid:97). This slaughter of
women may have been one result of increased reproductive pressure.
The closing of the agricultural frontier in Europe and the rise of an increasingly
urbanized class-based capitalist society altered demographic patterns. Levels of fertility and
mortality become increasingly differentiated by socioeconomic conditions.
North America was the last exit into a frontier. The populating and eventual closing of
the frontier in North America was the result of the last great migration of agriculturalists. In
total, it took over five centuries for agricultural modes of production to appear across the
globe; it has taken only 200 years for industrial modes of production to reach every
continent.
The use of steam, the factory system, and the manufacture of iron and cotton textiles
began in England in the 1770s. Technological revolutions in transportation and trade,
agricultural productivity, and mechanized manufacturing spread from England to the rest of

the industrializing world. The second demographic transition is associated with the
industrial mode of production and represents another punctuation point in human cultural
evolution.
57
The Second Demographic Transition
The second demographic transition began with an unprecedented outburst of population
growth in the late eighteenth century in most countries in Europe and among European
descendants in North America and Oceania, followed by an equally dramatic decline in
population growth occurring between 1870 and the First World War.
The initial spurt of population growth is associated with declining levels of mortality
without declining fertility. A similar phenomenon is experienced in developing countries
today during the early stages of demographic transition. The subsequent decline in
population growth was the result of rapidly declining fertility. Table 4.1 represents the
estimated date of fertility decline by more than ten percent among European countries
(based on 1900 boundaries):
TABLE 4.1
FERTILITY DECLINE IN EUROPE
(1)
France
1827
(10)
Norway
1903
(2)
Belgium
1881
(ID
Europe*
1903
(3)
Switzerland
1887
(12)
Austria
1907
(4)
Germany
1888
(13)
Greece
1913
(5)
EngAVales
1892
(14)
Italy
1913
(6)
Scotland
1894
(15)
Hungary
1920
(7)
Netherlands
1897
(16)
Spain
1920
(8)
Denmark
1898
(17)
Ireland
1922
(9)
Sweden
1902
(18)
Euro-Russia
1922
*median province date (Source: Coale and Treadway 1986:38)
After France’s precocious fertility decline,
French speaking Belgium, the French speaking cantons of
Switzerland, Catalonia, and some provinces in Hungary followed in
the next few decades [after 1830]. Before 1880 fertility had fallen in
only a few other provinces in Germany, Denmark, Latvia, Serbia,
the Swedish island of Gotlands, and St. Petersburg in Russia. . .

58
Most provinces did not start fertility transition until after 1880. All
but a few had begun the transition before 1930. About 60 percent of
the provinces began their fertility declines in the interval between
1890 and 1920. Late declines occurred in Ireland, and in the southern
and eastern periphery of Europe, in Russia, Romania, Albania,
southern Italy, Spain, and Portugal (McGreevey 1985:27-28).
The demographic transition in France is of particular interest because it was the first and
because it was a broad-based rural movement; it occurred before the modernizing forces of
urbanization and industrialization had much of an impact. Since most developing countries
are predominantly rural and lack a large industrial base, the determinants of French fertility
decline may be particularly relevant in a developing context.
Birth rates and death rates were high but stable in France until the mid-1750s because
of frequent plagues, famines, and epidemics. Ambiguous data make it difficult to assess the
exact sequence of declining birth and death rates. Bourgeois-Pichat (1965:482) argues that
birth and death rates began to decline simultaneously in the mid-1770s. However, Henry
(1965:447) argues that lower death rates between 1750-1790 created a slight bulge in the
natural rate of population increase until fertility began to decline in the 1870s. Bourgeois-
Pichat assumed that migration was negligible, that the registration of deaths was complete,
and that mortality estimates were accurate. Thus, Van de Walle (1974:136-144) complains
that Bourgeois-Pichat over-estimated the speed of fertility decline in the early nineteenth
century, overlooked the possibility of under-registration, and exaggerated earlier trends.
However, with the scant empirical evidence available to Bourgeois-Pichat and Henry, no
conclusions can be made about the causal relationship between mortality and fertility.
However, it is clear that fertility began to decline in the 1770s. Falling birth rates
between 1800-1830 are associated with a drop in marital fertility (ibid 1974:172). Birth
intervals lengthened substantially between the second and third, and especially the third and
the fourth child (Weir 1982, cited in McGreevey 1985).

59
Fertility decline was regionally uniform throughout French society (Newell 1977:137).
This suggests the presence of an overarching cause, independent of rural or urban
residence and socioeconomic status. Aries (1980:647) notes that the decline in marital
fertility is associated with the upward social mobility of French children through education.
McGreevey asserts that the French Revolution:
promoted upward social mobility; it brought new aspirations to the
fore, including emphasis on the education of children; it reduced
allegiance to religious norms and legitimized individual choice. . . .
the Napoleonic code changed inheritance customs by ending the
practice of promogeniture (all lands to the eldest son) thus forcing
rural families to reduce fertility to assure that landholdings could pass
intact to the next generation. ... a remarkable feature of it was its
spread beyond the educated and urban to permeate French rural life
(1985:27).
France did not experience the common stage in demographic transition of a long period
of falling death rates and high birth rates. Consequently, France never had a strong surge in
population growth as in other European countries. Though the agricultural labor force
declined slowly it grew at about the same pace as population from 1775-1850. As a result,
France did not have a large landless labor force. Clapham claims, ’’There were of course
everywhere some landless individuals. ... but the real rural laboring class, the proletariat,
the ’wage slaves’ of Marxian economics, did not exist” (1936:162). Thus, the high fertility
commonly associated with landless rural laborers did not exist.
These economic-demographic factors explain why French immigration to North
America was less numerous than from other European countries during the late nineteenth
and early twentieth centuries. Since nearly every rural denizen owned at least some land,
there was less incentive to migrate. Similarly, low fertility was effected by material
conditions. Small private farm ownership is usually associated with lower fertility. Also,
without land available to expand cultivation, the value of child labor and inheritance is
reduced-both factors that positively correlate with lower fertility.

60
Indeed, the rapid increase of agricultural productivity between the end of the
Napoleonic Wars in 1815 and the Franco-Prussian War in 1870 was because of the spread
of mixed farming, not the expansion of cultivated land. Clough (1939:91) has shown that
the number of small holdings in rural France increased substantially after the revolution.
Wright contends that, ”If there was any dominant trend during this period, it was toward a
steadily increasing subdivision of the soil” (1964:6). Newell (1977:162) agrees that, ’’The
exceedingly low potential for expansion of cultivated land for France as a whole may help
explain its unique demographic behavior--both the early start of the demographic transition,
and the low rates of natural increase.”
Though fertility declined slowly in France between 1770-1880, between 1880-1910
marital fertility declined sharply along with other European countries (Van de Walle 1974).
Caldwell (1981a; 1983:469-470) believes that the long, slow decline in fertility was the
result of declining economic advantages of children in a circumscribed agricultural
economy; the rapid decline in marital fertility was the result of women’s increased ability to
determine their own fertility in a growing industrial economy.
The demographic transition in Sweden best fits the standard demographic transition
model. The death rate started falling in the 1830s, but the birth rate did not begin to decline
until the 1860s. This time lag resulted in a period of rapid population growth and increased
agricultural circumscription.
Like France, fertility decline in Sweden corresponds with rapid increases in agricultural
productivity based on mixed farming, not the extension of farmlands. With increasing
population and opportunities for profit, private farm ownership increased dramatically
between 1870-1930. Land prices rose and it became increasingly difficult to set up a rural
household. It is estimated that marriage age increased and marital fertility declined 2.5
percent per year between 1900-1930 (Mosk 1983). Increased rural reproductive pressure

was largely responsible for the great outmigration to North America; in the 1880s seven
percent of Scandinavia’s population emigrated to the United States.
61
As defined by Harris and Ross (1987:33), ’’Reproductive pressure refers to adverse
cost benefit ratios, as distinct from population pressure, which is usually taken to mean
population growth. Reproductive pressure may increase in the absence of population
growth, as a result of depletions and diminishing returns.” Or in this case, economic
factors created reproductive pressures.
Increasing reproductive pressures also affected England and Wales. For three centuries,
the age at marriage in England and Wales changed, but fertility in marriage stayed the same
(Coale and Treadway 1986). Marital fertility was high and did not decline until the 1890s
(Coale and Watkins 1986). Lower fertility occurred earlier in some areas because of
delayed marriage and high rates of spinsterhood (Flynn 1982). But Haines (1989) has
shown that control of fertility within marriage was more important than later marriage in
reducing fertility. Whether delaying births within marriage or delaying marriage itself, both
strategies are used to optimize the costs and benefits of rearing children.
Changing economic opportunities and constraints affect people differently by class,
occupation, residence, etc., but the resulting decline in fertility was fairly uniform in
England. As in France, though different levels of marital fertility existed between
occupations and social classes in Victorian England, a decline in marital fertility occurred in
all occupations and social classes simultaneously (Woods and Smith 1983; Woods 1987).
As in France and Sweden, fertility transition in England and Wales was the result of
infrastructural change associated with reproductive pressure and technological innovation.
Broad-based structural economic change and fertility decline occurred as a result of these
infrastructural changes.

62
Comparative Causes of Demographic Transition
During the long period of hunting and gathering, fertility was moderate, mortality was
low, and population grew slowly. During the transition period of increased settlement and
domestication, mortality initially declined and population grew fast. Toward the end of the
Pleistocene-Holocene transition, mortality and fertility increased. Fertility outpaced
mortality, resulting in population growth. After the agricultural revolution, increasing
population growth lasted until the industrial revolution, when mortality and fertility levels
declined and population growth slowed. Eventually mortality and fertility levels reached
equilibrium at low levels, and populations became stable in developed countries.
During this long demographic evolutionary process it is clear that material opportunities
and constraints altered demographic outcomes. Ecological catastrophe caused demographic
pressure and resource depletions. A changing resource base required (selected for) new
productive innovations and adaptive survival strategies. Technological innovations and
behavioral adaptations became necessary to maintain standards of living. Modes of
production changed along with modes of reproduction.
After ecological catastrophe and over-predation at the end of the Pleistocene, people
who were located near and who were able to exploit new food resources survived. Small -
bodied species of wild plants and animals replaced the extinct large-bodied species. Broad
spectrum hunting and gathering was adopted to exploit this new resource base. People
settled for the first time. Eventually wild species were domesticated. Agricultural
production greatly increased the food supply. Children were no longer a burden to carry
and feed in settled households with abundant food resources. Children contributed to food
production at an earlier age. In addition, because land and labor became critical resources,
children became important social and political advantages and provided parents with

63
security in their old age. More children resulted in a better life during agricultural modes of
production.
These cultural and material conditions changed with the advent of the industrial mode of
production. New agricultural technologies replaced the need for farm labor at the same time
non-farm employment opportunities were expanding. The declining value of child labor on
the farm and the increasing value of women’s work in the modem industrial sector led to
massive urban migration, later marriage, delayed childbearing, and lower total fertility.
Increased costs of feeding, educating, clothing, and providing health care made children
more expensive; the declining economic and social value of children decreased the benefits
of large families to parents. The costs of large families increasingly exceeded benefits,
resulting in lower fertility and declining population growth rates.
The onset of demographic transition throughout Europe corresponds with agricultural
productivity and/or articulated sectorial development. Except for France, agricultural and
manufacturing productivity grew together, displacing people from rural areas about as fast
as increased food production could support urban food consumption.
Private landownership and urban markets encouraged agricultural investment. An
inability to increase landholdings encouraged mixed farming and the use of labor-saving
technologies. In turn, increased agricultural productivity created cheap and abundant food
for the growing urban population. Manufacturers could therefore pay lower wages to their
employees, and sell their products for less, but at a higher profit. This encouraged
increased commodity production and consumption and urban-industrial growth. The
articulation of rural and urban sectors maximized feedback benefits.
For four countries (Great Britain, Norway, the United States, and
Canada) the trend of per worker product in agriculture was identical
to country-wide per worker product. In the Netherlands, Denmark,
and Australia, productivity in the agricultural sector increased at a rate
somewhat faster than economywide productivity. In France,
Sweden, Italy, the USSR, and Japan, agricultural productivity grew

64
at two-thirds or more the speed of economywide productivity
(Kuznets 1966:113-127, cited in McGreevey 1985:33).
Demographic transition occurred in both rural and urban sectors throughout Europe.
However, in every country, fertility was higher in rural than in urban areas and lower
among landowners than among peasants. Across Europe, landowning families (who were
already reducing their fertility) remained in the countryside, while the rural poor (who had
the highest reproductive rates) migrated to urban areas or overseas in search of land and
employment. The high reproductive rate of the rural poor was the result of new
opportunities for children to migrate and provide remittances from urban employment.
In urban areas, this landless class stratified into a new lower and middle-class based on
skill, education, and employment status. The birth rate of the new urban middle class was
lower than landowning agriculturalists, while the birth rate of the new urban poor was not
significantly higher than landless farm workers. Thus, aggregate fertility differences in
Europe are correlated with the changing magnitude and proportion of rural landed versus
rural landless and urban middle class versus urban poor. The age of marriage also rose
because of migration and the problem of finding urban employment and setting up a
household.
But what factors caused these demographic changes? Mosk (1983) argues that
increased agricultural productivity and new alternatives to family-farm work led to the
dissolution of the patriarchal family system and the beginning of fertility transition. Shorter
(1975:269-280) has shown that parent/child, spousal, and extended family
interdependencies weakened throughout Europe during this period. McGreevey asserts:
The timing and swiftness of fertility declines varied with the extent to
which women stopped working at home and children stopped
working at all. . .. Even as the agricultural age was drawn to a close
by the rise of industry, change in life on farms, particularly the lives
of women and children, proved to be a critical determinant of the
timing and pace of the demographic transition (1985:29).

65
McGreevey continues:
The patriarchal system was undermined by the expansion of
education, which offered job certification independent of the
patriarch, and by the growth of labor markets, which offered
alternatives to children and diminished the patriarch’s control.
Schooling, and jobs gotten independently, changed the relative
bargaining positions of patriarch, wife, sons, and daughters.
Innovations in farm techniques led to greater per worker productivity
in agriculture and diminished the need for farm family labor. Overall,
the new alternatives for children, and the reduced demand for their
services by parents, reduced the economic advantages of children.
Fertility decline was a predictable response to these changed
conditions (ibid:30).
Intergenerational obligations changed because the mode of production changed. The
growing industrial mode of production created new material relationships which had
historic reproductive repercussions. Women became less dependent on men, children, and
extended families for economic resources, perhaps for the first time in human history.
More economic independence allowed for greater individual autonomy. Since early
childbearing and large families would restrict these aspirations for women, they
increasingly delayed childbearing and restricted family size (Flinn 1982). Also, the
advantages of having a few (expensive) educated, wage-earning, urbanized children
outweighed the advantages of having a lot of (inexpensive) uneducated children.
Hayden writes:
Under advanced industrial conditions the individual rather than the
family (or lineage, or clan) becomes the competing economic unit.
This represents the crossing of a new rubicon of reproductive
behavior, for the fundamental relationships of reproduction
characterizing the previous 2,000,000 years will have been altered. .
.. we have finally reached the top of the sigmoid curve of population
increase begun when huntei/gatherers first began making effective
use of small-bodied resources, some 20,000 years ago (1986:177;
also see Tabah 1980:361-2).
Population growth remained low among Paleolithic foraging people, not because they
wanted fewer children, but because of biological factors and because they couldn’t afford
them. Mortality declined and population grew during the Pleistocene-Holocene transition,

66
not because people wanted more children, but because they could afford (feed) them.
Fertility and population growth increased after the agricultural revolution, not because
people decided to have more children, but because they could not afford to have fewer
children. Fertility and population growth declined after the industrial revolution, not
because people wanted fewer children, but because the costs of large families to parents
outweighed the benefits.
An evolutionary approach to demographic transition shows that aggregate fertility
behavior is a response to the practical problems of earthly existence. New environmental
conditions create new constraints and opportunities for technological innovation and new
modes of production, which in turn, select for certain fertility outcomes over others. Modes
of production and reproduction have changed together in a dynamically interacting feedback
loop, reflecting technological possibilities and environmental variation throughout cultural
evolution.
Human cultures have existed for more than a thousand generations. For tens of
thousands of years the population growth rates of paleolithic cultures remained relatively
stable, as did their basic technology and mode of production. The number and variety of
human artifacts suggests that a great acceleration in the rate of demographic and cultural
change began with agricultural modes of production. Recent historical evidence suggests
even a faster rate of demographic and cultural change. Boulding observes:
With the rise of science, of course, know-how expanded at an ever-
increasing rate for five hundred years, although the impact of science
on technology, that is, the translation of know-what into know-how,
hardly began until the middle of the nineteenth century.... As a
result, the total ecosystem of the earth, including both biological and
human artifacts, has almost certainly changed more in the last one
hundred years than in any one hundred years in the earth’s history
{except for catastrophic extinctions} (1992:181).
To understand the determinants of changing fertility behavior, demographic theory
must be placed in the more encompassing framework of evolutionary theory. Evolutionary

67
insights show that fertility outcomes are determined by changing material conditions which
affect fertility behavior in predictable ways. In the long run, demographic change is not
caused by cultural, moral or religious beliefs or by the whim of human free-agency, but
rather by practical adaptations to changing material conditions.
The top of the sigmoid curve has been reached in the industrial world. Populations are
even declining in a few countries. However, populations continue to grow in many
countries at disastrously high rates. In these countries, economic growth has not kept pace
with population growth, and reproductive pressure has resulted in further lowering
standards of living.
Development policies based on cultural idealist theories and emic mentalist
epistemologies have had little demographic impact, while policies which have not taken
demographic impacts into consideration have seeded their own failures. Development goals
to raise per capita standards of living are seldom met in rural or urban areas because they
have not been able to create conditions which select for lower fertility along with
development. As a result, poverty and desperation increase.

CHAPTER 5
MODERN EVIDENCE
Increases in modem education is frequently cited in the demographic transition literature
as one of the causes of fertility decline in the developing world. Aggregate cross-cultural
data shows strong correlations between high levels of education, contraceptive prevalence
and lower fertility. Cultural idealists, like the Caldwell’s, emphasize the westernizing
influences of education; on the other hand, materialists, like Handwerker, assert that
education will only lead to fertility decline if it is rewarded with modem sector
employment. Without modem employment opportunities there may be little incentive for
educational advancement. Parents may not support the education of their children.
Employment rewards for educational achievement are not always assured in developing
countries. This is especially true in small labor intensive agricultural economies, where
most of the employment opportunities that would reward an education are provided for by
the government. What if the government can not provide enough jobs for school-leavers?
Women and men may leave school earlier to begin a family. When women leave school
early because there are few employment opportunities for educated adults, they may also
have higher total fertility than if such opportunities existed and they choose to remain in
school to follow a career path. Also, without employment rewards for their children,
parents may be unwilling to pay school fees and associated expenses.
68

69
The causal role of education, like that of access to birth control, may be unimportant in
fertility reduction unless parents and their daughters have material incentives to take
advantage of educational opportunities. This understanding reverses the assumed causal
arrows, and stresses the primary causal role of economic change in fertility decline. The
belief that education independently causes changes in fertility attitudes and behaviors
toward western fertility norms is increasingly discredited.
Education and Fertility
For some time it has been commonly accepted in the demographic literature that
education spreads rationality, secularizes populations, and contributes to the diffusion of
information and techniques that alter the social values and cultural norms responsible for
high fertility (Stolnitz 1964; Knodel 1974; Bogue 1969; Caldwell 1982). Programmatic
social psychological and emic mentalist approaches emphasize that education changes
attitudes, preferences, values, opinions and beliefs according to new goals and desires
brought about by modernization (Fawcett 1983; Fawcett and Arnold 1973). Caldwell
asserts:
Education appears to cause the most changes. It challenges traditional
authority, gives females an absolute criterion or value for comparison
with males, teaches girls new aims and destinies that almost always
include some move toward a more egalitarian Western family
structure, and changes husbands’ appreciation of their wives, wives’
appreciation of themselves, and children’s appreciation of their
mothers. In families with educated women, wives become more
expensive and so do children, partly because mothers appear to be
more likely to stress the dependence of children and the primacy of
the nuclear family (198 lb: 114).
Most aggregate level research on historic and modem populations points to a strong
negative relationship between education and fertility (in Switzerland, Van de Walle 1986; in
Germany, Knodal 1974; in the United States Vinovskis 1976; also see Bogue 1969 and

70
Petersen 1975). Analyzing time-series data from 5 developed countries and 18 developing
countries, Tan and Haines claim to have found a threshold effect:
Prior to the attainment of primary gross enrollment ratios of about 70
or 80 percent, there appeared to be little relationship between levels
or change in primary school enrollments and fertility. There were
exceptions, but overall a fairly high level of educational development,
as indicated by the level of primary enrollments, seemed to be
important for a decline in fertility to take place (1984:24).
Referring to 46 study populations in the World Fertility Survey (WFS), Cleland and
Rodriquez (1987:6) note, ’There is only one instance when fertility is higher among
couples where the wife has secondary schooling than among wives who completed primary
school.” Reviewing the same data set, Faroog and DeGraff write:
On average, when not controlling for other factors, women with
seven or more years of schooling gave birth to three fewer children
than did women with no schooling, while the differentials in
surviving children across education levels were smaller. This
negative relationship between fertility and education remained
significant in about 40 per cent of the countries studied, after
controlling for duration of marriage, urban/rural residence, wife’s
occupation and husband’s education. In addition, in both bivariate
and multivariate analyses the relationship between desired family size
and education was consistently monotonically negative, and that
between contraceptive use and education was similarly positive
(1988:33-34).
It is generally assumed that education leads to contraceptive use. Comparing fertility
change, education and family planning in a global sample over two time periods, 1962-
1972 and 1972-1981, Hess found that:
Nearly 60 percent of the total variation in the percentage change in the
total fertility rate for the sample of 49 LDCs is accounted for in the
first period. The key influence again appears to be the change in the
female secondary school enrollment rate. ... In the second period
over 70 percent of the variation in fertility change is accounted for by
the model, and the most important factor is family planning program
effort (1988:6).
In another global sample, Wheeler (1985) found secondary school enrollment rates for
females and family planning efforts to be highly significant in explaining the percentage

71
change in fertility during the 1970s. The delayed reaction of fertility decline in this study is
explained in part by the time it takes for family planning to be accepted and widely adopted
(Mauldin and Berelson 1978). Increases in adult literacy has also been found to negatively
correlate with fertility in a global sample of contemporary developing countries (Boulier
1985).
As previously noted mentalist and materialist analysis of similar data usually lead to
different causal interpretations. Following mentalist epistemological assumptions,
demographic transition theorists usually interpret negative correlations between fertility and
female secondary education to mean that education causes lower fertility. The causal role of
education in reducing fertility is imputed, and rarely doubted. For example, citing negative
correlations between fertility and female education in Latin America and Asia, while
ignoring findings which show no correlation between fertility and increases in female
secondary education in Africa and the Middle East, Hess (1988:141) concludes that
education causes fertility decline ’’given the strong negative effects of secondary school
enrollments on fertility found in this and other studies.” Ignoring the effects of a quarter-
century of material change, Hess (ibid: 137) writes, ”In Latin America the key factor
generating the fertility declines over the last 25 years seems to be gains in secondary female
enrollment rates. For the more egalitarian nations of Asia, early and strong family planning
programs are the driving force.”
Contrary to the pervasive mentalist analytical bias, research into the effects of education
and family planning on fertility have been far from conclusive. Data which disputes the
causal effects of family planning on fertility decline have been provided above (see chapter
3). Positive and negative correlations between education and fertility have been found in
historical and contemporary data (for an overview, see Hawthorne 1970; Graff 1979;
Cochrane 1983).

72
Inconsistencies were first discovered in research at micro levels of analysis, e.g.,
households, which called into question findings derived from aggregate measures (such as
those used in the WFS). After comparing findings from different research designs, Graff
(1979:132) has observed, ’’The higher the level of aggregation and the further the data are
removed from the level of individuals, families or households, the higher the degree of
association.”
In more narrowly designed historical studies of United States fertility behavior (at the
household or individual level of analysis), education has been shown to be a less important
predictor of fertility decline than traditional wisdom has expected (Easterlin 1976b; Leet
1976). T. Paul Schultz (1973) has found a positive correlation between fertility and
education in Taiwan. Indeed, what explains the post-World War II baby boom in the West
where fertility and educational levels (for both men and women) reached new heights?
Research in developing countries has indicated there may be a nonlinear relationship
between education and fertility. Levine (1984) has shown that women with some primary
schooling display shorter birth intervals and higher fertility than those without primary
school experience (also see Cleland and Rodriguez 1987). Gueye and van de Walle
(1988:3.3.5) have recently observed that, ’’there is increasing evidence in sub-Saharan
Africa that unmarried high school students are more likely to get pregnant than their
uneducated counterparts.” Hess (1988:63) also found that, ’’For sub-Saharan African
nations, higher enrollment rates in secondary education for women were associated with
higher fertility.”
The reason for this is probably that women with some education tend to engage in
better health practices, enter into more stable marital unions, ignore traditional prohibitions
on sexual intercourse, and are more knowledgeable about food supplements. By weaning

73
their babies earlier these women shorten the duration of postpartum ammenorhea and
therefore are exposed to the risk of pregnancy sooner than less educated women (see Nag
1980). However, during the course of a lifetime, it is clear that African women with at least
secondary school education who go on to gainful employment have fewer children than
their uneducated counterparts (see p.82).
Statistical analysis provides correlations between variables, not answers to questions of
causation. It is theoretically and empirically challenging to determine what causes
something to happen, and what the new happening itself causes. This is especially difficult
when economic change, increasing levels of education, contraceptive use, urbanization,
improvements in health care, female employment outside the household, domestic equality,
etc., occur simultaneously with fertility transition.
Fortunately, some causal explanations are more credible than others. For example,
people in developing countries don’t migrate to urban areas because there are better
schools, they migrate because there is the possibility of a better life—better jobs! Parents
don’t send their children to school to become more educated farmers and seamstresses,
they send their children to school so they can get a higher paying job in the modem sector,
which in turn, is expected to materially benefit the family. Women don’t use contraceptives
because education made them less religious or more rational, they control fertility because
childbearing is incompatible with their desire to complete school and to pursue the
employment opportunities their advanced education will offer them.
Women weigh the opportunity costs of their reproductive careers against opportunities
in their productive careers in developing countries just as women do in developed
countries. According to evolutionary demographic transition theory, Pleistocene women
also weighed the costs and benefits of reproduction. Attitudes, values, opinions and beliefs

74
may vary, but fertility behavior is contingent upon material costs and benefits to individuals
(especially women). The most important factor, in this regard, is how people are able to
survive, or earn a living.
Employment and Fertility
Female labor participation was first considered a fertility determinant in the early 1960s
(see Colliver and Langlois 1962). But female labor participation has been found to be an
unreliable cause of fertility decline. High fertility regimes coincide with high female labor
participation rates in preindustrial and protoindustrial populations, such as those in
historical England or contemporary Africa (Handwerker 1989:23-24). Female labor
participation is not a necessary condition for fertility declines in Asia or a sufficient
condition in West Africa (Birdsall 1977; 1983). After surveying the data on female labor
participation and fertility cross-culturally, Faroog and DeGraff (1988:42) agree that, ”no
conclusive relationship between women’s work participation and fertility is evident for
developing countries.”
Some research has suggested that increased income from employment that does not
interfere with childrearing may actually increase fertility (Ware 1977; Bindary et al. 1973;
Goldstein 1972; Pinelli 1971). Neither employment or fertility is restricted for women who
can rely on child care provided by their extended family (Mueller 1982:82). But extended
family time interchanges diminish and kinship groups shrink as economic and geographical
mobility increases (Oppong 1982). Thus, economic changes which create incentives for
migration and more employment opportunities for women to work outside the household
also selects for the nuclearization of the family. The cost of children increases for women
who are unable to depend on child care provided by their extended family.

75
In Puerto Rico and Japan, Jaffe and Azumi (1960) found that fertility was equally high
for women working in ’’cottage industries” and those ’’economically inactive”; only women
who worked away from home had lower fertility. In Thailand, Chalamwong (1983) has
also found higher fertility among women engaged in ”home industry” and lower fertility
among women working outside the home. These data suggest that women’s employment
participation and level of income may not lower fertility independent of the effects of
working away from home. Indeed, there is increasing evidence which suggests that there is
lower fertility when childrearing is incompatible with employment.
The opportunity cost of children is low for women doing agricultural work; it is high
for women engaged in work that is incompatible with child care. In a cross-sectional
analysis of sixty developing countries, controlling for urbanization, industrialization and
education, Kasarda (1971) found an inverse relationship between fertility and the
employment of women outside the home. In an Indian village, Gupta (1978) found that
fertility declined with the expansion of urban, industrial, technical, and white-collar
employment opportunities outside the village. Conversely, studies suggest fertility will
increase when woman are excluded from wage-labor or have little job occupational mobility
(Tien 1967). Several studies have found a fertility inhibiting relationship in formal sector
work outside the home before marriage (Standing 1978; Rosen and Simmons 1971; Zarate
1967).
These studies suggest that women’s employment away from the home lowers fertility.
This is because modem employment (away from the home) is more time/money oriented
and inherently less compatible with child care than traditional work roles (in and around the
home). In addition, sociocultural influences, competitive consumer attitudes and non-
traditional norms about marriage and family are more prevalent in a modem urban work

group atmosphere. If this is true, it is important to understand how constraints to these
opportunities effect fertility.
Besides the pervasive constraint of a stagnant economy, there are at least two other
primary factors that limit women’s work participation outside the home: 1) child labor; and,
2) job and educational discrimination.
Entrepreneurs hire persons who are least likely to cause labor problems. For the
entrepreneur in developing countries, there is no incentive to hire one person over another
for many unskilled positions; keeping payrolls low is the primary concern. Thus, children
are often the preferred worker. Children got paid as much as adults in England during the
1820s. This encourages parents to let children leave school at a young age to work for
wages. In turn, this decreases the number of jobs unskilled adult women might find in the
labor market.
Standing (1983:532) asserts, ’’The substitution of women for child workers could be
expected to reduce fertility in two ways: by raising the costs of children and by raising the
opportunity costs of women’s inactivity.” It can be inferred that the institutionalization and
enforcement of child labor laws would impact on the availability of employment outside the
home for women, thus, creating conditions that select for lower fertility.
On the second point, Standing (1983:529-530) observes, ’’Discrimination against
women in the labor force has received relatively little attention in the fertility literature.
However, it can have a significant affect because it alters the opportunity costs of
childbearing and childrearing.” Employment discrimination also leads to educational
discrimination because parents invest more in the education of children they expect will
earn more in the labor market. Thus, economic opportunities impact on female educational
attainment (see Greenhalgh 1985).

In Pakistan, Sather et al. (1988:420) observe, ’’Whereas the effect of women’s
education on fertility diminishes when other independent factors are controlled, the
77
opposite applies in the case of women’s occupation.” This may be because education loses
value for women under conditions of employment discrimination. Employment
discrimination will persist as long as there are no productive incentives to hire women
instead of children and men. Therefore, without economic changes that result in increasing
rewards for skilled workers, the education and employment of women will be discouraged
and fertility decline will be inhibited. Handwerker writes,
To bear on fertility, increasing levels of education must be
accompanied by increasing economic rewards. There will be
increasing economic returns from education only in the presence of
competition that selects for both employer and employee
productivity... . Female labor participation rates have no bearing on
fertility transition in the absence of economic and social processes
that create new and competitive resource access channels (1989:23-
24).
As we have seen, in an analysis of the economic aspects of historical demographic
change in Europe, McGreevey (1985) found that fertility decline was associated with rising
agricultural productivity and a shrinking farm labor force. He argues that economic and
demographic transition was caused by the introduction of labor-saving farm technologies,
which made child labor redundant, and by the expansion of non-agricultural employment
opportunities, which gave women jobs outside the household. McGreevey notes:
Women left unpaid family labor on farms to work in offices,
factories and shops; this shift depressed fertility as jobs interfered
with child care. Jobs for children were fewer in urban than in rural
settings, so more children attended school, and most parents decided
to have fewer but better-educated children. The Europeans thus
escaped the Malthusian trap (1985:vii).
The research cited above suggests that infrastructural economic change may be a
prerequisite to demographic transition. Just as during the first demographic transition, new
modes of production bring new modes of reproduction. Productive employment that is

78
incompatible with childrearing changes the costs and benefits of childbearing. Increasing
demand for skilled versus unskilled labor changes the costs and benefits of hiring women
versus children; these labor demands encourage parents to invest in the education of their
children in hopes that one day they will have the qualifications for employment in the
modem sector. Parents are also less likely to advance the education of their sons at the
expense of their daughters. Under these new contingencies of reinforcement, women are
more likely to share equally with men in educational opportunities, stay in school longer
and use contraception in order to avoid the costs of an unwanted pregnancy. Also, adult
women will increasingly weigh the costs and benefits of their reproductive careers against
their employment careers. This is precisely what is occuring around the world in countries
that are experiencing fertility decline.
Transition in Zimbabwe
More than one-third of Zimbabwean women between the ages 40-49 have given birth to
ten or more children (ZDHS 1989:33). This will not be true for women presently entering
their reproductive years. Indeed, World Bank (1989a) data shows that the total fertility rate
(TFR) of Zimbabwe has declined dramatically since the late 1960s, down from 8 to 5.7
during this period. Zimbabwe is the first sub-Saharan African country to experience
sustained fertility decline. The overwhelming tendency today in Zimbabwe is toward more
anti-natal cultural perspectives and behaviors.
The onset of fertility transition in Zimbabwe corresponds with war migration and rapid
industrialization between 1965-1974. ’’Economic growth in Zimbabwe averaged about 7
percent per year between 1965-1974” (PFD 1985:82). United Nations sanctions on the
government of Rhodesia during this period forced Colonial Zimbabwe into a development

79
policy of import substitution. Funded by South African banking interests, the industrial
sector of the economy grew dramatically, offering more jobs to whites and blacks, men and
women. Today, behind South Africa, Zimbabwe is the most industrialized country in sub-
Saharan Africa.
After independence in 1979, the maintenance of fertility transition corresponds with a
continued expansion of economic opportunities, a dramatic growth in educational
opportunities, rapid urbanization, and increased contraceptive use. Except fora four year
period, during the height of the war, the Zimbabwean economy has continued to diversify
and grow rapidly. Between 1976 and 1986 there was an almost four fold increase in the
GDP, from $2.1 billion to $7.5 billion dollars (QDS 1989:14). Zimbabwe’s GDP is
composed of agriculture (16%), mining (8%), manufacturing (22%), infrastructure and
producer services (20%), and government expenditures (34%) (GOZ 1986:5). This
diversified economic growth has translated into substantial increases in skilled employment
opportunities for both men and women.
Comparing 1982 Census data (Population Census 1982) with the 1986/87 Labour
Force Survey (LFS 1989:6), there has been an increase in the labor force of nearly 800,000
people, 40 percent of whom were women. In 1982, women constituted 52 percent of all
sales workers, 40 percent of professional and technical workers, 34 percent of clerical
workers, and 32 percent of service workers (GOZ 1986:126). The number of women
employed by the public sector (mostly as teachers) increased from 3,243 in 1980 to 10,228
in 1983 (Kazembe 1987:397-398). Women are now being encouraged to traínas
agricultural extension workers and officers, and to become more active in trade union
activities and economic cooperatives. Increased opportunities for women in rural areas have
spurred changes in fertility and economic production. ’’Maize production quadrupled after

women’s access to land, agricultural training and credit was improved. And this is one
reason Zimbabwe has one of the highest rates of family planning usage and the lowest
infant mortality rates in Africa” (UNFPA 1988:57).
80
These economic incentives have had a dramatic effect on educational enrollment and
achievement. In 1979, 890,000 students were enrolled in primary and secondary schools,
but by 1982, school enrollments more than doubled to 2,160,000. Among all Zimbabwean
women between the ages 15-49, 14 percent have no formal education, 56 percent have at
least some primary education, and 31 percent have reached secondary school. These
figures are changing rapidly. Today, over 28 percent of women in their forties have never
been to school, but fewer than 3 percent of their 15-19 year old counterparts have not;
about one-half of the women under age 25 have reached secondary school compared with
only about 10 percent of their mothers (PFD 1985:35-46). Urban women are three times
more likely than rural women to have obtained at least some secondary education (33.1%
versus 10.7%).
The dramatic growth of educational involvement after independence reflects a general
optimism that jobs would increasingly be available on an equal basis to all citizens if they
had the educational qualifications to fill them. In order to stay in school, more Zimbabwean
women delay childbearing: the age at first birth has risen by about one year during the past
generation.
But women began controlling their fertility before mass education and modem
contraceptives were readily available. In response to increased demand for modem methods
of birth control, the first national family planning body was formed as early as 1965; by
1976, it was estimated that 5,500 new clients asked for contraceptives each month and that
80,000 to 90,000 Zimbabwean women were involved in family planning in some capacity
(Weinrich( 1982:121).

81
Recently, there has been a dramatic increase in contraceptive use. Since the Zimbabwe
National Family Planning Council (ZNFPC 1985) survey, completed in 1984, there has
been a 16 percent increase in ’’ever use” of modem methods; currently nearly one-third of
all women, and 43 percent of married women are using some form of birth control. This is
the highest rate of contraceptive use in continental Sub-Saharan Africa.
Statistically, educational status and fertility have an inverse relationship. The children
ever bom to women who never attended school is 7.0, for women with primary education
it is 6.0, and for women with a secondary education it is 3.8. The difference in
contraceptive use between women with no formal education and those with secondary or
higher education is 23 percentage points (ZDHS 1989:5).
However, among teenagers, ’’The proportion currently pregnant with the first child
varies little with educational level” (ibid:38). Contraception is increasingly being used by
women with little or no education. Between 1984 and 1988, the contraceptive use of all
methods among women who never attended school increased from 25 percent to 32
percent; the increase was from 16 percent to 25 percent for modem methods (ibid:57). In
the 1989 Zimbabwe Demographic and Health Survey it was discovered:
there is almost no difference in the mean number of children ever
bom between the two lowest educational groups, and the difference
in the mean number of women who never attended school and the
women with some secondary education is only slightly more than
two children. This suggests that the fertility decline in Zimbabwe
began with women who had at least some secondary education and
only recently spread to women with less education. The current
downward trend in fertility appears to be shared fairly equally by all
educational groups, with the relative decrease in the TFR between
1982-1984 and 1985-1988 periods being only slightly smaller for
women with no education (16 percent) as compared to the other
groups (20 percent) (ZDHS 1989:28-29).
In addition to being correlated with educational achievement, fertility control is strongly
correlated with settlement type. The urban population grew approximately 5.6 percent per

82
year between 1969-1982 (PFD 1985:23). Today, about one-fourth of the population of
Zimbabwe lives in urban areas where more skilled employment opportunities encourage
parents to support their daughters education and young women to delay childbearing and
stay in school longer. In urban areas 51 percent of all women have reached secondary
school as opposed to only 20 percent of their rural counterparts; the difference in
contraceptive use between women living in urban versus rural areas is 12 percent (ZDHS
1989:57).
With aggregate data, it is difficult to tell whether settlement type (and employment
opportunities) or level of education is more causally important in reducing fertility.
However, since employment opportunities are largely responsible for urban migration, and
urbanization is correlated with increased education and contraceptive use, a strong case can
be made for economic causal factors in fertility decline.
In a recent small sample (n=103) study in urban Harare, I asked respondents questions
rating childbearing desires versus career goals. I concluded:
Education clearly plays some role in lowering total fertility. It gives
women expectations for a better life and skills with which to get the
better jobs that provide a better life. Nevertheless, the hypothesis that
education plays a paramount role in reducing fertility is not supported
by my data. Indeed, independent of level of education, women in my
sample who value career over childbearing are more likely (p<.05) to
desire 4 or fewer children than are women who value having children
over career or women who value career and childbearing equally
(chi-square p=.02) (Iverson 1990:14).
Increased opportunities for female employment increases career incentives and reduces
fertility. The opportunity costs of childbearing to women who have modem sector
employment skills are much greater than for those women with no such skills or
opportunities.

The results of an important longitudinal study (1984-1988) of 1183 Zimbabwean
women support these propositions. In that sample of women, 84 percent had attained
83
secondary education, 73 percent were employed (81 percent of the employed were engaged
in clerical positions and 19 percent in technical, professional, and managerial positions).
Among the women in this sample, the TFR was 3.38, about half the national rate of 6.52
(TIPPS Project 1988).
Ironically, women who complete secondary education had their first child earlier than
those who do not complete secondary school. This is consistent with data from other
African countries (see p.72). But by 24 years of age, the TFR is about equal; by age 29,
the employed cohort in the sample had already given birth, on average, to over one fewer
child. This difference continues to grow as the population gets older. By age 39, the
gainfully employed women had more than two fewer births; by age 49, at the end of their
reproductive period, these employed women had given birth to about 3.5 fewer children
than women in the general population.
Without data from a control group of women who are educated but were not employed,
it is impossible to determine the independent effects of education and employment on
fertility from this study. However, the changing age cohort data suggests that modem
sector employment (outside the home) has a significant effect on fertility. In a small sample
survey, Mazur found that urban women, age 30 and up, who worked at home, had about
two more children on average than those who worked away from home (Mazur and Mhloyi
1988:25).
Since the dramatic fertility decline that began in the mid-1960s, Zimbabwean women
have increasingly sought to limit births. The above data indicates that fertility decline began
in the 1960s, before modem methods of contraception were introduced in the 1970s, and
before mass education in the 1980s. Fertility decline is correlated with infrastructural

84
change and greater economic opportunities for men and women. The colonial policy of
import substitution resulted in rapidly increasing employment opportunities in the industrial
sector. Increased private and public sector demands for skilled workers and technicians led
to new educational and employment opportunities for men and women immediately
following independence. Fertility declined as Zimbabwe passed through these
infrastructural economic changes, and has continued to decline in the present.
Transition in Barbados
Fertility transition in Barbados has been even more dramatic than in Zimbabwe. The
total fertility rate in Barbados fell from around 5.0 in the mid-1950s to a low of about 2.0
in 1980, where it has remained to the present. Handwerker (1989) has shown that
historical declines in fertility correspond with the decline of the sugar industry and a
dramatic growth in industrial manufacturing and tourist spending.
The sugar industry had been the backbone of the Barbadian economy since the
Eighteenth Century. However, when the United Kingdom ceased acting as clearing house
for West Indian sugar in 1951, Barbadian producers found themselves under increased
competitive pressure from world markets. Between 1950 and 1980, sugar production
factories declined from 34 to 8, and sugar's share of the gross domestic output dropped
from 40 percent to 6 percent; sugar accounted for less than 10 percent of national
employment by 1980 (Handwerker 1989:97).
In response to the decline in the sugar industry, Barbados began to actively pursue an
export-driven development policy. The export-driven development model was pioneered by
Tiawan and other East-Asian countries (which, incidently, have also undergone
infrastructural economic transformation and dramatic fertility declines). Protective tariffs

85
and incentive legislation at home, combined with a readily accessible wealthy consumer
market for its products in the United States, propelled Barbados into the manufacturing
age.
In the 1950s and 1960s, the export-driven manufacturing sector grew to include
garments, furniture, ceramics, pharmaceuticals, phonograph records, wood processing,
paints, and a variety of construction materials; in the 1970s, the manufacturing sector
expanded further to include petroleum refining, paper products, data processing and
electronics components assembly (ibid:98-99).
During this period of infrastructural economic change, new jobs were created which
demanded new skills of the Barbadian work force; the labor market increasingly rewarded
acquired skills and perspectives, thus minimizing the value of child labor and improving the
employment opportunities for skilled women (also see Handwerker 1986a:400).
Handwerker writes:
Growth in manufacturing did not change the female work
participation rate. However, it radically changed the work
opportunities available for women. Whereas in 1946 female
employment in manufacturing was 14.4% of the labor force (and
even then it was employment only in cottage industry crafts), by
the late 1970s women held more than 50% of the jobs in the
manufacturing sector (1989:99).
The establishment of a tourist marketing board in the 1950s, fiscal incentives, and its
close proximity to the wealthy United States tourist market contributed to a dramatic growth
in the tourist industry in Barbados. The growing tourist industry added more service, white
collar, professional, and managerial jobs. Women were favored over children and could
compete on a more equal basis with men for these positions. The correlation between
economic change and antinatalist values and behaviors is evident in table 4.2.

86
TABLE 4.2
MEASURES OF FERTILITY, ECONOMIC GROWTH, EDUCATION
AND WOMEN’S FERTILITY VALUES IN BARBADOS: 1955-1980
1955
1960
1965
1970
1975
1980
Period Total Fertility
Growth of Industrial
4.9
4.8
4.4
3.9
3.1
2.3
Manufacturing (100= 1980)
Growth of Tourist
38
41
61
68
87
100
Spending (100= 1980)
Women Who View Childbearing
8
15
29
70
61
100
as an Investment Activity* (%)
Women aged 20-24 who
70
67
53
43
25
17
Completed Secondary School (%)
4
19
20
32
33
52
*This index measures women’s desire to put childbearing ahead of
career.
(Source: Compiled from Handwerker 1989:27, 98,
100, 104, 117, 15-22)
More nonagricultural economic opportunities based outside the home and on skill and
performance (instead of on paternalism) resulted in more egalitarian power relations
between the sexes and more opportunities for women to pursue goals independently of
their childbearing capacity. Increasing meritocratic access to economic opportunities created
the material incentives for women to achieve in school and to practice fertility control. With
economic independence from children and men, women could chart the course of their lives
in new ways. Increasingly, women are valuing productive over reproductive careers, and
selecting to have fewer children.
Transition in Mauritius
Mauritius has experienced social and political change similar to Zimbabwe’s. Though
Mauritius did not undergo a prolonged civil war as did Zimbabwe, political liberation in the
spring of 1968 was largely the result of opposition to the socially and fiscally conservative
economic policies of the past. As in Zimbabwe, political liberation created expectations for
more economic and educational opportunities.

87
Mauritius has experienced strikingly similar economic and demographic change to
Barbados. Twenty years ago, Benedict (1972:248) wrote, ” The island is entirely
dependent on agriculture, and one crop, sugar, accounts for more than 97 per cent of all
exports.” Today, Mauritius is in the midst of changing from a sugar-based plantation
economy to a diversified modem economy. As sugar production and export stagnated in
the late 1950s and early 1960s, Mauritius began to focus on other sectors of the economy
for growth potential. The diversification of the Mauritian economy and the promotion of
tourism, led to the creation of skilled jobs in the modem sector of the economy and to a
decline in agricultural employment. Table 4.3 shows changing employment trends since
1970.
TABLE: 4.3
MAURITIUS: EMPLOYMENT TRENDS: 1970-1990
(thousands) EXPORT HOTELS
YEAR
AGRICULTURE
PROCESSING
ZONE
AND
RESTAURANTS
1970
61
—
1
1975
64
10
2
1980
58
22
3
1985
53
50
4
1990
46
91
6
(Source: Bowman 1991:115)
The Mauritian economy grew rapidly after independence because of three principle
factors: 1) generous trade preferences granted by developed countries; 2) a ready supply of
cheap and relatively skilled labor encouraged foreign investment; and, 3) beautiful beaches
provided wealthy European and South African tourists with a unique Holiday environment.
Trade preferences gave Mauritius a competitive advantage in markets in the developed
world; the largest importers of Mauritian textiles and other products were European
Economic Community (EEC) countries and the United States. These trade preferences
stimulated the development of Export Processing Zones (EPZ) and the dramatic increase of

88
light manufacturing businesses. The EPZ began functioning in 1971. Between 1971 and
1988, the number of EPZ firms grew from 9 to 591; total exports increased from 4 million
rupees to over 8 trillion rupees (Bowman 1991:127).
This EPZ growth created a dramatic increase in modem sector employment. By 1976,
85 new enterprises provided skilled and semi-skilled jobs to over 17,000 employees
(mostly to female textile workers). In the early 1970s, the government created about
20,000 public sector jobs. Between 1971 and 1975, GNP grew 10 percent per year and
modem sector employment grew 5.5 percent per year; in total, between 1971 and 1977,
64,000 new jobs were created (ibid: 114-116).
Rapidly growing tourism also brought foreign currency into the national market and
created skilled employment opportunities. In 1968 only 15,553 tourists visited Mauritius,
but after the opening of a new international airport capable of handling jumbo jets, by the
late 1970s over 100,000 tourists visited Mauritius annually. In 1989, almost 300,000
tourists arrived in Mauritius (ibid: 134).
The growth of light industry and tourism led to a dramatic increase in employment
opportunities in the modem sector for both men and women of all ethnic backgrounds.
Less than twenty-five years ago the Titmuss Commission and the Meade Report
complained that there was a lack of social and economic mobility (Titmuss and Smith 1961;
Meade 1961). Both studies concluded that social and economic resources were wasted
because ethnicity was a more important criteria than ability (Benedict 1972:257). These
problems have been minimized by economic changes which have selected for skilled labor;
increasingly ability has replaced ethnicity and gender as a criteria for employment.
This trend has continued to the present. Today, Mauritius is called the "little tiger” in
deference to the "four tigers” of East Asia (Taiwan, South Korea, Singapore, and Hong

89
Kong), and there is much speculation that Mauritius hopes to become the ’Hong Kong’ of
the Indian Ocean. A comparison of economic change and demographic transition for these
four countries reveals strikingly similar trends. It was observed in a recent World Bank
report:
Examination of the accelerated sectoral shifts of employment in recent
years provides ample evidence of the extent to which the Mauritian
economy is approaching the status of a newly industrializing country.
The share of employment provided in the agricultural sector dropped
from one-quarter to one-fifth within the space of four years [1984-
1988], while employment in the two major export crops - sugar and
tea - continued to record significantly declining trends. In contrast,
over 20 percent of the increase in jobs took place in the transport,
trade, hotel and restaurant sectors which perhaps are among the most
directly affected by the expanding exports of manufacturers and the
burgeoning tourist industry (World Bank 1989b:58).
In addition to ethnic minorities, the largest benefactors of this sectoral redeployment of
labor have been women. Between 1972 and 1987, the total number of women entering the
labor force increased 320 percent compared with 57 percent for men; the female labor force
participation rate (by percentage of total labor force) has more than doubled. Forty-two
percent of Mauritian women were at work (outside the home) in the modem sector in 1987.
This is comparable to the female labor force participation rate of developed countries. Table
4.4 provides data on employment by gender in Mauritius.
TABLE: 4.4
MAURITIUS: MODERN SECTOR EMPLOYMENT BY SECTOR
(M=Males; F=Females) 1972 1987
M F T M F T
Employed (1,000) 169 44 213 265 141 406
Participation Rate (%) 83 20 52 82 42 62
(Source: Ministry of Economic Planning and Development, Human
Resources Division, adapted from Table 5.1 in World Bank 1989b:58)
This trend has accelerated recently. The World Bank reports:
Indeed, one of the most prominent and significant features of the
Mauritian development in recent years is the extent to which it has
been dependent upon drawing women into the labor market. Of the
overall increase in employment between 1983 and 1987 of some
124,000 workers, roughly 40 percent reflects increases in the

90
participation of women and about 38 percent is accounted for by the
reduction in unemployment. Growth in the working-age population
and increased male participation rates contributed only 16 percent and
less that 6 percent respectively (ibid:57).
As in Zimbabwe and Barbados, Mauritian women were encouraged to control fertility
and to obtain more education in order to meet new employment opportunities. Table 4.5
shows the concomitant educational advancement of women in the work force between 1972
and 1983.
TABLE: 4.5
MAURITIUS: DISTRIBUTION OF EMPLOYED POPULATION BY
EDUCATIONAL ATTAINMENT, AGE GROUP AND SEX: 1972-1983
1972
1983
1972
1983
1972
1983
(percentages)
(15-24)
(25-44)
(45-64)
M F
M F
M F
M F
M F
M F
Nil
6 14
2 3
15 42
6 20
29 60
22 54
Primary
60 46
48 46
60 36
49 39
63 33
63 35
Secondary
33 39
49 50
22 20
39 34
6 6
12 10
Tertiary
1 1
1 1
3 2
6 6
2 1
3 2
(Source: Central Statistics Office, 1983 Housing and Population Census of Mauritius.
Analysis Report, Volume IV (April 1987), Table 4.3, p.60., 12 from Table 5.5 in World
Bank 1989b:58)
This table lends itself to some interesting retrodictive interpretations. Since fulfillment
of primary and secondary education is usually completed before or about the same time one
reaches childbearing age, it can be inferred that in 1983 over 90 percent of the women
reaching childbearing age had obtained at least a primary education and about 50 percent
had reached secondary school. Between 1945-1965, one-half to three-quarters of Mauritian
women reaching childbearing age had obtained a primary school education. During these
20 years the number of Mauritian women of childbearing age who had completed
secondary school increased almost 3-1/2 times, from 12 to 40 percent: by 1983, more
women than men were completing secondary degrees.
Dramatic infrastructural economic change in the 1970s and 1980s led to rising
educational expectations and demographic transition. Dramatic fertility decline is reflected
in table 4.6.

91
TABLE: 4.6
MAURITIUS: CRUDEBIRTH RATE, 1952-1987
YEAR
BIRTHS PER
PERCENT CHANGE
THOUSAND
IN TEN YEARS
1952
44.3
--
1962
38.5
-13.1
1972
24.8
-35.6
1987
19.1
-16.9*
♦
Calculated from 1983 data when the crude birth rate is reported at 20.6
(Source: Central Statistics Office, Digest of Demographic Statistics, 1987,
found in World Bank 1989b: 111)
This data suggests that the Mauritian demographic transition began as early as the
1950s, before the introduction of modem methods of birth control; transition increased in
the 1960s, and has continued to the present. Population growth in Mauritius fell from an
annual rate of 3 percent in the 1950s and early 1960s to around 1.5 percent by the early
1970s. Today, the natural rate of population increase is about 1.25 percent; when
accounting for net emigration, the Mauritian population is presently growing at less than 1
percent per year. This is in sharp contrast to Benedict’s dire conclusion twenty years ago:
In many ways Mauritius can be viewed as a microcosm of the earth’s
population problem. The eradication of disease and improved health
services have led to an unprecedented increase in population, which
continues to grow at a dangerous rate. This population growth has
outstripped the country’s ability to support itself. Unemployment is
rife and increasing, and this is leading to political unrest. ... It is
probably too late to avoid a demographic disaster in Mauritius, and
the rest of the world may have to rescue this island people from the
consequences of their overbreeding (1972:275).
Since Benedict’s field research, infrastructural economic change has occured in
Mauritius and created a series of events which have led to fertility transition. With a
growing demand for skilled workers, employers selected women over children and on a
more equal basis with men than ever before. This led to the employment of women in jobs
away from the household; child labor also became less valued. Increasing meritocratic
access to economic opportunities created the material incentives for parents to support their
children through school and for women to achieve in school and to practice fertility control.

92
More nonagricultural economic opportunities based on skill and performance resulted in
more egalitarian power relations between the sexes and more opportunities for women to
pursue goals independently of their childbearing capacity. Increasingly, women began to
weigh the opportunity costs of their reproductive careers against the growing potential of
their productive careers. As a result of these changes, parents stressed educational
advancement for their daughters and young career oriented women had fewer children.
Transition in Kuwait
Women living in Arab Islamic states traditionally have enjoyed little autonomy. In some
states women are considered the property of men; their primary role is that of childbearer.
Marshall (1984:499) notes: ’’Muslim women have been less involved in traditional
agricultural and trading activities and have significantly lower rates of literacy, educational
achievement, nonagricultural labor force participation than women in other developing
areas at similar levels of industrialization.” It is not surprising that, ’’Among less developed
countries today, fertility/per capita-income groupings show Moslem countries to be
atypical, having high fertility across a broad range of income levels” (Donaldson 1991:9).
Indeed, Reeves asserts:
Reactionary religious forces within these societies do all they can to
prevent women from attaining greater social status. Ideally they
would like to see women back in harems where they believe women
belong, fulfilling purely domestic responsibilities and acting as
pleasure objects and reproductive machines (1989:29).
However, even in traditionally male dominated Arab Islamic societies, when women
have more equal access to employment and education, they are treated less as submissive
objects and more as equal subjects. In spite of cultural obstacles, women everywhere are
less likely to be treated as ’’pleasure objects” and ’’reproductive machines” when outside
economic opportunities free them from domestic bondage and dependence on men and

93
children for their well-being. As women gain better access to resources and contribute more
to family income they attain greater power vis-a-vis men in making reproductive decisions.
These changes are beginning to be felt in some Arab Islamic countries. Reeves
(1989:28-29) divides the Arab Islamic states into two general categories based on treatment
of women. First, there are the states where seclusion and veiling are strictly practiced and
where women have few if any rights. These states include Saudi Arabia, Oman, Qatar, the
United Arab Emirates, Yemen Arab Republic, and Mauritania. Second, there are the states
where a combination of religious and secular law prevails and women have acquired some
rights. These states include Kuwait, Iraq, Syria, Jordan, Sudan, Algeria, Egypt, Morocco,
and Somalia.
Among this group, the women of Kuwait stand out as demographic innovators in a
region slow to change. Following the causal arguments provided in previous sections, it is
not surprising that the women of Kuwait have fewer children and more economic
independence than most of their Arab Islamic sisters. Economic change has benefited the
educational and economic aspirations of Kuwaiti women more than women in any other
Islamic country. The comparatively lower total fertility rate of Kuwait among other Middle
Eastern countries is one result of the growing social and economic independence of
Kuwaiti women. Table 4.7 compares the total fertility rate of Kuwait with several other
Middle Eastern countries.
TABLE: 4.7
TOTAL FERTILITY RATES FOR SELECTED
MIDDLE EASTERN COUNTRIES: 1989
Country
TFR
Country
TFR
Saudi Arabia
7.1
Jordon
5.8
Iraq
6.7
Iran
5.6
Syria
6.2
Kuwait
4.6
(Source: Zachariah and Vu 1989)
Women’s roles changed with changing modes of production and the economic
development of Kuwait. The speed of infrastructural economic change in Kuwait was

unprecedented. Kuwait acquired in a generation the level of economic transformation it
took the developed countries a century or more of struggle to achieve.
When oil was first discovered in 1938, Kuwait was a poor Shaykhdom whose people
secured a meager subsistence by herding, fishing, pearling, and trading. Half a century
later, the grandchildren of simple Bedouins have become international bankers and the
people of Kuwait enjoyed one of the highest standards of living in the world. In FY 1939
the average per capita income was US$35; by 1981, GDP on a per capita basis was about
US$16,500--the highest in the world (Nyrop 1985:91-92). ’’Few if any persons are below
the absolute poverty level and malnutrition has been effectively eliminated” (Country
Reports 1986:1296).
The transformation of Kuwait into a major oil exporter began after the end of the
Second World War. Between 1946 and 1957, oil exports rose from 800,000 tons to 55
million tons, making Kuwait the second largest oil exporter in the world (behind
Venezuela). From 1955 to 1965 Kuwaits oil revenues grew at an average rate of 10 percent
per year. Profits have skyrocketed since the early 1970s, after the Organization of
Petroleum Exporting Countries (OPEC) was formed, and have remained high.
With the influx of oil revenues after the Second World War, Kuwait has aggressively
constructed a modem infrastructure, i.e., electricity, piped water and sewage, a huge
desalination system, modem housing, schools, and hospitals, deep-water ports, airports,
and paved roads. However, the lack of metallic minerals, the small size of its domestic
market, and the high cost of labor has limited industrial investment and development. Oil
revenues have allowed Kuwait to develop its infrastructure and social welfare system
without the development of a substantial industrial base. Industry (excluding oil refining,

but including electricity and water desalination) has expanded slowly, contributing only 4
percent of GDP in the early 1980s, little more than it had a decade earlier (Nyrop
1985:108).
95
Thus, the economic changes in Kuwait which have resulted in increasing demand for
skilled workers were not the result of rapid industrialization, as is the case in most
developing countries, but were the result of government spending on social services. About
three-quarters of the jobs in Kuwait are in the service sector of the economy; approximately
90 percent of all working women are employed in the service sector (Al-Shamoubi
1989:181). The value of child labor is nil.
Kuwait has aggressively instituted one of the world’s most encompassing health,
education, and welfare systems (see Khouja and Sadler 1979; Nyrop 1985:87-90). From
having only four doctors in 1949 (Mansfield 1990:91), today Kuwait has one doctor for
every 619 residents and one nurse for every 212 residents (Nyrop 1985:76,88). Infant
mortality fell from 44.3 per thousand in 1974 to 19 per thousand in 1983. These figures are
now compatible with those in the advanced industrialized countries” (Mansfield 1990:92).
Health care and education are free; housing, water and electricity supplies are heavily
subsidized; and the state, which employs about a third of the population, pays unusually
high salaries (ibid:76-77). Social security benefits are offered to Kuwaiti citizens who are
either over 50 years of age or who have worked for 20 years or more; pensions are paid to
widows and the disabled. Mansfield (ibid:93) observes, ”At the institution of social
security, which was founded in 1977, there are rows of bright and efficient young Kuwaiti
girls with direct access to computerized files on each Kuwaiti family who are ready to
inform anyone of his or her entitlements.” Even unmarried women over the age of eighteen
are subsidized (Nyrop 1985:90).

96
The combined forces of infrastructural development and the rise of the welfare state
have resulted in dramatic demographic changes. New large scale construction projects and
the expansion of public services created a large demand for both skilled and unskilled
labor. Migrants from surrounding Arab nations flowed in. Between 1946 and 1975, the
size of Kuwaits population increased more than ten-fold from 90,000 to over one million;
the compounded growth rate of more than 6.5 percent was almost double the natural
growth rate of other countries in the region during this period. The rapid influx of
workers from other countries was responsible for this phenomenal growth (Khouja and
Sadler 1979:37-38). Table 4.8 shows that labor migration into Kuwait of non-Kuwaitis
(increasingly females) has been considerable.
TABLE: 4.8
NON-KUWAITIS BY SEX AND PERCENTAGE
OF POPULATION IN KUWAIT: 1957-1975
CENSUS
NON-KUWAITIS
TOTAL
YEAR
%MALES % FEMALES %TOTAL
POPULATION
1957*
79
21
45
206,473
1960
73
27
50
321,621
1965
70
30
53
467,399
1970
62
38
53
738,662
1975
57
43
53
1,066,400
1980
58
1,357,952
1985
60
1,710,000
*Vital Statistics for Kuwait have only been available since 1957.
(Sources: Khouja and Sadler 1979:38; Nyrop 1985:82; Country Reports 1986:1296)
As table 4.8 shows, Kuwait’s economic development was achieved in large part by
importing foreign workers. In 1980 non-Kuwaitis represented 79 percent of the employed
labor force and held 84 percent of the 27,400 professional, technical, and managerial jobs
(Nyrop 1985:10).
Though jobs are abundant, Kuwaiti men and women are about four times as likely to be
classified as economically inactive than are non-Kuwaiti men and women. Of course this

97
figure has changed dramatically since the Gulf War; all of my comparative data is from
before the War. In the 1975 Census, about one-quarter of Kuwaiti males were categorized
as outside the active labor force; these men derive their income from rents, dividends, and
profits from investments and other entrepreneurial activities. There has been an upward
trend in the proportion of inactive Kuwaiti males that is correlated with a substantial rise in
rents, dividends, and profits, and a growing feeling of security associated with the welfare
state (Khauja and Sadler 1979:40-42).
Between 1957 and 1975, the percentage of Kuwaiti women in the labor force only
increased from 1.4 to 6.7 percent, and from 16 percent to over 25 percent for non-Kuwaiti
women (ibid:42). It is observed that,
although Kuwaiti women were clearly more emancipated than others
in the Gulf and many had taken advantage of the opportunities for
education, their entrance into the labor force was slow. In 1980
Kuwaiti women constituted only 13 percent of all employed Kuwaitis
(Nyrop 1985:105).
However, in recent years the economic participation of both Kuwaiti and non-Kuwaiti
women has increased for all age groups. Table 4.9 shows that economic activity is highly
correlated with level of education among female Kuwaiti citizens.
TABLE: 4.9
EDUCATION AND ECONOMIC
ACTIVITY OF FEMALE KUWAITI CITIZENS
LEVEL OF % ECONOMICALLY
EDUCATION ACTIVE
Illiterate 4.0
Intermediate 4.6
Secondary 43.6
University 82.2
(Source: Al-Shamoubi 1989:181)
Educational opportunities have risen along with oil profits. Table 4.10 shows the
dramatic increase in student enrollments since 1945.

98
TABLE: 4.10
STUDENT ENROLLMENT: 1945-1990
YEAR ENROLLMENT
1945
3,600
1957
20,000
1967
120,000
1975
250,000
1990
500,000+
(Sources: Mansfield 1990:96; Khoujaand Sadler 1979:33;
Winston and Freeth 1972:196)
Between 1949 and 1982, the number of teachers increased from 198 to 24,367. The
reason for this dramatic increase in student enrollments and teachers is that the Kuwaiti
government has made education a top priority. Nyrop (1985:85) notes that, ’’Public
education is free to Kuwaiti citizens and many foreigners from the kindergarten through the
university level. The government absorbs the costs of books, clothing, meals, and
transportation and pays parents an allowance that increases when a child reaches the
secondary-school level.”
This focus on education has helped advance literacy. Modem measures of literacy rates
reflect a growing equality in educational opportunity for women. Among people 60 and
older, 28 percent of the men and only 6 percent of the women are literate; this is compared
with children aged 10-14, where 96 percent of the men and 91 percent of the women are
literate (Mansfield 1990:94).
Educational equality is also found at the University level. Among the over 10,000
students who were enrolled at the University of Kuwait in the early 1980s, 57 percent were
women (ibid:86). A portion of this is explained by the fact that women are discouraged
from attending college overseas while men are encouraged. Thus, more men than women
attend college outside Kuwait. However, as early as the mid-1950s, the ministry of
education discriminated positively in favor of females, setting a limit on the number of
scholarships for boys but not girls (ibid:96). This new generation of highly educated
women is expected to enter the work force in large numbers in the near future.

99
Mansfield contends that Kuwaiti women have experienced a much more revolutionary
social change than men in the past forty years, especially in terms of educational and
employment opportunities. He writes, ’’From being virtually uneducated, they now have a
higher proportion of University degrees (with better levels) than the males. They play an
active role in public life as senior civil servants, heads of university departments, doctors
and lawyers” (ibid: 127; also see Sapsted 1980:23).
Increased educational opportunities have encouraged women in Kuwait to delay
marriage and stay in school longer. There has been an increasing tendency toward
postponement of marriage. Between 1965 and 1980 the mean age at marriage for Kuwaiti
women increased from 18.9 to 22 years; 18.9 to 21.3 years for non-Kuwaiti women (Al-
Shamoubi 1989:183).
Some Kuwaitis’ are concerned about later marriage and by the declining birth rate; they
believe the government should do more to encourage young women to have larger families
and to marry earlier. Al-Sabah (1984:29) asserts, ’’Measures to encourage marriage in order
to increase the birth rate would contribute in the long run to raising the indigenous labour
supply. Such measures could include marriage loans and a housing loan scheme which
favors large families.” Several months after the Gulf War the Council of Ministers offered
young men $14,000 dollars (double the previous rate) to marry Kuwaiti women. In
addition, a non-governmental Charity Committee has offered $3,500 dollars to men who
take a second wife. Kuwaiti feminists have objected strongly to this measure because they
feel it will break up Kuwaiti families.
In spite of persistent social and constitutional discrimination, Kuwaiti women have
tended to fair better than their Islamic sisters. A United States government report notes:
Kuwaiti women are allotted a subordinate role by statute and practice.
Denied the vote, women are also limited by tradition from freely
choosing their role in the society, though less so than in some other
Islamic countries. Nevertheless, there are Kuwaiti women who are

100
outspoken in their demand for a broader role in society. In contrast to
the practice in some neighboring countries, a Kuwaiti woman is
permitted to drive a car, may wear Western dress in public, and has
legal access to higher education inside and outside the country.
Although women have yet to join the work force in large numbers,
they are able to compete for government and corporate employment
and have the right to litigate against men (for example, in child
custody suits). Many women have accumulated substantial personal
wealth (Country Reports 1986:1297).
Even the contrasting Islamic and Western styles of dress reflect a growing social irony
made possible by the new independence of women in Kuwait. Though a growing number
of women now wear Western styles of dress, the majority of college aged women have
adopted Islamic dress, i.e., they wear a hijab which is a nun-like enveloping headscarf
which covers their face. It has been assumed by many that dressing in an Islamic fashion
implies female subordination to males as consistent with Islamic traditions. This is not the
case. Mansfield asserts:
The young girls who have chosen to wear modem Islamic dress
covering all but their face and hands have not done so because they
want to retire to the harem. On the contrary, they want to take part in
public life without having to put up with male harassment. When
working with males who are not their husbands, they want their sex
to be ignored, which presumably is the ideal of the western feminist
(Mansfield 1990:127).
Mansfield continues:
It is quite wrong to suppose that those in the hijab are shy or unduly
deferential in their attitudes towards men. On the contrary, they are
full of a self-confidence which makes clear that it was their decision
alone to adopt it. Young Kuwaiti girls in the hijab are said to be more
aggressive behind the wheel of a car than their sisters in Western
dress (ibid:98).
Indeed, many of the women who wear Islamic dress are active in the suffrage movement
and hold high status jobs.
The economic liberation of the women of Kuwait has been made possible by the
petroleum infrastructure. As a result of this resource infrastructure, socially based
economic transformation and the establishment of the welfare state has occurred. Unlike the

101
pattern of industrial based economic transformation which is common in most other rapidly
developing countries, Kuwait’s economy has been able to develop on the basis of social
services. Though women have yet to enter the work force in large numbers, they are
beneficiaries of one of the most broad-based social security systems ever instituted.
Kuwaiti women need not have children in order to obtain access to resources or for fear
that their well-being will be compromised in old age.
Similar to the women benefiting from industrially based economic changes in other
parts of the world, the women of Kuwait increasingly do not need to rely on men or
children for their well-being. As a consequence, the women of Kuwait are having fewer
children. They are also increasingly taking advantage of expanded educational
opportunities; they are also delaying marriage and childbearing, and are advancing their
career opportunities. As more women remain in school longer and enter the work force as
equal partners in the future development of Kuwait, the birth rate is likely to decline even
further.
Summary
Throughout this manuscript I have argued that increases in education alone will not lead
to fertility decline or economic development; emic mentalist changes will not lead to etic
behavioral results. Education may change values and beliefs, but it does not change fertility
behavior unless it leads to employment opportunities for women which conflict with
childrearing. An educated work force may be necessary for economic development to
proceed, but it is not a sufficient condition for the occurrence of such dramatic change.
Infrastructural changes have created natural experiments in Barbados, Mauritius,
Zimbabwe and Kuwait. Infrastructural economic changes have resulted in greater
employment opportunities outside the household for women. This has led parents to

102
encourage their daughters to stay in school longer and to delay setting up a family. Young
women are responding to these changes with a new sense of autonomy and freedom.
Increased access to modem sector employment has resulted in new modes of social
relations that are based on more equality between the sexes. It is no surprise that the most
vocal women’s sufferage movement in the Arab Islamic states is found in Kuwait.
Where women are gainfully employed, men are beginning for the first time to
participate in domestic chores and to treat their partners on a more equal basis. Even in
developed countries, men have traditionally tended not to perform household chores, i.e.,
wash dishes, change diapers, make beds, etc. But as women have increasingly joined the
work force, in the United States and elsewhere, more men have begun to participate in
household tasks and to accept the fundamental equality of women. Handwerker notes:
The opening of new and competitive resource access channels thus
was accompanied by a shift in the means by which men and women
could best optimize resource access. Young men, unlike their fathers
and grandfathers, were not placed in a position in which they had to
exploit women and alienate children to respond rationally to the
resource structure. Young women, unlike their mothers and
grandmothers, could find work that permitted them an independence
from men. Relationships between young men and women came to be
characterized by companionate qualities that their parents and
grandparents experienced only rarely (1989:204).
The new independence of women in Mauritius and Kuwait has created sex role
controversy. There is presently a strong women’s movement in both countries that has
increasingly demanded equal rights in social and legal arenas. As women have been earning
more money and making general economic headway, they have demanded more social and
legal equality. Increasingly, more educated, employable, and liberated women are choosing
to either contracept or abort with or without their husbands’ permission. Family planning is
discussed more frequently and more openly. As women’s independence grows, so does
their antinatalist sentiment; they want to be breadwinners also!

103
In Zimbabwe, increased educational and non-agricultural employment opportunities for
women and increasing legal and economic independence from men have given women
more ability to chart their own course. Indeed, a growing controversy over brideprice
reflects the rise of women’s power and independence and suggests fundamental social
changes in expectations between men and women and in the obligations they feel to their
parents and the extended family (see Iverson 1990).
When I asked Zimbabwean women, ”How have women’s roles changed since
independence?”, overwhelmingly they said that since independence there are more
educational opportunities and jobs for women (with equal pay). Also, they commonly said,
’’Men don’t demand the pay a woman brings home as they used to.” On the issue of child
support, women agreed that, ’’men are more responsible these days”; however, they also
agreed that nothing has changed for housewives: ’’Equal rights doesn’t work in the
household; men still oppress women in the home” (ibid: 16-18).
In all four countries there have been complaints that divorce is more common, that the
younger generation is more disrespectful of their elders, and that impersonal social relations
are replacing those based on kinship, especially in the marketplace. These are the structural
and superstructural changes one should expect as infrastructural change creates
employment opportunities for more skilled labor. Demand for skilled labor selects for
talented employees, usually with higher education; when performance is valued over
paternalism, meritocracy replaces nepotism and seniority. Under these conditions, women
have a more equal opportunity as a practical matter of good business. Similarly, women
employed outside the household have fewer children as a practical matter of opportunity
costs.
The development strategies of Zimbabwe, Barbados, Mauritius and Kuwait were well
suited for their particular natural and human resource bases. Given the rich and diverse

104
base of natural resources in Zimbabwe, and its inaccessibility to the sea, it is
understandable that economic development was fueled by a policy of import substitution,
whereas in Barbados and Mauritius it was fueled by a policy of export-led industrial
expansion. The same infrastructural resources that led Kuwait to change its mode of
production from a pastoral to petrochemical basis resulted in the establishment of a
generous and comprehensive social security system. Regardless of approach, these policies
led to rapid structural economic transformation, a demand for skilled labor and greater
access to resources for women.
Increasing educational requirements of new employment opportunities encouraged
parents to educate their children and gave incentive for women to achieve in school and to
practice fertility control. Because these new employment positions required social and
abstract skills, educated women were selected for them on a more equal basis with men.
With a growing demand for skilled labor, child labor and paternalistic hiring practices
declined, and large numbers of women entered the modem work force for the first time.
Increasingly, women were forced to weigh the opportunity costs of their reproductive
careers against new opportunities for productive careers. This has resulted in dramatic
fertility decline.
These are precisely the changes that have occurred in Zimbabwe, Barbados, and
Mauritius over the last quarter century. Demographic transition in Kuwait has also been
caused by infrastructural economic changes which have resulted in greater independence
for women from men and children. However, unlike the three previous examples, Kuwaiti
women have not needed to enter the modem labor force to obtain access to recources. The
existence of a generous welfare state has allowed Kuwaiti women a high degree of freedom
and security without obtaining employment outside the household. Financial security is
guaranteed to young single women without children; thus, Kuwaiti women do not need to

105
marry and procreate in order to gain access to material resources; their material security is
also guaranteed in old age. These material conditions have delayed marriage and
childbearing and fueled fertility decline.
It will be especially interesting to follow the demographic developments in Kuwait
since the Gulf War because the massive outmigration of foreign workers will place more
demand on Kuwaiti women to enter the work force. As more women become educated and
enter the modem work force in the future, fertility should decline further.
The above comparisions suggest that lower fertility is caused by the opening up of new
resource access channels for women. The bottom line is that women must feel materially
secure independent of their childbearing capacity. Under these material conditions they are
free to choose to have fewer children. Under these circumstances, women in Zimbabwe,
Barbados, Mauritius and Kuwait (and women all over the world) have fewer children.
In sum, the most important causal factor in fertility decline in developing countries
today is infrastructural economic change that results in more skilled employment
opportunities for women outside the household. Increased demand for skilled labor reduces
paternalistic hiring practices and selects for educated women on a more equal basis; it also
reduces the value of child labor and increases employment opportunities for educated
adults. Not only do children become more expensive, but employment outside the home is
incompatible with parental child care. As opportunities for skilled employment for both
men and women increase, there are more incentives for women to delay childbearing and to
stay in school longer; the opportunity costs of reproductive careers are increasingly
weighed against the costs and benefits of employment careers.

CHAPTER 6
DISCUSSION
Determining the causes of fertility behavior has been no easy task. Demographic
transitions have occurred in poor countries and in rich countries. Research has been
conducted using etic materialist and emic mentalist epistemological approaches, scientific
and interpretive methods, and western and non-western biases. There have been studies
using countries, regions, households, and individuals as units of analysis. Hypotheses
about the causes of demographic transition range from the simple to the complex, with
problems of moving thresholds, simultaneous interactions, intervening and confounding
variables, and spurious associations. Even the direction of causal arrows is sometimes in
doubt.
Progress has been made however. Decisions at the individual and family level to lower
fertility can and do sustain or improve standards of living in certain socioeconomic
contexts, and it is now known that these decisions are often made for just this reason by the
actors themselves. We know, too, that infrastructural economic change leads to changes in
reproduction. In much of the developing world, fertility is declining as the result of more
democratic and productive cultivation of human and natural resources.
These processes are now evident in sub-Saharan Africa and throughout North Africa
and the Middle East, as they were earlier in Latin America, the Pacific Basin, and Southeast
Asia, and earlier yet in Europe, Scandinavia, Australia, Japan, and the United States.
However, Faroog and DeGraff warn:
106

107
Given the differences in the pre-transition demographic rates of the
industrialized and developing countries, the rapidity of current
mortality decline in the developing world, and the much greater role
of social, cultural, and economic influences at the international level
in today’s world, it is difficult to judge to what extent the course of
the demographic transition in the developing regions will resemble
the experience of the industrialized countries (1988:20).
Indeed, fertility in most developing countries is higher at the beginning of transition
than it was in preindustrial Europe. This is usually explained by early and near universal
marriage in developing countries distinct from 19th-Century European patterns of later
marriage and extensive non-marriage. Fertility declines have also been more rapid in some
developing countries than the historic declines in Europe. Demographic transition has also
begun at unexpectedly low per capita income levels (Beaver 1975). This is usually
explained by the greater speed of economic growth and modernization, cultural and
intellectual diffusion, and by the higher quality of health care available in even low income
countries.
Indeed, changes in technology, health, education and economic development have
occurred at a faster pace in the contemporary developing world than ever before. For
example, there is no natural historical phenomenon comparable to the sudden rise in income
levels and general development experienced in the oil producing states. Advances in
transportation and communication have totally revolutionized trade and the level of contact
between distant peoples; economic resource interdependencies have grown stronger. The
flow of scientific, technical, medical, and contraceptive information has never been more
rapid or global.
The world has changed dramatically over the past twenty years; it is difficult to imagine
the changes which have taken place over the past one-hundred years, since the beginning of
the fertility transition in Europe. It is even more difficult to imagine the changes which must
have occurred as humans adapted from foraging to agricultural modes of production. The
common denominator through each of these periods of cultural evolutionary change is the

108
individual human being, struggling to make the best for themselves and their family under
changing material circumstances.
Standard demographic transition theories have been derived from the paradigms of
modernization and westernization; they stress the behavior modernizing and determining
effects of western education, health care, and family planning. These conclusions have
been drawn from emic mentalist epistemological foundations. The fertility effects of these
factors depends on changing values, preferences, attitudes, and beliefs, largely independent
of changes in material conditions.
On the other hand, those who work from etic behaviorist epistemological foundations
emphasize the effects of changing material conditions on fertility behavior. Materialist
theories stress material causes of fertility decline; they assert that the role of education,
health care, and family planning in fertility decline is indirect and secondary.
Education may give women an opportunity to find gainful employment outside the
household, and to acquire resources independent of men and children. But when there are
few economic opportunities for women, education will have little effect on fertility. Indeed,
women with little or no education have as few children as educated women when they
work away from home. Education is not the primary cause of fertility behavior change;
rather, the primary cause is infrastructural economic change--changing modes of
production-which leads to employment opportunities for women outside the household.
The role of family planning in fertility decline is also indirect. Family planning acts as a
resource for women who already desire fewer children. Indeed, the introduction of
contraceptive technologies has been most effective in reducing fertility in countries where
there is a latent demand for them and in countries undergoing infrastructural economic
change. Women who do not want to have fewer children either do not use contraceptives or
use them for spacing births.

109
Both education and family planning are means to ends for women. Education leads to
economic security (and lower fertility) only when jobs are available. Increased access to
family planning leads to contraceptive use (and lower fertility) only when women already
desire fewer children. When there are few jobs prospects available for educated women,
parents will not send their daughters through school and women will leave school early.
Similarly, family planning leads to lower fertility only when material conditions exist where
parents can benefit from having fewer children.
The causal role of declining infant mortality in fertility decline is also empirically
unsubstantiated. In all cases where high levels of infant mortality and fertility exist together
other material factors also selecting for high fertility are present. The notion that women
will have more children than they want because they are unsure the children they do have
will live to adulthood, though logically compelling, has not been proven independent of
other fertility enhancing factors. Over the course of approximately thirty years of fecundity,
women will have as few or as many children as they want anchor are able to have.
These criticisms of standard demographic transition theories do not intend to imply that
more educational opportunities, the expansion of family planning services, and better
primary health care are not crucial to the development process. These missions are
humanitarian development goals in themselves. For instance, family planning is the best
preventive health measure available today. It is estimated that the lives of over a quarter
million women and over five million infants and children could be saved annually if women
could control the timing of their births (UNFPA 1988). The three billion dollars spent
annually on family planning in developing countries (only 3 percent of all development
assistence) is not nearly enough. The percentage of GNP dedicated to education is also
abysmally low in many parts of the developing (and developed) world. In no way do I

mean to downgrade the importance of these humanitarian programs and development
objectives.
110
My argument is simply that more educational opportunity and access to family planning
and primary health care do not in themselves cause fertility decline. More education does
not automatically lead to more economic opportunities for women outside the household.
Without economic opportunity women will still remain dependent on men and children for
their well-being. A recent United Nations Family Planning Association report notes:
In strongly patriarchal societies-where men’s control of women is
extreme-it has been found that fertility rates and child survival are
extremely resistant to change. Even normally powerful factors like
mothers’ education (as well as family income and the availability of
contraception) have much less of an effect in these societies. It is as
though women are allowed to see the possibilities but not to translate
what they have learned into improvements in their lives (UNFPA
1988:49) {also see Cain 1988;Oppong 1988}.
Nor does access to family planning automatically make more women want to control
their level of fertility; nor will conditions of lower infant mortality cause women who want
eight children to have less than eight children. It is only when women gain a measure of
economic independence and have a real choice-when the opportunity costs of having
children outweigh the benefits of having children-that they will have fewer children. This
will only occur when there are more economic opportunities for women outside the
household.
Statistical associations between rising levels of education, increased access to family
planning, improved primary health care, and lower fertility do not prove anything about
causation. The imputation of cultural idealist modernization and westernization biases into
the interpretation and analysis of data has led to incorrect assumptions of causality and
contributed to ineffective and damaging development results. The use of exclusively
aggregate measures to shore up a system of causation which explains fertility behavior has
resulted in completely leaving out considerations of the motivations of individual women.

Ill
Incredibly, demographers, economists, and population and development policy experts
have underestimated the role of women in fertility and development. Indeed, some of their
general recommendations seem more politically than scientifically motivated.
At the First International Conference on Population in Bucharest in 1974 there was
disillusionment with the failures of family planning programs. It was agreed that
development was the best contraceptive. This position was taken further at the Second
International Conference on Population in Mexico City in 1984. It was contended that
western free-market economic development was the key to fertility decline; capitalism is the
best contraceptive. One need only look to the below replacement levels of fertility in the
command economies of eastern Europe to dispel this notion. Free-market economic
systems may be the most successful at developing a country’s economy, which in turn may
lead to fertility transition, but there is no evidence that free-market systems are either the
direct or the only means to fertility decline.
A related and misleading conclusion drawn at the 1984 Conference on Population in
Mexico City is that population growth is a ’’neutral phenomenon” (United States
1984:576). This conclusion seems to have been drawn more from theoretical confusion
than from empirical data. While it has been shown that more efficient agricultural systems
of production have historically resulted from the stresses of rapid population growth and
higher population densities (Boserup 1965; 1981; Hayami and Ruttan 1985), there is no
evidence to suggest that these conditions are required for technological innovation, as
Simon and others have asserted (Simon 1977; 1981; Kelly, Williamson and Cheetham
1972). Indeed, the Committee on Population reports:
There is nothing in these arguments to suggest that denser or more
rapidly growing populations are better off; rather, they show that the
choice of [production] system and direction of technological change
typically adjust to the negative effects of higher density and more
rapid growth” (1986:51).

112
More recent research has provided some evidence which suggests that fertility decline
does not inhibit economic growth in developing countries (Committee on Population 1986)
and may have a positive economic impact (Evenson 1984; Hess 1988). Reducing fertility is
more important in some regions than others; but most agree that lower fertility should be
one goal of development. Therefore, I would suggest that every development project
proposal be required to submit a demographic impact statement (similar to requirements for
environmental impact statements).
Another consequence of the erroneous assumption that fertility is a ’’neutral
phenomenon” is that there has been little research into the social and economic effects of
fertility decline. The Committee on Population reports (1986:6), ’The scientific literature
contains few adequate studies of the effects of slower population growth in developed
countries and still fewer on the effects in developing countries.” There have also been few
studies of the demographic impact of development projects. The works of Barlow (1982)
and Oberai (1992) are among the few exceptions. Oberai (1992:7-8) notes, ’’Very little is
currently known about the demographic impact of most development projects.... As a
result planners lack methodologies for projecting, monitoring and analyzing the probable
demographic consequences of development projects.”
The lack of research in this area may also be due to the daunting task of conducting
demographic impact assessment studies. Possible methodological problems are numerous
and include measuring indirect causation, simultaneous interactions, and accounting for
selection bias and differences between long-term and short-term effects. Nonetheless, such
assessments are critical if development projects are to enhance desired effects and minimize
undesirable outcomes.
In addition to methodological challenges, ethnocentric notions based on emic mentalist
epistemological foundations still exist. Some scholars and policy-makers believe that

113
deeply rooted cultural traditions and religious beliefs delay or prevent fertility transition.
This emic confusion has led to unparsimonious theories of the causes of fertility change.
Mentalist research orientations have unwittingly propagated continued ignorance of the
underlying material preconditions for fertility transition. Fertility theories and development
policies have often been misdirected as a consequence. There seems to be a strange
resistance to etic behavioral and materialist data.
For instance, Oberai (1992) has recently completed a synthesis of country studies
assessing the demographic impact of development projects, including rural electrification
and irrigation projects, land reform and agricultural resettlement schemes, women’s co¬
operatives and income-generating schemes, promotion of small-scale industry and rural job
creation programs. In spite of unintended consequences and inconsistent demographic
findings in each development project (except in a reforestation program in Thailand where
women working outside the home had fewer children), Oberai (1992:93) concludes, ’’The
more integrated a development intervention is, the greater are its chances of success” [in
reducing fertility].
Though Oberai may be correct that more integrated development projects are more
beneficial from a demographic perspective, his general conclusion is rather unhelpful from
a policy perspective. Though he refers often to the importance of weighing the costs of
different development alternatives with the benefits of their demographic effects, he does
not offer a specific alternative. Given that development programs are always limited by
insufficient funds, a more exacting development design for reducing fertility would be in
order.
As I have argued throughout this manuscript, and indeed, as Oberai has found by his
own admission, the creation of opportunities for women to work outside of the home
would have a direct and immediate effect on fertility. Given his empirical findings, why

doesn’t he offer this as a possible specific solution toward integrating demographic and
economic development objectives?
114
The current world population is estimated at 5.2 billion and is growing at a rate of 90
million each year. However, total fertility rates are declining in regions where 80 percent of
the worlds people live; TFR’s are either increasing, remaining static, or are just beginning
to show signs of decline among the remaining 20 percent. The percentages are about the
same in the United States where approximately 20 percent of the population has a high birth
rate.
Increasingly, high fertility is being viewed as a causal factor in ecological, economic,
and political instability. Brown and Jacobson observe:
Rapid population growth is beginning to overwhelm local life-
support systems in many countries, leading to ecological
deterioration and declining living standards. Once this deterioration
begins, rapid population growth and ecological deterioration feed on
each other, pushing countries into a demographic trap. In effect,
ecological deterioration, economic decline, and political instability
reinforce each other, confronting governments with the prospect of
social disintegration. Interrupting this downward spiral now rivals in
importance nuclear disarmament on the international agenda
(1986:5).
Throughout this manuscript I have made the point that demographic and economic
factors are integrally related. Demographic and political-economic changes are interrelated
in the United States and around the world. The capital flight from inner cities, declining job
opportunities in urban areas, and the inadequacy of government supports effects fertility
behavior. As Mamdani has argued, people are not poor because they have large families,
they have large families because they are poor! Women have children to get access to
resources when they have few other means of getting them.
I am not contending that impoverished inner city women in the United States have
children to increase the amount of their government aid check. Such increases are meager at
best. There are many other resources these women may hope to obtain through procreation,

115
including the support of a potential husband/father (and his family). My point is that high
fertility (and reliance on men and children to obtain access to resources) is evidence that
opportunities for economic independence are lacking for these women. This is as true for
women in the inner cities of the United States as it is in some developing countries. Not
enough research has been conducted in this area; nor has there been enough comparative
work relating the causes of high fertility in sectors of the United States population to the
causes of high fertility in other regions of the world.
A quick look at the etic behavioral data shows that much time and money has been
spent providing education, family planning, and medical resources to inner city women
across the United States. These provisions have had almost no effect on the rate of high
school drop-outs, teenage pregnancy, infant mortality, and a panoply of other social
ailments. This is because these provisions are only the means to material opportunities
which have been absent. Without material economic opportunities, there is little incentive to
take advantage of education, family planning, etc. There is no incentive for children not to
have children!
Domestic social and international development programs share a common responsibility
for demographic and economic change. The way development money is spent has an effect
on fertility as well as a host of other social and economic problems. Understanding the
causes of fertility behavior change is critical to designing programs which can have a
positive impact on society. Where there is high fertility, there are not enough economic
alternatives for women to give them the incentive to have fewer children.
Given that there is a well established and documented cycle of poverty, and that women
from all over the world have children because they cannot afford not to have children; then,
to break this cycle of poverty and to reduce the number of children bom into poverty, jobs
must be created in the developing world and in the inner cities of the United States which

116
give women access to resources they could not obtain if they had children. Therefore, one
goal of public policy should be to set up circumstances for women in which they can begin
to weigh their economic opportunities against their fertility prerogatives. In all instances,
when women are faced with such choices, aggregate fertility has eventually declined. In the
1988 Annual Report of the United Nations Population Fund it is concluded:
The status of women will be crucial in determining future population
growth rates. The extent to which women are free to make decisions
affecting their lives may be the key to the future not only of poor
countries but of the richer ones too. . . . Increasing a woman’s
capacity to decide her own future--her access to education, to land, to
agricultural extension services, to credit, to employment-as an
individual in her own right has a powerful effect, not least on her
fertility.. . . Women who have managed to acquire a measure of
self-determination tend to have smaller families than women with no
such assets (UNFPA 1988:11-12).
From the Pleistocene to the present, reproductive behavior has been shown to be an
adaptive response to material contingencies; fertility outcomes reflect the struggle of women
to make the best of their lives given a set of external circumstances completely beyond their
control. Domestic social and international economic development policies which create an
environment where women are faced with new opportunity costs of procreation can
empower women with a new measure of control. I have found in my research that the most
important causal factors in modem fertility decline are: 1) economic conditions or
employment opportunities that conflict with childrearing; and, 2) women’s access to
material resources independent of men and children. This is true in the United States and
abroad. Domestic and international development aid can have a positve effect on reducing
fertility if it specifically targets these socioeconomic objectives.

CHAPTER 7
CONCLUSION
The integrative necessities of cultural materialist oriented anthropological research
requires diverse methods and multidisciplinary knowledge. A new spirit of collaboration
between demographers and anthropologists has advanced knowledge about the causes of
fertility behavior and demographic transition. A more integrated knowledge of demographic
and cultural evolutionary processes has led to a better understanding of both.
Anthropologists from an array of subfields have made significant contributions to
understanding the causes of fertility behavior and demographic transition. Demographic
theories which once rested solely on historical interpretations are being replaced by theories
which are informed by a longer view of the human experience. Etic household and
community level data collected by anthropologists are advancing fertility-behavior analyses
which were once based almost exclusively on large aggregates of data and intuition about
causation.
Also, a productive critique of the epistemological basis for claims to knowledge in the
social sciences has emerged because of the special research problems anthropologists face.
Problems such as interviewer bias, the unreliability of informant reports, and inducing the
causes of cultural evolutionary change among people who have long since ceased to exist,
have led to the development of a scientific data language based on the emic/etic distinction.
117

118
This distinction helps to identify mentalist and behaviorist epistemological approaches and
to understand the underlying basis for divergent theoretical perspectives in demographic
analyses.
Indeed, in this work I have shown how epistemological assumptions have influenced
fertility research methods, theory, data analysis, and population policy. I have explained
why etic behavioral and cultural materialist approaches avoid erroneous assumptions and
biases often associated with emic mentalist and cultural idealist approaches. I have shown
that modernization and westernization theories of the causes of demographic transition,
e.g., western style education, modem health care, family planning, or the diffusion of
western attitudes and behavioral norms, are not necessary or sufficient causes of fertility
decline.
Instead, by using etic behavioral research methods and a cultural materialist theoretical
frame of reference, I have found common underlying material (or infrastructural) causes of
fertility behavior (and demographic transition) from the Pleistocene to the present. Dramatic
change in the material conditions of life occurred at two major punctuation points in cultural
evolution; changing modes of reproduction during the first and second demographic
transitions correlate with dramatic changes in modes of production. I have shown how
changing infrastructural conditions forced humans to adopt new survival strategies and
novel optimizing behaviors; this resulted in economic and technological innovation and
dramatic ecological and demographic adaptation.
Based on these observations, I have formulated an evolutionary demographic transition
theory to explain the underlying causes of fertility behavior and demographic transition.
Borrowing from the research traditions of behaviorism, cultural materialism, and
punctuated evolutionism, I have shown how fertility outcomes are selected for by
consequences in material reality, and change in patterned and predictable ways to

119
demo-techno-econo-environmental opportunities and constraints. I have argued that cultural
selection follows the same cost-benefit principles as biological selection and that fertility
behavior and cultural evolution are probabilistically determined by material conditions.
According to evolutionary demographic transition theory, fertility behavior is determined
by how individuals can best optimize their material well-being within limited and changing
material conditions.
I have found in my research that the most important causal factors in modem fertility
decline are: 1) economic conditions or employment opportunities that conflict with
childrearing: and, 2) women’s access to material resources independent of men and
children. New material conditions alter the costs and benefits of children to women. I have
provided evidence which shows that from prehistoric times to the present, in developing
and developed countries, fertility behavior is selected for on the basis of these material
costs and benefits.
Given sufficient infrastructural data, these cost/benefit factors can now be estimated in a
given material context at specific cultural evolutionary points of development. As a result,
the demographic effects of development programs can now be predicted and controlled
with increased accuracy. As knowledge of causation increases using cultural materialist
models of reproductive behavior, national and international agencies of development can be
held more accountable for the demographic effects of their policies. At current levels of
knowledge, there is no excuse for the designers of social and economic development
programs to either ignore the demographic impact of their development inputs or to treat
them as neutral. Indeed, because poor theory usually leads to ineffective policy, there is a
critical need today to re-evaluate the epistemological assumptions which underlie theories
about the causes of fertility behavior.

BIBLIOGRAPHY
AI-Sabah, S.M.
1984 Kuwait: Anatomy of a Crisis Economy. London: Eastlords.
Al-Shamoubi, Mohommed A
1989 Status of Women in Kuwait. In Women and Population Dynamics:
Perspectives from Asian Countries, K. Mahadevan, ed. Pp. 177-186.
New Dehli: Sage.
Angel, J. Lawrence
1975 Paleoecology, Paleodemography, and Health. In Population, Ecology, and
Social Evolution, Steven Polgar, ed. Pp. 167-190. The Hague: Mouton.
Aries, P.
1980 Two Successive Motivations for the Declining Birth Rate in the West.
Population and Development Review 6:645-650.
Barlow, Robin
1982 Case Studies in Demographic Impact of Asian Development Projects.
Ann Arbor, Michigan: The University of Michigan Center for Research on
Economic Development.
Barnett, Homer
1953 Innovation. New York: McGraw-Hill.
1961 The Innovative Process. Kroeber Anthropological Society Papers 25:1-25.
Beach, L.R., B.D. Townes, F.L. Campbell and G.W. Keating
1976 Developing and Testing a Decision Aid for Birth Planning Decisions.
Organizational Behavior and Human Performance 15:99-116.
Beaver, S.E.
1975 Demographic Transition Theory Reinterpreted. Lexington, Mass.:
Lexington Books.
Becker, Gary S.
1960 An Economic Analysis of Fertility. In Demographic and Economic Change in
Developed Countries. National Bureau Committee for Economic Research,
Conference Series 11. Pp. 209-31. Princeton: Princeton University Press.
1965 A Theory of the Allocation of Time. Economic Journal 75:493-517.
1981 A Treatise on the Family. Cambridge: Harvard University Press.
120

121
Becker, Gary S., and H. Gregg Lewis
1973 Interaction Between Quantity and Quality of Children. Journal of Political
Economy 81(2):279-299.
Benedict, Burton
1972 Controlling Population Growth in Mauritius. In Technology and Social
Change, Bernard, H. Russell, and Perth J. Pelto, eds. Pp.246-276.
New York: The Macmillan Company.
Ben-Porath, Y.
1974 Notes of the Micro-economics of Fertility. International Social Science
Journal 26:30-314.
1978 Family Functions and Structure and the Organization of Exchange. In
International Union for the Scientific Study of Population: Issues for the
1980s. Pp. 101-122. Selected Papers. Helsinki.
1980 The F-connection : Families, Friends, and Firms and the Organization of
Exchange. Population and Development Review 6:1-30.
Bernard, H. R., P.D. Killworth, D. Kronenfeld, and L. Sailer
1984 The Problem of Informant Accuracy: The Validity of Retrospective Data.
Annual Review of Anthropology 13:495-517.
Bielenstein, Hans
1947 The Census of China During the Period 2-742 A.D. Bulletin of the Museum of Far
Eastern Antiquities 19:125-165.
Bindary, A., C.B. Baxter, and T.H. Hollingsworth
1973 Urban-Rural Differences in the Relationship Between Women’s Employment and
Fertility: A Preliminary Study. Journal of Biosocial Science 5:159-167.
Birdsall, Nancy
1977 Analytical Approaches to the Relationship of Population Growth and Development.
Population and Development Review 3:63-102.
1983 Analytical Approaches to the Relationship of Population Growth and Development.
In The Struggle for Economic Development, Michael P. Todaro, ed. Pp. 136-152.
New York: Longman, Inc.
Birdsell, Joseph B.
1968 Some Predictions for the Pleistocene Based on Equilibrium Systems Among Recent
Hunter-Gatherers. In Man the Hunter, R. Lee and I. Devore, eds. Pp.229-249.
Chicago: Aldine.
Blake, Judith
1968 Are Babies Consumer Durables? Population Studies 22:5-25.

122
Bledsoe, Caroline
1980The Manipulation of Kpelle Social Fatherhood. Ethnology 19:29-45.
1990 The Politics of Children: Fosterage and the Social Management of Fertility Among
the Mende of Sierra Leone. In Births and Power: Social Change and the Politics of
Reproduction, W. Penn Handwerker, ed. Pp. 113-126. Boulder, Colorado:
Westview Press.
Bogue, Donald J.
1969 Principles of Demography. New York: Wiley.
Bongaarts, John
1978 A Framework for Analyzing the Proximate Determinants of Fertility.
Population and Development Review 4:105-132.
1980 Does Malnutrition Affect Fecundity? A Summary of Evidence. Science
208:564-569.
1981 The Impact on Fertility of Traditional Child-Spacing Practises. In
Child-Spacing in Tropical Africa: Traditions and Change, Hilary J. Page
and Ron Lesthaeghe, eds. Pp. 111-129. New York: Academic Press.
1982 The Fertility Inhibiting Effects of the Intermediate Fertility Variables.
Studies in Family Planning 13:179-189.
Bongaarts, John and Jane Menken
1983 The Supply of Children: A Critical Essay. In Determinant of Fertility in Developing
Countries, R. Bulatao and R. Lee, eds. Pp.27-60. New York: Academic Press.
Boserup, Ester
1965 The Conditions of Agricultural Growth. Chicago: Aldine Publishing Co.
1981 Population and Technological Change: A Study of Long Term Trends.
Chicago: University of Chicago.
1985 Economic and Demographic Interrelationships in Sub-Saharan Africa.
Population and Development Review 11:383-397.
Boulding, Kenneth E.
1966 Economic Analysis. 4th ed. Volume I: Microeconomics. New York: Harper and
Row.
1992 Punctuationism in Societal Evolution. In The Dynamics of Evolution: The
Punctuated Equilibrium Debate in the Natural and the Social Sciences, A. Somit and
S. A. Peterson, eds. Pp. 171-186. Ithaca: Cornell University Press.
Boulier, Bryan L.
1985 Family Planning Programs and Contraceptive Availability: Their Effects on
Contraceptive Use and Fertility. In The Effects of Family Planning on Fertility in
the Developing World, Nancy Birdsall, ed. World Bank Staff Working Paper
no.677; Population and Development Series. Washington, D.C: World Bank.

123
Bourgeois-Pichat, J.
1965 The General Development of the Population in France Since the Eighteenth
Century. In Population in History, D. Glass and D. Eversley, eds. Pp.474-506.
Great Britain: Alva.
Bowman, Larry W.
1991 Mauritius: Democracy and Development in the Indian Ocean. Boulder, Colorado:
Westview Press.
Braudel, Fernand
1979 The Wheels of Commerce. Vol. 2: Civilization and Capitalism 15th-18th Century.
New York: Harper and Row.
Brown, Lester R., and Jodi L. Jacobson
1986 Our Demographically Divided World. Worldwatch Paper 74. Washington, D.C.:
Worldwatch Institute.
Bulatao, Rudolfo A., and Ronald D. Lee, editors.
1983 Determinants of Fertility in Developing Countries. Volume 1. San Francisco:
Academic Press.
Butzer, Karl
1971 Environment and Archaeology: An Ecological Approach to Prehistory.
Chicago: Aldine.
Butzer, K., and L.G. Freeman, eds.
1976 Early Hydraulic Civilization in Egypt. Chicago: University of Chicago Press.
Cain, Mead
1977 The Economic Activities of Children in a Village in Bangladesh. Population and
Development Review 3:201-227.
1980 Risk, Fertility and Family Planning in a Bangladesh Village. Studies in Family
Planning 11:210-222.
1981 Risk and Insurance: Perspectives on Fertility and Agrarian Change in India and
Bangladesh. Population and Development Review 7:435-474.
1988 Patriarchal Structure and Demographic Change. Paper presented at the Conference
on Women’s Position and Demographic Change in the Course of Development.
Oslo, Norway, June 15-18.
Caldwell, John C.
1976 Toward a Restatement of the Demographic Transition Theory. Population and
Development Review 2:321-366.
1978 A Theory of Fertility: From High Plateau to Destabilization. Population and
Development Review 4:553 -577.
1980 Mass Education as a Determinant of the Timing of Fertility Decline.
Population and Development Review 6:225-255.

124
1981a The Mechanisms of Demographic Change in Historical Perspective.
Population Studies 35:5-27.
1981b Fertility in Africa. In Fertility Decline in the Less Developed Countries,
Nick Eberstadt, ed. Pp.97-118. New York: Praeger.
1982 Theory of Fertility Decline. San Francisco: Academic Press.
1983 Direct Economic Costs and Benefits of Children. In Determinants of Fertility in
Developing Countries, R.A. Bulatao and R.D. Lee, eds. Vol.l. Pp.458-493.
New York: Academic Press.
Caldwell, John C., and Pat Caldwell
1987a The Cultural Context of High Fertility in Sub-Saharan Africa. Population and
Development Review 13:409-437.
1987b The Limitation of Family Size in Ibadan City, Nigeria: An Explanation of its
Comparative Rarity Derived from In-Depth Interviews. Paper presented at the
conference on The True Determinants of Fertility: The Cultural Roots of African
Fertility Regimes. Ile-Ife, Nigeria: University of Ife.
1990 High Fertility in Sub-Saharan Africa. Scientific America 262(5): 118-125.
Cantrelle, P., B. Ferry, and J. Mondot
1978 Relationship Between Fertility and Mortality in Tropical Africa. In The Effect of
Infant and Child Mortality on Fertility, S.H. Preston, ed. Pp. 181-205. New York:
Academic Press.
Carmines, Edward G., and James A. Stimson
1989 Issue Evolution. Princeton: Princeton University Press.
Cameiro, Robert and Daisy F. Hilse
1966 On Determining the Probable Rate of Population Growth During the Neolithic.
American Anthropologist 68:177-181.
Chalamwong, Y.
1983 Development of Cottage Industries, Women’s Labour Force Participation and
Fertility in Rural Thailand. In Population and Development Interactions in Thailand,
S. Prasith-rathsint, ed. Pp.45-67. Bangkok: Prabpim.
Chamov, Eric
1976 Optimal Foraging: The Marginal Value Theorum. Theoretical Population Biology
9:129-136.
Chen, L.C., B. Huq and S. D’Souza
1981 Sex Bias in the Family Allocation of Food and Health Care in Rural Bangladesh.
Population and Development Review 7:55-70.

125
Chowdhury, Allauddin, A.K.M., and Lincoln C. Chen
1977 The Interaction of Nutrition, Infection, and Mortality During the Recent Food Crisis
in Bangladesh. Food Institute Research Studies 16:47-61.
Clapham, J.H.
1936 Economic Development of France and Germany 1815-1914. 4th ed.
Cambridge: Cambridge University Press.
Clark, C.
1967 Population Growth and Land Use. New York: St. Martin’s Press.
Cleland, John, and German Rodriquez
1987 The Effect of Parental Education on Marital Fertility in Developing Countries.
Fertility Determinants Research Notes, November No. 19. New York: The
Population Council.
Clough, Shephard B.
1939 France: A History of National Economics, 1789-1939. New York: Scribner’s and
Sons.
Coale, Ansley J., Barbara A. Anderson and Ema Harm
1979 Human Fertility in Russia Since the Nineteenth Century. Princeton: Princeton
University Press.
Coale, Ansley J., and Susan Cotts Watkins, eds.
1986 The European Fertility Transition: The Revised Proceedings of a Conference on the
Princeton Fertility Project. Princeton, New Jersey: Princeton University Press.
Coale, Ansley J., and Roy Treadway
1986 A Summary of the Changing Distribution of Overall Fertility, Marital Fertility, and
the Proportion Married in the Provinces of Europe. In The European Fertility
Transition: The Revised Proceedings of a Conference on the Princeton Fertility
Project, Ansley Coale and Susan Watkins, eds. Pp.31-181. Princeton, New
Jersey: Princeton University Press.
Cochrane, Susan H.
1983 The Effects of Education and Urbanization on Fertility. In Determinants of Fertility
in Developing Countries, R.A. Bulatao and R.D. Lee, eds. Vol. 2. Pp.587-626.
New York: Academic Press.
Cohen, Mark N.
1977 Food Crisis in Prehistory. New Haven, Conn.: Yale University Press.
Collver, A., and E. Langlois
1962 The Female Labor Force in Metropolitan Areas: An International Comparison.
Economic Development and Cultural Change 10:367-385.
Committee on Population
1986 Population Growth and Economic Development: Policy Questions. Washington,
D.C.: National Academy Press.

126
Country Reports 1985
1986 Country Reports on Human Rights Practices for 1985. Washington, D.C.: U.S.
Government Printing Office.
Crosbie, Paul V.
1986 Rationality and Models of Reproductive Decision-Making. In Culture and
Reproduction: An Anthropological Critique of Demographic Transition Theory,
W. Penn Handwerker, ed. Pp.30-58. Boulder, Colorado: Westview Press.
Darwin, Charles
1859 The Origin of Species. Reprinted in 1966. Cambridge, MA: Harvard University
Press.
Davidson, A.R., and J.J. Jaccard
1975 Population Psychology: A Look at an Old Problem. Journal of Personality and
Social Psychology 31:1073-1082.
1979 Variables that Moderate the Attitude-Behavior Relation: Results of a Longitudinal
Study. Journal of Personality and Social Psychology 37:1364-1376.
Davis, Kingsley
1951 The Population of India and Pakistan. Princeton: Princeton University Press.
1963 The Theory of Change and Response in Modem Demographic History.
Population Index 29:345-366.
Davis, Kingsley, and Judith Blake
1956 Social Structure and Fertility: An Analytic Framework. Economic Development and
Cultural Change 4:211 -235.
Deevey, E.
1960 The Human Population. Scientific America 3:195-204.
Demeny, Paul
1986 The World Demographic Situation. In World Population and U.S. Policy: The
Choices Ahead, Jane Menken, ed. Pp.27-66. New York: W.W. Norton.
DeTray, D.N.
1973 Child Quality and the Demand for Children. In Economics of the Family: Marriage,
Children, and Human Capital, T.W. Schultz, ed. Pp.81-90. Chicago: University
of Chicago Press.
Donaldson, Loraine
1991 Fertility Transition: The Social Dynamics of Population Change. Great Britain:
Basil Blackwell.
Dumond, Don E.
1975 The Limitation of Human Population: A Natural History. Science 187:713-721.

127
Easterlin, Richard A.
1976a Population Change and Farm Settlement in the Northern United States. Journal of
Economic History 1:45-75.
1976b Factors in the Decline of Farm Family Fertility in the United States: Some
Preliminary Results. Journal of American History 63:600-615.
1976c The Conflict Between Aspirations and Resources. Population and Development
Review 2:417-425.
1975 An Economic Framework for Fertility Analysis. Studies in Family Planning
6:54-63.
1969 Towards a Socioeconomic Theory of Fertility: A Survey of Recent Research on
Economic Factors in American Fertility. In Fertility and Family Planning: A World
View, S.J. Behrman, L. Corsa and R. Freedman, eds. Pp. 127-156. Ann Arbor:
University of Michigan Press.
Easterlin, Richard A., and Eileen M. Crimmins
1985 The Fertility Revolution: A Supply-Demand Analysis. Chicago: University of
Chicago Press.
Easterlin, Richard A., R.A. Pollack, and M.L. Wachter
1980 Toward a More General Economic Model of Fertility Determination: Endogenous
Preferences and Natural Fertility. In Population and Economic Change in
Developing Countries, R.A. Easterlin, ed. Pp.81-149. Chicago: University of
Chicago Press.
Ehrlich, Paul
1968 The Population Bomb. New York: Balantine Press.
Eldredge, Niles
1992 Punctuated Equilibria, Rates of Change, Large-Scale Entities. In The Dynamics of
Evolution: The Punctuated Equilibrium Debate in the Natural and the Social
Sciences, A. Somit and S.A. Peterson, eds. Pp. 103-120. Ithaca: Cornell
University Press.
Eldredge, Niles and Stephen Jay Gould
1972 Punctuated Equilibria: An Alternative to Phylogenetic Gradualism. In Models of
Paleobiology, T.J.M. Schopf, ed. Pp.82-115. San Francisco: Freeman, Cooper.
Epstein,T.S.
1977 From ’’Accomodation” to ’’Intervention”: Socioeconomic Heterogeneity and
Demographic Patterns. In The Feasibility of Fertility Planning: Micro Perspectives,
T.S. Epstein and D. Jackson, eds. Pp.219-236. Oxford: Pergamon Press.
Evenson, R.E.
1984 Population Growth, Infrastructural Development, Technology and Welfare in North
India. Paper prepared for the IUSSP Seminar on Population and Rural
Development. New Delhi, India.

128
Fapohunda, Eleanor R. and Michael P. Todaro
1988 Family Structure, Implicit Contracts and the Demand for Children in Southern
Nigeria. Population and Development Review 14:571-594.
Faroog, Ghazi M., and Deborah S. DeGraff
1988 Fertility and Development: An Introduction to Theory, Empirical Research and
Policy Issues. Background Papers for Training in Population, Human Resources
and Development Planning. Geneva: International Labor Office.
Fawcett, James T.
1972 The Satisfaction and Costs of Children: Theories, Concepts, and Methods,
J. T. Fawcett, ed. Honolulu: East-West Institute.
1973 Psychological Perspectives on Population. J. T. Fawcett, ed. New York: Basic
Books.
1983 Perceptions of the Value of Children: Satisfaction and Costs. In Determinants of
Fertility in Developing Countries, R. Bulatao and R. Lee, eds. Vol. 1. Pp.429-
457. New York: Academic Press.
Fawcett, James T. and F. Arnold
1973 The Value of Children: Theory and Method. Representative Research in Social
Psychology 4:23-35.
Fishbein, M., J.J. Jaccard, A.R. Davidson, I. Ajzen, and B. Loken
1980 Predicting and Understanding Family Planning Behaviors. In Understanding
Attitudes and Predicting Social Behavior, I. Ajzen and M. Fishbein, eds.
Pp. 130-47. Englewood Cliffs, N.J.: Prentice Hall.
Flynn, M.
1982 The European Demographic System: 1500-1820. Baltimore, Maryland: The Johns
Hopkins University Press.
Freeman, Ronald
1961-1962 The Sociology of Human Fertility. Current Sociology 10-11:35-121.
Frisch, R. E.
1975 Demographic Implications of the Biological Determinants of Female Fecundity.
Social Biology 22:17-22.
1978 Population, Food Intake and Fertility. Science 199:22-30.
Frisch, R. and J. W. MacArthur
1974 Menstrual Cycles: Fatness as a Determinant of Minimum Height for Weight
Necessary for their Maintenance or Onset. Science 185:949-951.
Frisch, R., J. Canick, and D. Tulchinsky
1980 Human Fatty Marrow Aromatizes Androgen and Estrogen. Journal of Clinical
Endocrinology and Metabolism 51:394-396.

129
Giorgis, Belkis Wolde
1988 The Status of Women and Population Policy in Africa. In African Population
Conference, Dakar 1988. Liege,Belgium: International Union for Scientific Study
of Population (IUSSP).
Gould, Stephen Jay, and Niles Eldredge
1977 Punctuated Equilibria: The Tempo and Mode of Evolution Reconsidered.
Paleobiology 3:115-151.
GOZ-Govemment of Zimbabwe
1985 First Five-Year National Plan, 1986-1990. Volume 1. Ministry of Finance,
Economic Planning and Development. Harare: Government Printer.
Greenhalgh, Susan
1982 Prosperity and Famine in Modem Bengal- The Famine of 1943-44.
New York: Oxford
1985 Sexual Stratification: The Other Side of Growth With Equity in East Asia.
Population and Development Review 11:265-293.
Graff, Harvey J.
1979 Literacy, Education, and Fertility, Past and Present: A Critical Review.
Population and Development Review 5:105-140.
Goldstein, S.
1972 The Influence of Labor Force Participation and Education on Fertility in Thailand.
Population Studies 26:419-436.
Gueye, Mouhamadou, and Etienne van de Walle
1988 Some Joint Determinants of Fertility and Infant and Child Mortality in Sub-Saharan
Africa. In African Population Conference, Dakar 1988. Pp. 101-119. Liege,
Belgium: International Union for the Scientific Study of Population.
Gupta, Monica Das
1978 Production Relations and Population: Rampur. Journal of Development Studies
14(4): 177-185.
Haines, Michael R.
1989 Social Differentials During Fertility Decline: England and Wales Revisited.
Population Studies 43:305-323.
Handwerker, W. Penn
1983 The First Demographic Transition: An Analysis of Subsistence Choices and
Reproductive Consequences. American Anthropologist 85:5-27.
1986a The Modem Demographic Transition: An Analysis of Subsistence Choice and
Reproductive Consequences. American Anthropologist 88:400-417.
1986b Culture and Reproduction: An Anthropological Critique of Demographic Transition
Theory. W. Penn Handwerker, ed. Boulder, Colorado: Westview Press.

130
1987 Fiscal Corruption and the Moral Economy of Resource Acquisition. Research in
Economic Anthropology 9:307-353.
1989 Women’s Power and Social Revolution: Fertility Transition in the West Indies. In
Frontiers of Anthropology Series, Vol.2. Newbury Park, California: Sage.
1990 Women’s Power and Fertility Transition in Africa and the West Indies. Paper
Prepared for the 1990 Meeting of the American Association for the Advancement of
Science, New Orleans.
Harpending, Henry, and LuAnn Wandsnider
1981 Population Structures of Ghanzi and Ngamiland !Kung. In Current Developments
in Anthropological Genetics, M. Crawford and J. Mielke, eds. Pp.29-50.
New York: Plenum Press.
Harris, Marvin
1964 The Nature of Cultural Things. New York: Random House.
1977 Cannibals and Kings: The Origins of Cultures. New York: Randon House.
1979 Cultural Materialism: The Struggle fora Science of Culture. New York: Random
House.
1981 America Now: The Anthropology of a Changing Culture. New York: Simon and
Schuster.
1988 Culture, People, Nature: An Introduction to General Anthropology. New York:
Harper and Row.
Harris, Marvin, and Eric Ross
1987 Death, Sex and Fertility. New York: Columbia University Press.
Hassan, Ferki
1978 Demographic Archaeology. In Advances in Archaeological Method and Theory,
Michael Schiffer, ed. Pp.49-103. New York: Academic Press.
Hawthorn, Geoffrey
1970 The Sociology of Fertility. London: Collier-Macmillan.
Hayami, Y., and V.W. Ruttan
1985 Agricultural Development: An International Perspective. Baltimore, Maryland:
The Johns Hopkins University Press.
Hayden, Brian
1981a Subsistance and Ecological Adaptations of Modem Huntei/Gatherers. In
Omnivorous Primates: Gathering and Hunting in Human Evolution, Robert S.O.
Harding and Geza Teleki, eds. New York: Columbia University Press.
1981b Research and Development in the Stone Age: Technological Transitions Among
Hunter-Gatherers. Current Anthropology 22:519-548.

131
1986 Resources, Rivalry, and Reproduction: The Influence of Basic Resource
Characteristics on Reproductive Behavior. In Culture and Reproduction: An
Anthropological Critique of Demographic Transition Theory, W. Penn
Handwerker, ed. Pp. 176-195. Boulder, Colorado: Westview Press.
Headland, Thomas N., Kenneth L. Pike and Marvin Harris, editors.
1990 Ernies and Etics: The Insidei/Outsider Debate. Newbury Park, Calif.: Sage.
Henry, Louis
1961 Some Data on Natural Fertility. Eugenics Quarterly 8:81-91.
1965 The Population of France in the Eighteenth Century. In Population in History,
D. Glass and D. Eversley, eds. Pp.434-456. Great Britain: Alva.
Hess, Peter N.
1988 Population Growth and Socioeconomic Progress in Less Developed Countries:
Determinants of Fertility Transition. New York: Praeger.
Ho, T.
1979 Measuring Time Costs of Rearing Children in the Philippines. Population and
Development Review 5:643-662.
Hogarth, Robin M. and Melvin W. Reder, eds.
1987 Rational Choice: The Contrast between Economics and Psychology. Chicago:
University of Chicago Press.
Howell, Nancy
1979 Demography of the Dube !Kung. New York: Academic Press.
Iverson, Shepherd
1990 The Demographic Transition in Zimbabwe. Master’s thesis, University of Florida.
Jaffe, A.J., and K. Azumi
1960 The Birth Rate and Cottage Industries in Underdeveloped Countries. Economic
Development and Cultural Change 9:52-63.
Johnson, Allen and Timothy Earle
1987 The Evolution of Human Societies From Foraging Groups to Agrarian States.
Palo Alto, California: Stanford University Press.
Jones, F. Lancaster
1963 A Demographic Survey of the Aboriginal Population of the Northern Territory,
with Special Reference to Bathurst Island Mission, Occasional Papers in Aboriginal
Studies. Social Anthropology Series, no. 1. Canberra: Australian Institute of
Aboriginal Studies.
Kasarda, J.D.
1971 Economic Structure and Fertility: A Comparative Analysis. Demography 8:307-
317.

132
Kazembe, Joyce L.
1987 The Women Issue. In Zimbabwe: The Political Economy of Transition, 1980-1986.
Ibbo Mandaza, ed. Pp.377-404. Codsria Book Series. Harare, Zimbabwe: Jongwe
Press.
Kelly, Allen, Jeffrey Williamson, and Russell Cheetham
1972 Dualistic Economic Development, Theory, and History. Chicago: University of
Chicago Press.
Khouja, M.W. and P.G. Stadler
1979 The Economy of Kuwait: Development and Role in International Finance.
London: Macmillan.
Knodel, John E.
1974 The Decline of Fertility in Germany, 1871-1939. Princeton N.J.: Princeton
University Press.
Knodel, John, and Etienne van de Walle
1979 Lessons From the Past: Policy Implications of Historical Fertility Studies.
Population and Development Review 5:217-246.
Kuhn, Thomas
1970 The Structure of Scientific Revolutions. 2nd edition. Chicago: University of
Chicago Press.
Kuznets, S.
1966 Modem Economic Growth: Rate, Structure and Spread. New Haven: Yale
University Press.
Lee, Richard B.
1968 What Do Hunter-Gatherers Do for a Living, or How to Make Out on Scarce
Resources. In Man the Hunter, R. Lee and I. Devore, eds. Pp.30-43. Chicago:
Aldine.
Leet, Don R.
1976 The Determinants of Fertility Transition in Antebellum Ohio. Journal of Economic
History 27:359-378.
Leibenstein, Harvey
1974 An Interpretation of the Economic Theory of Fertility: Promising Path or Blind
Alley? Journal of Economic Literature 12:457-479.
1977 Beyond Economic Man: Economics, Politics, and the Population Problem.
Population and Development Review 3:183-199.
1981 Economic Decision Theory and Human Fertility Behavior: A Speculative Theory.
Population and Development Review 7:381-400.
Lett, James
1987 The Human Enterprise: A Critical Introduction to Anthropological Theory. Boulder,
Colorado: Westview Press.

133
LFS-Labour Force Survey
1989 Main Results of the Labour Force Survey, 1986-1987. Flarare, Zimbabwe: Central
Statistics Office.
Levine, Robert A.
1984 Maternal Behavior and Child Development in High-Fertility Populations. Fertility
Determinants, Research Notes, September. New York: The Population Council.
Malthus, Thomas R.
1967 [1817] An Essay on the Principle of Population. New York: Dutton.
Mamdani, Mahmood
1973 The Myth of Population Control: Family Caste, and Class in an Indian Village.
New York: Monthly Review Press.
Mansfield, Peter
1990 Kuwait: Vanguard of the Gulf. London: Hutchinson.
Marshall, Susan E.
1984 Politics and Female Status in North Africa: A Reconsideration of Development
Theory. Economic Development and Cultural Change 32:499-524.
Martin, Paul
1984 Prehistoric Overkill: The Global Model. In Quaternary Extinctions: A Prehistoric
Revolution, Paul S. Martin and R. Klein, eds. Pp.354-403. Tucson: University of
Arizona Press.
Marx, Karl
1970 [1859] A Contribution of the Critique of Political-Economy. New York:
International Publishers.
Mauldin, W. Parker, and Bernard Berelson
1978 Conditions of Fertility in Developing Countries 1965-1975. Studies in Family
Planning 9:89-147.
Mayr, Ernst
1992 Speciational Evolution or Punctuated Equilibria. In The Dynamics of Evolution:
The Punctuated Equilibrium Debate in the Natural and Social Sciences, A. Somit
and S.A. Peterson, eds. Pp.21-53. Ithaca: Cornell University Press.
Mazur, Robert E. and Marvellous Mhloyi
1988 Underdevelopment, Women’s Work and Fertility in Zimbabwe. Working Paper
no. 164. Women in International Development. Michigan State University.
McGreevey, William Paul
1985 Economic Aspects of Historical Demographic Change. World Bank Staff
Working Paper no.685. Washington D.C.: World Bank.

134
McNicoll, Geoffrey
1980 Institutional Determinants of Fertility Change. Population and Development Review
6:441-462.
Meade, J.E.
1961 The Economic and Social Structure of Mauritius. London: Methuen.
Meadows, D.H., D.L. Meadows, J. Randers, and W.W. Behrens III
1972 The Limits to Growth. New York: Universe Books.
Mencken, J., J. Trussell, and S. Watkins
1981 The Nutrition-Fertility Link: An Evaluation of the Evidence. Journal of
Interdisciplinary History 11:425-441.
Mhloyi, Marvellous M.
1986 Fertility Determinants and Differentials: The Cases of Kenya and Lesotho.
Zambezia 13 (2):81-107.
Miller, Barbara D.
1981 The Endangered Sex: Neglect of Female Children in Rural North India. Ithaca,
N.Y: Cornell University Press
Mincer, J.
1963 Market Prices, Opportunity Costs, and Income Effects. In Measurement in
Economics: Studies in Mathematical Economics and Econometrics. Pp.67-82.
Palo Alto, Calif.: Stanford University Press.
Mosk, Carl
1983 Patriarchy and Fertility: Japan and Sweden, 1880-1960. New York: Academic
Press.
Mueller, Eva
1976 The Economic Value of Children in Peasant Society. In Population and
Development: The Search for Selective Interventions, R.G. Ridker, ed. Pp.98-153.
Baltimore, Maryland: The Johns Hopkins University Press.
1982 The Allocation of Women’s Time and its Relation to Fertility. In Women’s Roles
and Population Trends in the Third World, R. Anker, M. Buvinic, and N.H.
Youssef, eds. Pp.55-8. London: Croom Helm.
Nag, Moni
1980 How Modernization Can Also Increase Fertility. Current Anthropology 2:561-587.
Nag, Moni, and Neeraj Kak
1984 Demographic Transition in a Punjab Village. Population and Development Review
10: 661-678.
Nag, M., B. White, and R.C. Peet
1978 An Anthropological Approach to the Study of the Economic Value of Children in
Java and Nepal. Current Anthropology 419:293-306.

135
Nerlove, M.
1974 Household and Economy: Toward a New Theory of Population and Economic
Growth. Journal of Political Economy 82(2):200-218.
Newell, William Henry
1977 Population Change and Agricultural Development in Nineteenth Century France.
New York: Amo Press.
Notestein, Frank
1945 Population: The Long View. In Food For The World, Theodore Schultz, ed.
Chicago: Chicago University Press. Pp.39-41.
Nugent, Jeffrey B.
1985 The Old-Age Security Motive for Fertility. Population and Development Review
11:75-97.
Nyrop, Richard F., ed.
1985 Persian Gulf States: Country Studies. Washington: United States Government.
Oberai, A.S.
1992 Assessing the Demographic Impact of Development Projects: Conceptual,
Methodological and Policy Issues. London: Routledge.
Oppong, Christine
1982 Family Structure and Women’s Reproductive and Productive Roles: Some
Conceptual and Methodological Issues. In Women’s Roles and Population
Trends in the Third World, R. Anker, M. Buvinic, and N.H. Youssef, eds.
Pp. 133-150. London: Croom Helm.
1988 The Effects of Women’s Position on Fertility, Family Organization and the Labour
Market: Some Crisis Issues. Paper presented at the Conference on Women’s
Position and Demographic Change in the Course of Development. Oslo, Norway,
June 15-18.
Omstein, R. and P. Ehrlich
1989 New World/New Mind. New York: Doubleday.
Pedersen, Jon
1985 The Social Construction of Fertility: Population Processes on a Plantation in the
Seychelles. Oslo: Department of Social Anthropology.
Petersen, William
1975 Population. Third Edition. New York: Macmillan.
PFD--Population Factors and Development
1985 Population Factors and Development. Harare, Zimbabwe: Central Statistics Office.
Pinelli, A.
1971 Female Labor and Fertility in Relationship to Contrasting Social and Economic
Conditions. Human Relations 24:603-610.

136
Polgar, Steven
1964 Evolution and the Ills of Mankind. In Horizons of Anthropology. Sol Tax, ed.
Pp.200-211. Chicago: Aldine.
1972 Population History and Population Policies from an Anthropological Perspective.
Current Anthropology 13:203-211.
Population Census
1982 Main Demographic Features of the Population of Zimbabwe: An Advance Report
Based on a Ten Percent Sample. Published in 1985. Harare: Central Statistics
Office.
QDS-Quarterly Digest of Statistics
1989 Quarterly Digest of Statistics. Harare, Zimbabwe: Central Statistics Office.
Ra, Chong Phil
1988 An Ontogeny of Political Behavior: A Punctuated Equilibrium Model of Political
Socialization. Ph.D. dissertation, University of Hawaii.
Reeves, Minou
1989 Female Warriors of Allah: Women and the Islamic Revolution. New York: E.P.
Dutton.
Robinson, Warren C., and Sarah F. Harbison
1980 Toward a Unified Theory of Fertility. In Demographic Behavior: Theory of
Fertility, T.K. Burch, ed. Pp.201-235. Boulder, Colorado: Westview Press.
Rosen, B.C., and A.B. Simmons
1971 Industrialization, Family, and Fertility: A Structural-Psychological Analysis of the
Brazilian Case. Demography 8:49- 69.
Rosenzweig, M.R.
1978 The Value of Children’s Time, Family Size and Non-Household Child Activities in
a Developing Country: Evidence from Household Data. In Research in Population
Economics, J.L. Simon, ed. Vol. 1. Pp.331-347. Greenwich, Conn.: JAI Press.
Ruse, Michael
1992 Is the Theory of Punctuated Equilibria a New Paradigm?. In The Dynamics of
Evolution: The Punctuated Equilibrium Debate in the Natural and Social Sciences,
A. Somit, and S.A. Peterson, eds. Pp. 139-158. Ithaca: Cornell University
Sahlins, Marshall
1972 Stone Age Economics. Chicago: Aldine.
Sapsted, David
1980 Modem Kuwait. London: Macmillan.
Sather, Zeba, Nigel Crook, Christine Callum, and Shahnaz Kazi
1988 Women’s Status and Fertility Change in Pakistan. Population and Development
Review 4:415-432.

137
Scheper-Hughes, Nancy
1984 Infant Mortality and Infant Care: Cultural and Economic Constraints on Nurturing
in Northeast Brazil. Social Science and Medicine 19:535-546.
Schultz, T.W.
1974 The High Value of Human Time. Journal of Political Economy 82:2-10.
Schuler, Sidney Ruth, and Melvyn C. Goldstein
1986 Family Planning from the User’s and Nonuser’s Perspective: Reproductive
Decision-Making in Napal. Studies in Family Planning 17(2):66-77.
Scott, Christopher S.O., and V.C. Chidambaram
1985 World Fertility Survey: Origins and Achievements. In Reproductive Change in
Developing Countries: Insights from the World Fertility Survey, John Cleland and
John Hobcraft, eds. Pp.22-55. New York: Oxford University Press.
Scrimshaw, Susan
1978 Infant Mortality and Behavior in the Regulation of Family Size. Population and
Development Review 4:383-404.
1983 Infanticide As Deliberate Fertility Regulation. In Determinants of Fertility in
Developing Countries: Supply and Demand for Children, R. Bulatao and R. Lee,
eds. Vol.2. Pp.841-867. New York: Academic Press.
Schultz, T. Paul
1973 Explanation of Birth Rate Changes Over Space and Time: A Study of Taiwan.
Journal of Political Economy 81:238-274.
Segraves, D. B.
1977 The Malthusian Proposition and Nutritional Stress: Differing Implications for Man
and Society. In Malnutrition, Behavior, and Social Organization, L.S. Greene, ed.
Pp. 173-218. New York: Academic Press.
Shorter, Edward
1975 The Making of the Modem Family. New York: Basic Books.
Simmons, George B.
1985 Theories of Fertility. In Fertility in Developing Countries: An Economic Perspective
on Research and Policy Issues. G.M. Farooq and G.B. Simmons, eds. Pp.20-55.
New York: St. Martin’s Press.
Simon, H.J.
1980 The Behavioral and Social Sciences. Science 209:72-78.
Simon, Julian L.
1977 The Economics of Population Growth. Princeton, N.J.: Princeton University
Press.
1981 The Ultimate Resource. Princeton, N.J.: Princeton University Press.

138
Simpson, G.G.
1944 Tempo and Mode in Evolution. New York: Columbia University Press.
Skinner, B.F.
1947 Experimental Psychology. In Current Trends in Psychology, W. Dennis, ed.
Pp. 16-49. Pittsburgh: University of Pittsburgh Press.
1953 Science and Human Behavior. New York: Free Press.
1963 Behaviorism at Fifty. Science 140:951-958.
1981 Selection By Consequences. Science 213:501-504.
1984 Selection By Consequences. Behavioral and Brain Sciences 7:477-510.
Skocpol, Theda
1979 States and Social Revolutions. Cambridge: Cambridge University Press.
Smith, E.A.
1983 Anthropological Applications of Optimal Foraging Theory: A Critical Review.
Current Anthropology 24:625-651.
Somit, Albert, and Steven A. Peterson
1992 The View from the Elephant. In The Dynamics of Evolution: The Punctuated
Equilibrium Debate in the Natural and Social Sciences, A. Somit and S.A.
Peterson, eds. Pp.1-18. Ithaca: Cornell University Press.
Standing, Guy
1978 Labour Force Participation and Development. Geneva: International Labour
Organization.
1983 Women’s Work Activity and Fertility. In Determinants of Fertility in Developing
Countries, R. Bulatao and R. Lee, eds. Vol. 1. Pp.517-546. New York: Academic
Press.
Stolnitz, George
1964 The Demographic Transition from High to Low Birth Rates and Death Rates. In
Population: The Vital Revolution, R. Freedman, ed. Pp. 101-143. New York:
Doubleday.
Sussman, Robert
1972 Child Transport, Family Size, and Increases in Population During the Neolithic.
Current Anthropology 13:258-259.
Tabah, Leon
1980 World Population Trends, a Stocktaking. Population and Development Review
6:355-390.

139
Tan, Jee Peng, and Michael Haines
1984 Schooling and Demand for Children: Historical Perspectives. World Bank Staff
Working Paper no.697. Washington D.C.: World Bank.
Teitelbaum, Michael
1975 Relevance of Demographic Transition Theory for Developing Countries. Science
188:420-425.
Tien, H.Y.
1967 Mobility, Non-Familial Activity and Fertility. Demography 4:21-227.
TIPPS Project
1988 CIMAS Business Analysis: Summary of Results. Commercial and Industrial
Medical Aid Society Of Zimbabwe, Technical Information on Population for the
Private Sector (TIPPS). Columbia, Maryland: John Short and Associates, Inc.
Titmuss, R.M., and B. Abel Smith
1961 Social Policies and Population Growth in Mauritius. London: Methuen.
Townes, B.D., L.R. Beach, F.L. Campbell, R.L. Wood
1980 Family Building: A Social Psychological Study of Fertility Decisions. Population
and Environment 3:210-220.
Trussel, James
1978 Menarche and Fatness: Re-examination of the Critical Body Composition
Hypothesis. Science 200:1506-1509.
Truswell, A.S. and J.D.L. Hanson
1976 Medical Research Among the !Kung. In Kalahari Hunter-Gatherers, R. Lee and
I. Devore, eds. Pp. 166-195. Cambridge, Mass.: Harvard University Press.
UNFPA--United Nations Family Planning Association
1988 Investing in Women: The Focus for the Nineties. Annual Report by the Executive
Director of the United Nations Population Fund. Pp. 7-71. New York: UNFPA.
United States
1984 U.S. Policy Statement for the International Conference on Population. Population
and Development Review 10:574-579.
Van de Walle, Etienne
1974 The Female Population of France in the Nineteenth Century: A Reconstruction of
82 Departments. Princeton, N.J.: Princeton University Press.
Van de Walle, Francine
1986 Infant Mortality and the European Demographic Transition. In The Decline of
Fertility in Europe, A.J. Coale and S.C. Watkins, eds. Princeton: Princeton
University Press.
Vinovskis, Maris
1976 Socio-economic Determinants of Interstate Fertility Differentials in the United States
in 1850 and 1860. Journal of Interdisciplinary History 6:375-396.

140
Wallsten, T.S.
1980 Cognitive Processes in Choice and Decision Behavior. Hillsdale, N.J.: Lawrence
Erlbaum Associates.
Ware, Helen
1976 Motivations for the Use of Birth Control: Evidence from West Africa.
Demography 13(4)479-494.
1977 Women’s Work and Fertility in Africa. In The Fertility of Working Women: A
Synthesis of International Research, S. Kupinsky, ed. Pp. 1-34. New York:
Praeger.
Weber, Max
1958 The Capitalist Ethic and the Spirit of Capitalism. New York: Charles Scriber’s
Sons.
Weinrich, A.K.H.
1982 African Marriage in Zimbabwe: and the Impact of Christianity. Harare, Zimbabwe:
Mambo Press.
Weir, David
1982 Fertility Transition in Rural France: 1740-1829. Ph.D. dissertation, Stanford
University, Palo Alto, California.
Wheeler, David
1985 Female Education, Family Planning, Income and Population: A Long Run
Econometric Simulation Model. In The Effects of Family Planning on Fertility in
the Developing World, Nancy Birdsall, ed. World Bank Staff Working Paper
no.677. Population and Development Series. Washington, D.C: World Bank.
White, B.
1975 The Economic Importance of Children in a Javanese Village. In Population and
Social Organization, M. Nag, ed. Pp. 127-146. The Hague: Mouton.
White, Leslie
1949 The Science of Culture. New York: Grove Press.
1959 The Evolution of Culture. New York: McGraw-Hill.
Wilmsen, Edwin N.
1981 Exchange, Interaction, and Settlement in Northwestern Botswanna: Past and
Present Perspectives. In Proceedings of the Symposium on Settlement in
Botswana, R. Hitchcock and M. Smith, eds. Pp.98-109. London: Heineman.
1986 Biological Determinants of Fecundity and Fecundability: An Application of
Bongaart’s Model to Forager Fertility. In Culture and Reproduction: An
Anthropological Critique of Demographic Transition Theory, W. Penn
Handwerker, ed. Pp. 59-82. Boulder, Colorado: Westview Press.

141
Winston, H.V.E. and Freeth, Z.
1972 Prospect and Reality. New York: Rusak Crane.
Wittfogel, Karl
1957 Oriental Despotism. New Haven, Conn.: Yale University Press.
Wright, Gordon
1964 Rural Revolution in France: The Peasantry in the Twentieth Century. Palo Alto,
California: Stanford University Press.
Woods, Robert I.
1987 Approaches to the Fertility Transition in Victorian England. Population Studies
41 (2):283-311.
Woods, R.I., and C.W. Smith
1983 The Decline in Marital Fertility in the Late Nineteenth Century: The Case of England
and Wales. Population Studies 37(2):207-225.
World Bank
1989a World Tables, 1988-1989 edition. Baltimore, Maryland: The Johns Hopkins
University Press.
World Bank
1989b Mauritius: Managing Success. A World Bank Country Study. Washington, D.C.:
The World Bank.
Wrigley, E.A.
1969 Population and History. London: Cambridge University Press.
Zachariah, K.C. and My T. Vu
1989 World Population Projections, 1987-88 Edition: Short and Long-Term Estimates.
Published for the World Bank. Baltimore, Maryland: The Johns Hopkins
University Press.
Zarate, A.O.
1967 Differential Fertility in Monterray, Mexico: A Prelude to Transition? Milbank
Memorial Fund Quarterly 45:213-229.
ZDHS-Zimbabwe Demographic and Health Survey
1989 Zimbabwe Demographic and Health Survey, 1988: Preliminary Report. Institute for
Resource DevelopmentAVestinghouse. Harare, Zimbabwe: Department of Census
and Statistics.
ZNFPC-Zimbabwe National Family Planning Council
1985 Zimbabwe Reproductive Health Survey, 1984. Columbia, Maryland: John Short
and Associates, Inc.

BIOGRAPHICAL SKETCH
Shepherd Iverson graduated with a B.A. in history from Brown University in 1980.
He received his M.A. in cultural anthropology at the University of Florida in 1991. In 1990
he conducted field research in Zimbabwe, Africa.
142

I certify that I have read this study and that in my opinion it conforms to acceptable
standards of scholarly presentation and is fully adequate, in scope and quality, as a
dissertation for the degree of Doctor of Philosophy.
(WT
Bussell Bernard, Chair
Professor of Anthropology
I certify that I have read this study and that in my opinion it conforms to acceptable
standards of scholarly presentation and is fully adequate, in scope and quality, as a
dissertation for the degree of Doctor of Philosophy. /
Ronald Cohen
Professor of Anthropology
I certify that I have read this study and that in my opinion it conforms to acceptable
standards of scholarly presentation and is fully adequate, in scope and quality, as a
dissertation for the degree of Doctor of Philosophy.
Marvin Harris
Graduate Research Professor of
Anthropology
I certify that 1 have read this study and that in my opinion it conforms to acceptable
standards of scholarly presentation and is fully adequate, in scope and quality, as a
dissertation for the degree of Doctor of Philosophy. ' '
Abraham C. Goldman '
Assistant Professor of Geography
I certify that I have read this study and that in my opinion it conforms to acceptable
standards of scholarly presentation and is fully adequate, in scope and quality, as a
dissertation for the degree of Doctor of Philosophy.
assistant Professor of Psychology
This dissertation was submitted to the Graduate Faculty of the Department of
Anthropology in the College of Liberal Arts and Sciences and to the Graduate School and
was accepted as partial fulfillment of the requirements for the degree of Doctor of
Philosophy.
December 1992
Dean, Graduate School

UNIVERSITY OF FLORIDA
3 1262 08553 8626