Maria Sophia Aguirre, Ph. D

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The Family and Economic Development:

Socioeconomic Relevance and Policy Design


Maria Sophia Aguirre, Ph.D.

Department of Business and Economics

The Catholic University of America

Doha Conference Preparatory Sessions

Geneva, Switzerland
August 23-25, 2004

The Family and Economic Development:

Socioeconomic Relevance and Policy Design

Maria Sophia Aguirre, Ph.D., Department of Business and Economics, The Catholic University of America

I. Introduction

Is the family relevant for economic development? Some would argue that the family is key for economic development because they see it as an obstacle to achieve “sustainable“ development. Marriage, the union of a man and a woman, generate children. They believe that the earth is limited. Therefore, the more we are, the poorer we will be.1 In addition, others within this group see the family as a hostile place for woman and children. Consequently, they contest, if poverty and abuse of women is to be eradicated, it has to be monitored and regulated by national and international laws as well as by institutions.2 Finally, other within this position see the family as a problem for development because they believe that large populations, by perpetuating poverty, threaten government stability in developing countries and in the world. This in turn causes instability within their countries as people fight to access scarce resources. It also, they believe, causes resentment towards developed countries because they are rich.3

Others argue that the family is key because it makes “sustainable” development possible. This is so, because healthy families are needed for the economy to fulfill its purpose.4 Growth of population does not equal poverty, they maintain, poorly structured families and societies as well as bad economic policies foster poverty.5 Finally, others consider that the family makes sustainable development possible precisely because of its connection with population. They believe that population control policies, by hampering human generation, undermine families and economic development, as it leads them towards an “aging population trap” as oppose to the “population trap” predicted by Malthus.6 How people perceive the connection between the family and economic development is critical, for it is by these perceptions that domestic and international economic and social policies are formulated and implemented. Thus, it is equally critical that people ensure their perceptions are grounded, not in rhetoric and emotions, but in established scientific and empirical data.

I would like to argue that the focus on family and population is not necessarily incorrect, but that both the population control policies used and the approach of some international organizations and countries to the family are mistaken. This is so because: 1) healthy families are essential for a country as they have a direct impact on human, moral, and social capital, and therefore, on resources use, economic activity, and economic structures; and 2) resources are used inefficiently when directed towards policies that weaken families instead of policies that strengthen them. This, in turn, hampers the sustainability of real economic growth and perpetuates poverty.7

In the second part of this paper, a basic framework of the role of the family in the economic activity is presented. This section is followed by the socioeconomic relevance of the family. Section four addresses some of the main economic living condition of families in developing countries. The policies most often proposed together with some of the policies that have proven helpful to the family in developed countries are examined in section five. This section is followed by a review of two useful initiatives introduced in developing countries as tools of strengthening poverty-striking families. The paper finishes with the conclusions.

II. How Does the Family Fit in the Economy and It Socioeconomic Implication

Elsewhere I have argued that when addressing the relationship between family and economics, it is important to consider the characteristics of the family and how the economy relates to these characteristics.8 One of the characteristics of the family is that it is the first form of society. A person normally comes into the world within a family, and it is within a family where the child first develops and matures as a human person. In addition, the members of the family are human beings and, therefore, they are in need of material things to survive and develop. It is this need to obtain and to consume goods and services that explains the reason for economics and the role that the family plays in it. In this sense then, we can say that the family is the first and most fundamental place where production and spending acquire their meaning. It follows that it is precisely in the ability to foresee both the needs of families and the optimal allocation of the inputs of production to satisfy those needs, which constitute an important characteristic of a well functioning economy.

Table 1, presents a sketch of how the economy operates and why a well functioning family is necessary for sustainable economic growth. The economy has three fundamental activities: production, exchange, and consumption (Table 1, Column 1). In order to produce, the economy needs to use resources. These resources or factors of production are labor, capital, land, and entrepreneurship.9 It also needs to optimize the use of these resources because, at any given point in time but not over time, the resources available are limited. Households or associations of households that take the form of corporations or some other type of institution provide these resources. In this process, human capital plays a key role as it affects not only the quality of the labor force, but the manner in which these resources are used to obtain the desired production to cover the basic needs.10

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