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Contents Introduction

Recent researches using econometric models fitted to cross-country data show that demographic transition is fundamental to explaining economic growth for developing countries. A study by Mapa and Balisacan (2004) finds that the Philippines is paying a high price for its unchecked population growth. This paper studies the relationship between population dynamics and income growth in the Philippines using data from 74 provinces for the period 1985-2003. Simulation techniques were used to quantify the effect of population dynamics on the differences in income of the provinces. It also examines the robustness of the explanatory variables to determine “deep” determinants of income growth. The study shows that population variable is robustly related with growth and while it is not the sole culprit for the dismal growth performance over the years, it shows that the opportunities associated with the demographic transition are real and can provide the stimulus needed by the country.