The Impact of Strategically Allocated Family Planning Programs in Indonesia, 1986-94

and two anonymous referees. The authors are indebted to BPS and BKKBN for making community and program data available, and gratefully acknowledge financial support from research grants funded by NICHD and the Futures Group Policy Project. The usual disclaimer applies. Abstract In this paper, we investigate the effects of public family planning programs on fertility in Indonesia, controlling for economic growth and improvements in the status of women. A major stumbling block to measuring the impacts of family programs on fertility is that family planning programs are not randomly placed. Moreover, if, as in the case of Indonesia, the government allocates program inputs to areas of greatest need and updates the allocations based on performance, standard methods of controlling for this problem, such as fixed effects analysis, yield inconsistent estimates. We solve this problem by explicitly modeling the government's allocation process together with the impact analysis. Using these methods, we find that total BKKBN expenditures on contraceptive subsidies lowered fertility by about 3-6 percent. By contrast, a 50 percent improvement in the distribution network (including public health clinics and community-based distribution systems) lowered fertility by about 12 percent. However, these policies are expensive; BKKBN's contraceptive subsidies represent roughly 50% of their annual expenditures, while the costs of the distribution network are paid largely out of other ministerial budgets. Population control is often cited as a key element in a country's ability to maintain and improve its economic and social welfare. While fertility reductions have been associated with general economic development, many governments have established explicit policies designed to reduce population growth. These policies include aggressive family planning programs and efforts to improve general education and economic opportunities for women. The 1994 United Nations conference in Cairo highlighted the fact that strong publicly financed family planning programs are critical elements of most countries' population control policies. The conference report recommended that the world triple its spending on family planning programs by the year 2010. Population programs continue to be emphasized by both multilateral aid agencies such as the World Bank, the regional development banks and the UN, and bilateral aid agencies such as USAID. Yet debate still continues over the importance of family planning (FP) programs in contributing to fertility declines. The debate concerns several questions: when in the development process are FP programs most effective; which components of FP programs are most effective; and how effective are FP programs relative …