How would population growth affect investment in the future? Asymmetric panel causality evidence for Africa

Simplice Asongu

MPRA Paper from University Library of Munich, Germany

Abstract: Our generation is experiencing the greatest demographic transition and Africa is at the center of it. There is mounting concern over rising unemployment and depleting per capita income accruing there-from. We look at the issue in this paper from a long run perspective by examining the nature of the relationship between population growth and a plethora of investment indicators: public, private, foreign and domestic investments. Using asymmetric panels on data spanning from 1977 to 2007, we investigate effects of population growth on investment from Granger causality models. Our findings reveal a long-run positive causal linkage from population growth to only public investment. But for domestic investment, permanent fluctuations in human capital affect changes in other forms of investments. Not unexpected, no significant short-run causal relationship is found. For economic implications, sampled countries should take family planning and birth control policies seriously. Though growth in population may appear not to have an impact on investment in the short spell, in the distant future, it strangles public finances. Therefore measures should be adopted such that, rising unemployment rate resulting from population growth be accommodated by private sector investments. Seemingly, structural adjustments policies implemented by sampled countries have not had the desired investment effects.

Keywords: Productivity; investment; human capital; asymmetric panel; causality; Africa (search for similar items in EconPapers)
JEL-codes: C33 J00 O10 O40 (search for similar items in EconPapers)
Date: 2011-02-14
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://mpra.ub.uni-muenchen.de/30124/2/MPRA_paper_30124.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/43863/2/MPRA_paper_43863.pdf revised version (application/pdf)

Related works:
Journal Article: How Would Population Growth Affect Investment in the Future? Asymmetric Panel Causality Evidence for Africa (2013)
Journal Article: How Would Population Growth Affect Investment in the Future? Asymmetric Panel Causality Evidence for Africa (2013)
Working Paper: How would population growth affect investment in the future? Asymmetric panel causality evidence for Africa (2011)
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