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How Would Population Growth Affect Investment in the Future? Asymmetric Panel Causality Evidence for Africa

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  • Simplice A. Asongu

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.

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Bibliographic Info

Article provided by African Development Bank in its journal African Development Review.

Volume (Year): 25 (2013)
Issue (Month): 1 (03)
Pages: 14-29

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Handle: RePEc:bla:afrdev:v:25:y:2013:i:1:p:14-29

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References

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Citations

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Cited by:
  1. Asongu, Simplice A., 2014. "A note on the long-run neutrality of monetary policy: new empirics," European Economic Letters, European Economics Letters Group, vol. 3(1), pages 1-6.
  2. Simplice A, Asongu, 2011. "Deforestation and welfare : evidence from Africa," MPRA Paper 35161, University Library of Munich, Germany.
  3. Simplice A, Asongu, 2011. "Long-term effects of population growth on aggregate investment dynamics: selected country evidence for Africa," MPRA Paper 30128, University Library of Munich, Germany.
  4. Asongu Simplice & Jingwa Brian, 2011. "Population Growth and Forest Sustainability in Africa," Working Papers 11/017, African Governance and Development Institute..
  5. Asongu Simplice, 2011. "New financial intermediary development indicators for developing countries," Working Papers 11/005, African Governance and Development Institute..
  6. Asongu, Simplice A, 2013. "Consult your gods: the questionable economics of development assistance in Africa," MPRA Paper 48475, University Library of Munich, Germany.
  7. Simplice A, Asongu, 2012. "Determinants of Health Professionals’ Migration in Africa," MPRA Paper 37632, University Library of Munich, Germany.
  8. Akpan, Uduak & Isihak, Salisu & Asongu, Simplice, 2014. "Determinants of Foreign Direct Investment in Fast-Growing Economies: A Study of BRICS and MINT," MPRA Paper 56810, University Library of Munich, Germany.
  9. Asongu, Simplice & Nguena, Christian, 2014. "Equitable and Sustainable Development of Foreign Land Acquisitions: what have we learnt on policy syndromes and implications?," MPRA Paper 56808, University Library of Munich, Germany.
  10. Asongu Simplice & Oasis Kodila-Tedika, 2013. "State fragility, rent seeking and lobbying: evidence from African data," Working Papers 13/019, African Governance and Development Institute..

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