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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 corresponding rising unemployment and depleting per capita income. We examine the issues in this paper from a long-run perspective by assessing the relationships among population growth and a plethora of investment dynamics: public, private, foreign and domestic investments. Using asymmetric panels from 38 countries with data spanning from 1977 to 2007, 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 permanent changes in other forms of investments. Robustness checks on corresponding short-run Granger causality analysis and the long-run ‘physical capital led investment’ nexus are consistent with the predictions of economic theory. As a policy implication, population growth may strangle only public finances in the long-run. Hence, the need for measures that encourage family planning and create a conducive investment climate (and ease of doing business) for private and foreign investments. Seemingly, structural adjustments policies implemented by sampled countries may not have the desired investment effects in the distant future.

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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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  3. Asongu Simplice, 2012. "On the effect of foreign aid on corruption," Working Papers 12/031, African Governance and Development Institute..
  4. Asongu Simplice, 2012. "Reversed Economics and Inhumanity of Development Assistance in Africa," Working Papers 12/034, African Governance and Development Institute..
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Citations

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Cited by:
  1. Simplice A, Asongu & Oasis, Kodila-Tedika, 2013. "State fragility, rent seeking and lobbying: evidence from African data," MPRA Paper 44066, University Library of Munich, Germany.
  2. Simplice A, Asongu, 2012. "Determinants of Health Professionals’ Migration in Africa," MPRA Paper 37632, University Library of Munich, Germany.
  3. 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.
  4. Asongu Simplice, 2013. "Consult your gods: the questionable economics of development assistance in Africa," Working Papers 13/002, African Governance and Development Institute..
  5. Simplice A. Asongu & Brian A. Jingwa, 2012. "Population growth and forest sustainability in Africa," International Journal of Green Economics, Inderscience Enterprises Ltd, vol. 6(2), pages 145-166.
  6. Asongu Simplice, 2011. "Deforestation and Welfare: Evidence from Africa," Working Papers 11/022, African Governance and Development Institute..
  7. Akpan Uduak & Isihak Salisu & Asongu Simplice, 2014. "Determinants of Foreign Direct Investment in Fast-Growing Economies: A Study of BRICS and MINT," Working Papers 14/002, African Governance and Development Institute..
  8. Simplice A., Asongu, 2011. "New financial intermediary development indicators for developing countries," MPRA Paper 30921, University Library of Munich, Germany.
  9. Asongu Simplice, 2011. "Long-term effects of population growth on aggregate investment dynamics: selected country evidence for Africa," Working Papers 11/001, African Governance and Development Institute..

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