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Long-term effects of population growth on aggregate investment dynamics: selected country evidence for Africa

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  • Simplice A, Asongu

Abstract

The role of Africa in world demographic change is primary and consequences on future investment dynamics could provide some insight on how unemployment, economic migration and other issues resulting there-from could be addressed. Using Johansen and Granger-causality models on data from 1977 to 2007, we investigate long-term effects of population growth on investment. Our study reinforces the lack of consensus over the impact of demographic change on economic growth. Main findings are, in the long-run, population growth will: (1) decrease foreign and public investments in Ivory Coast; (2) increase public and private investments in Swaziland; (3) deplete public investment but augment domestic investment in Zambia; (4) diminish private investment and improve domestic investment in the Congo Republic and Sudan respectively. For policy implications, the positive linkage of population growth to investment growth in the long-term should be treated with extreme caution, unless investment measures are adopted to utilize accruing work force. Family planning and birth control policies could also be considered in countries with little future investment avenues.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 30128.

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Date of creation: 15 Jan 2011
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Handle: RePEc:pra:mprapa:30128

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Keywords: Productivity; investment; human capital; causality; Africa.;

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References

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  1. Ivar Kolstad & Espen Villanger, 2008. "Foreign Direct Investment in the Caribbean," Development Policy Review, Overseas Development Institute, vol. 26(1), pages 79-89, 01.
  2. Rosenzweig, Mark R, 1990. "Population Growth and Human Capital Investments: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages S38-70, October.
  3. Hondroyiannis, George & Papapetrou, Evangelia, 2005. "Fertility and output in Europe: new evidence from panel cointegration analysis," Journal of Policy Modeling, Elsevier, vol. 27(2), pages 143-156, March.
  4. Asongu Simplice, 2012. "Linkages between Investment Flows and Financial Development: Causality Evidence from Selected African Countries," Working Papers 12/029, African Governance and Development Institute..
  5. Engle, Robert F & Granger, Clive W J, 1987. "Co-integration and Error Correction: Representation, Estimation, and Testing," Econometrica, Econometric Society, vol. 55(2), pages 251-76, March.
  6. Asongu Simplice, 2011. "Government Quality Determinants of Stock Market Performance in African Countries," Working Papers 11/019, African Governance and Development Institute..
  7. Aude POMMERET & William T. SMITH, 2004. "Fertility, Volatility, and Growth," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 04.08, Université de Lausanne, Faculté des HEC, DEEP.
  8. Francis W. Ahking, 2001. "Book Review: Measuring Business Cycles in Economic Time Series," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 36(1), pages 304-306, January.
  9. 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.
  10. Gries, Thomas & Kraft, Manfred & Meierrieks, Daniel, 2009. "Linkages Between Financial Deepening, Trade Openness, and Economic Development: Causality Evidence from Sub-Saharan Africa," World Development, Elsevier, vol. 37(12), pages 1849-1860, December.
  11. Simplice A. Asongu, 2013. "How Would Population Growth Affect Investment in the Future? Asymmetric Panel Causality Evidence for Africa," African Development Review, African Development Bank, vol. 25(1), pages 14-29, 03.
  12. Hasan, Mohammad S., 2010. "The long-run relationship between population and per capita income growth in China," Journal of Policy Modeling, Elsevier, vol. 32(3), pages 355-372, May.
  13. Azomahou, Théophile & Mishra, Tapas, 2008. "Age dynamics and economic growth: Revisiting the nexus in a nonparametric setting," Economics Letters, Elsevier, vol. 99(1), pages 67-71, April.
  14. Reginaldo Pinto Nogueira, 2009. "Is monetary policy really neutral in the long-run? Evidence for some emerging and developed economies," Economics Bulletin, AccessEcon, vol. 29(3), pages 2432-2437.
  15. Simplice A, Asongu, 2012. "The impact of health worker migration on development dynamics: evidence of wealth-effects from Africa," MPRA Paper 38189, University Library of Munich, Germany.
  16. Venus Khim-Sen Liew, 2004. "Which Lag Length Selection Criteria Should We Employ?," Economics Bulletin, AccessEcon, vol. 3(33), pages 1-9.
  17. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
  18. Cheung, Yin-Wong & Lai, Kon S, 1993. "A Fractional Cointegration Analysis of Purchasing Power Parity," Journal of Business & Economic Statistics, American Statistical Association, vol. 11(1), pages 103-12, January.
  19. Starr, Martha A., 2005. "Does money matter in the CIS? Effects of monetary policy on output and prices," Journal of Comparative Economics, Elsevier, vol. 33(3), pages 441-461, September.
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Cited by:
  1. Simplice A, Asongu, 2011. "Deforestation and welfare : evidence from Africa," MPRA Paper 35161, University Library of Munich, Germany.
  2. Asongu Simplice, 2012. "Determinants of Health Professionals’ Migration in Africa," Working Papers 12/009, African Governance and Development Institute..

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