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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

Purpose - – The generation is witnessing the greatest demographic transition and Africa is at the heart of it. There is mounting concern over corresponding rising unemployment and depleting per capita income. The purpose of this paper is to examine the issues from a long-run perspective by assessing the relationships between population growth and a plethora of investment dynamics: public, private, foreign and domestic investments. Design/methodology/approach - – Vector autoregressive models in the perspectives of vector error correction and short-run Granger causality are used. Findings - – In the long-run population growth will: first, decrease foreign and public investments in Ivory Coast; second, increase public and private investments in Swaziland; three, deplete public investment but augment domestic investment in Zambia; fourth diminish private investment and improve domestic investment in the Congo Republic and Sudan, respectively. Practical implications - – Mainstream positive linkage of population growth to investment growth in the long-term should be treated with extreme caution. Policy orientation should not be blanket, but contingent on country-specific trends and tailored differently across countries. The findings stress the need for the creation of a conducive investment climate (and ease of doing business) for private and foreign investments. Family planning and birth control policies could also be considered in countries with little future investment avenues. Originality/value - – The objective of this study is to provide policy makers with some insights on how future investment opportunities could help manage rising population growth and corresponding unemployment.

Suggested Citation

  • Simplice A. Asongu, 2015. "Long-term effects of population growth on aggregate investment dynamics: Selected country evidence for Africa," African Journal of Economic and Management Studies, Emerald Group Publishing, vol. 6(3), pages 225-250, September.
  • Handle: RePEc:eme:ajempp:v:6:y:2015:i:3:p:225-250
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    References listed on IDEAS

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    1. 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 Asongu & Jacinta C. Nwachukwu, 2017. "Openness, ICT and Entrepreneurship in Sub-Saharan Africa," Working Papers 17/032, African Governance and Development Institute..
    2. Asongu Simplice, 2012. "Determinants of Health Professionals’ Migration in Africa," Working Papers 12/009, African Governance and Development Institute..
    3. 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.
    4. 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.
    5. Simplice Asongu, 2014. "REER Imbalances and Macroeconomic Adjustments in the Proposed West African Monetary Union," South African Journal of Economics, Economic Society of South Africa, vol. 82(2), pages 276-289, June.
    6. Simplice Asongu, 2016. "Reinventing Foreign Aid For Inclusive And Sustainable Development: Kuznets, Piketty And The Great Policy Reversal," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 736-755, September.
    7. Simplice A, Asongu, 2011. "Deforestation and welfare : evidence from Africa," MPRA Paper 35161, University Library of Munich, Germany.
    8. Simplice Asongu, 2014. "Reinventing foreign aid for inclusive and sustainable development: a survey," Working Papers 14/033, African Governance and Development Institute..

    More about this item

    Keywords

    Causality; Africa; Human capital; Productivity; Investment;

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • J00 - Labor and Demographic Economics - - General - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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