Demographic structure, structural change, and economic growth: panel evidence in sub-Saharan African countries

In the face of rapid demographic transitions, Sub-Saharan African countries stand at a critical juncture where the potential for harnessing a demographic dividend to fuel economic growth is immense. This demographic shift presents both challenges and opportunities, with the right investments in health, education, and employment, countries can turn the growing youth population into a powerful engine for development, driving substantial and sustainable economic progress across the region. This study examines the demographic structure effect on economic growth in the context of structural changes in 26 sub-Saharan African countries. Using data from 1992 to 2019 in the PMG-ARDL, FMOLS, and DOLS estimates, we find that demographic structure has a positive influence on economic growth in the long run, which occurs through effective structural change, that is, structural changes that occur with an increase in labor productivity growth. Indeed, our results show that structural changes are relevant in transforming African youth debt into demographic dividends.The study investigates the impact of demographic structure on economic growth within the context of structural changes in 26 sub-Saharan African countries from 1992 to 2019. It provides a detailed analysis of the impact of demographic transition, characterized by declining fertility rates and an expanding working-age population, on economic growth in sub-Saharan Africa. It highlights the importance of structural changes, such as labor productivity and sectoral composition variations, to transform demographic advantages into sustainable economic growth. Using robust econometric methods (PMG-ARDL, FMOLS, and DOLS), the research demonstrates a significant positive long-term impact of demographic structure on economic development, mediated by effective structural change. The policy implications include promoting family planning and education for young girls, which will help reduce dependency ratios, accelerate demographic transitions, and encourage industrialization and innovation to drive structural change and improve labor productivity. Incorporating demographic characteristics such as education levels and health status into economic planning will help maximize the benefits of demographic transitions. Recommendations include encouraging demographic and sectoral policies to effectively manage demographic transitions and promote structural change and innovation. Future research should include country-specific analyses to address heterogeneity and incorporate additional indicators such as education and health to capture their nuanced impacts on economic growth. The results of this study are significant for policymakers, researchers, and development practitioners working in sub-Saharan Africa. By providing empirical evidence on the interaction between demographic structure and structural change, the study offers valuable insights into strategies for leveraging the demographic dividend to fuel sustainable economic growth in the region. This research contributes to a better understanding of how to navigate demographic transitions and structural changes to achieve long-term economic development.