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

  • Asongu Simplice

    ()

    (Yaoundé/Cameroun)

Purpose – Our 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. I examine the issues in this paper 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: (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. 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.

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File URL: http://www.afridev.org/RePEc/agd/agd-wpaper/Long-term-effects-of-population-growth-on-aggregate-investment-dynamics.-Evidence-from-Africa.pdf
File Function: Revised version, 2013
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Paper provided by African Governance and Development Institute. in its series Working Papers with number 11/001.

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Length: 32
Date of creation: 15 Jan 2011
Date of revision:
Publication status: Forthcoming in African Journal of Economics and Management Studies
Handle: RePEc:agd:wpaper:11/001
Contact details of provider: Web page: http://www.afridev.org/index.php/en/
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  1. Asongu Simplice, 2011. "Government Quality Determinants of Stock Market Performance in African Countries," Working Papers 11/019, African Governance and Development Institute..
  2. Pommeret, Aude & Smith, William T., 2005. "Fertility, volatility, and growth," Economics Letters, Elsevier, vol. 87(3), pages 347-353, June.
  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. Thomas Gries & Manfred Kraft & Daniel Meierrieks, 2008. "Linkages between Financial Deepening,Trade Openness and Economic Development: Causality Evidence from Sub-Saharan Africa," Working Papers CIE 15, University of Paderborn, CIE Center for International Economics.
  5. 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.
  6. Simplice A, Asongu, 2012. "Linkages between investment flows and financial development: causality evidence from selected African countries," MPRA Paper 38719, University Library of Munich, Germany.
  7. Simplice Asongu, 2014. "The impact of health worker migration on development dynamics: evidence of wealth effects from Africa," The European Journal of Health Economics, Springer, vol. 15(2), pages 187-201, March.
  8. Ivar Kolstad & Espen Villanger, 2008. "Foreign Direct Investment in the Caribbean," Development Policy Review, Overseas Development Institute, vol. 26(1), pages 79-89, 01.
  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. 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.
  11. Venus Khim-Sen Liew, 2004. "Which Lag Length Selection Criteria Should We Employ?," Economics Bulletin, AccessEcon, vol. 3(33), pages 1-9.
  12. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501, March.
  13. 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.
  14. Asongu Simplice, 2011. "How would population growth affect investment in the future? Asymmetric panel causality evidence for Africa," Working Papers 11/002, African Governance and Development Institute..
  15. 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.
  16. Théophile Azomahou & Tapas Mishra, 2006. "Age Dynamics and Economic Growth: Revisiting the Nexus in a Nonparametric Setting," Working Papers of BETA 2006-36, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
  17. 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.
  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. 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.
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