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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.

Suggested Citation

  • 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..
  • Handle: RePEc:agd:wpaper:11/001

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    References listed on IDEAS

    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.
    2. Simplice A. Asongu, 2014. "Linkages between investment flows and financial development: Causality evidence from selected African countries," African Journal of Economic and Management Studies, Emerald Group Publishing, vol. 5(3), pages 269-299, August.
    3. Engle, Robert & Granger, Clive, 2015. "Co-integration and error correction: Representation, estimation, and testing," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 39(3), pages 106-135.
    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. 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.
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    11. 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 38-70, October.
    12. 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;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 15(2), pages 187-201, March.
    13. A. R. Sweezy, 1940. "Population Growth and Investment Opportunity," The Quarterly Journal of Economics, Oxford University Press, vol. 55(1), pages 64-79.
    14. Johansen, Soren, 1995. "Likelihood-Based Inference in Cointegrated Vector Autoregressive Models," OUP Catalogue, Oxford University Press, number 9780198774501.
    15. Simplice 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.
    16. Asongu Simplice, 2011. "Government Quality Determinants of Stock Market Performance in African Countries," Working Papers 11/019, African Governance and Development Institute..
    17. 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.
    18. 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.
    19. 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.
    20. 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.
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    Cited by:

    1. 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.
    2. 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.
    3. Simplice Asongu & Jacinta C. Nwachukwu, 2017. "Openness, ICT and Entrepreneurship in Sub-Saharan Africa," Working Papers 17/032, African Governance and Development Institute..
    4. 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.
    5. 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.
    6. Asongu Simplice, 2012. "Determinants of Health Professionals’ Migration in Africa," Working Papers 12/009, African Governance and Development Institute..
    7. Asongu, Simplice, 2014. "Reinventing foreign aid for inclusive and sustainable development: a survey," MPRA Paper 65300, University Library of Munich, Germany.
    8. Simplice A, Asongu, 2011. "Deforestation and welfare : evidence from Africa," MPRA Paper 35161, University Library of Munich, Germany.

    More about this item


    Productivity; Investment; Human capital; Causality; Africa;

    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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