The Impact of Rapid Population Growth on Economic Growth: Evidence From Ethiopia

Abstract

Rapid population growth is increasing from time to time as a result of high fertility and migration rate. This has a greater impact on the quality life of the society, in case of increasing number of unemployed peoples, lack of job opportunity, decrease in land share, infrastructure and so on. The objective of this study aimed to examine the impact of rapid population on economic growth of Ethiopia country by employing Autoregressive distributed lag model for the time period spanning from 1975 to 2019.  The variables used in model were, population, consumer price index, gross investment proxied by gross capital formation and trade openness as explanatory variables and RGDP proxy for economic growth used as dependent variable. To check stationarity properties of the data augmented dickey fuller unit root test was used and the result indicates all the variables are non-stationary at level and become stationary at first difference. Regarding cointegration test, ARDL bound test used to test the existence of long-run association among the variables and the result confirmed that there is long run relationship among RGDP and explanatory variables. The empirical result obtained from ARDL Model revealed that gross capital formation and consumer price index have found to be positive and statistical significant impact on RGDP in both short run and long run where as our variable of interest meaning population growth is negatively affecting real GDP in the short run but, in the long run it is found to be positive and statistical significantly affecting economic growth.

Keywords: population growth, economic growth, ARDL, Bound test, Ethiopia

DOI: 10.7176/JESD/11-15-02

Publication date:August 31^st 2020