Demographic Dynamics and Economic Development in Ethiopia By:
No Thumbnail Available
Date
2021-02
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Addis Ababa University
Abstract
The study is based on a time series data covering a time period of 1990 to 2019 and analyzed the relationship between population (with other demographic variables) and economic development (Real GDP per capita is used as a proxy). Considering econometric analysis, the study employed different tests such as unit root, co-integration, and Granger causality tests and vector error correction model.
According to the estimation result, population Granger causes real GDP per capita i.e. only unidirectional causality which runs from population growth to economic development. Here working age population and young population granger causes real GDP per capita but not vice versa. But real GDP per capita didn’t cause them. On the other hand, real GDP per capita causes life expectancy at birth and aged population but not vice versa.
In the long run population growth, working age population (WAPO) has positive and significant effect on economic development while young population group (CHPO), aged group (AGPO) has a negative and significant effect on economic development.
As the finding above shows Ethiopia is under stage two of demographic transition which is characterized by lower death rate but higher birth rate. This shows the need to revise population policy and decrease fertility rate by using different family planning technics and contraceptive methods. So in line with decreasing fertility rate creating human capital development is a key for countries economic development. so greater attention must be given to this since Ethiopia has a promising segment of young population once very trained, educated and experienced its economy will expand.
In addition to this improving the social and economic status of women is a key for a decrease in fertility rate. The development of old-age and other social security systems outside the extended family network can also be a solution to lessen the economic dependence of parents, especially women, on their offspring since the study indicated that aged population affects economic development significantly and negatively.
Description
Keywords
Economic Development, Real GDP per capita, Population Growth, Fertility Ratel, Vector Error Correction Mode