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Population and Economic Development in Ethiopia: VECM Approach

Abstract: 

The relationship between population growth and economic development has been an agenda over the last decades as there is no conclusive evidence on their causal association. The mixed empirical results with regards to (Granger) causality between population and economic development inspired this study to venture into the area with respect to the Ethiopian context. The study employed vector error correction model (VECM) and investigated the causal relationship between population and economic development using a World Bank dataset (1981 to 2012). The results are consistent with some previous research findings: which note that there exists unidirectional long run causal relationship from population to economic development, but no long run causal relationship exists from economic development to population. Consistently, the short run causality tests suggest that population (Granger) causes economic development; however, there is no reverse short run causality form economic development to population. Therefore, there is a need to device a sound population policy to combat its adverse effects on economic developmentThe relationship between population growth and economic development has been an agenda over the last decades as there is no conclusive evidence on their causal association. The mixed empirical results with regards to (Granger) causality between population and economic development inspired this study to venture into the area with respect to the Ethiopian context. The study employed vector error correction model (VECM) and investigated the causal relationship between population and economic development using a World Bank dataset (1981 to 2012). The results are consistent with some previous research findings: which note that there exists unidirectional long run causal relationship from population to economic development, but no long run causal relationship exists from economic development to population. Consistently, the short run causality tests suggest that population (Granger) causes economic development; however, there is no reverse short run causality form economic development to population. Therefore, there is a need to device a sound population policy to combat its adverse effects on economic development.

 

Corporate Author: 
Ethiopian Economics Association
Publisher: 
Ethiopian Economic Association
ISBN/ISSN: 
978-99944-54-52-5
Primary Descriptors: 

Population

Geographic Descriptors: 
Ethiopia
Cataloge Date: 
09/06/2016
Broad Subject heading: 
Economic Development
Call Number: 
330.0963 PRO 2016
Publication catagory: 
Content type: 
Publication date: 
2016-06-01 00:00:00
Conference Place: 
EEA Multi-purpose Building Conference Hall, Addis Ababa
Place of publication: 
Addis Ababa, Ethiopia
Type of material: 
Book
Current frequency: 
Annually
Conference date: 
July 23 – 25, 2015