Population Impact On Economic Growth – Evidence From Pakistan

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Population Impact On Economic Growth, Growing populace is one of the major component of monetary boom. The present theoretical and empirical literature have observed each tremendous and terrible effect of populace on monetary boom. This paper inspects the effect of populace on monetary boom of Pakistan for the time period of 1961 to 2020. Data on dependent and unbiased variables were taken from world development indicator.

Moreover, the take a look at used (Population Impact On Economic Growth) to analyze the data. Findings of this take a look at shows that Population and Crude death rate have tremendous impact on monetary boom with inside the quick and lengthy run. While, Fertility has a terrible impact on monetary boom in each quick and lengthy run. Finally, the result of this take a look at are impartial as evidenced via way of means of distinct diagnostic check used.

Introduction of Population Impact On Economic Growth

In early durations of human history, the populace boom became 0.002% in step with yr until the 17thcentury which became very low. After boom of agriculture and then advancement in industrial sector populace start to grow fast. Form beginning until yr 1800 populace reached at 1 billion and from 1800 until now world populace have reached to an estimated figure of around 8 billion. 1.5 million More people added to the planet each week (Population Impact On Economic Growth)Pakistan, being the 5thmost populous u . s . and has 2ndlargest Muslim populace with total populace of 207,774,520 with mean annual boom of 2.40 from 1998 to 2017.

Rural populace grew at average of 2.23 and urban populace grew at mean annual boom of 2.70. Population of Pakistan improved from 130,857,717to 207,774,520 from 1998 to 2017. This is an increase of 76.nine million (Population Impact On Economic Growth).Figure 1 is indicating populace boom of Pakistan from 1961 to 2020. From 1961 to 1983 populace had been growing and began out lowering because 1992. From 1998 until 2020 it’s been lowering from 2.eighty four to 1.97.

Population growth and economic growth “Population Impact On Economic Growth”

Different empirical and theoretical literature have different views regarding this relationship (Headey & Hoge, 2009). Economists like Malthus and Ricardo alarmed regarding link between populace increase and populace increase. But they had established incorrect because the speedy populace increase ended in industrialization in Western Europe and multiplied in financial activity (Population Impact On Economic Growth).

In Solow increase model or neoclassical increase model, populace increase growth the increase fee of total output but no permanent growth in according to capita output(Population Impact On Economic Growth). Moreover, endogenous increase model also focuses on the role of Population increase, Human capital and investment on financial increase. According to endogenous increase model growth in labor producing ideas increases the long run financial increase (Population Impact On Economic Growth).

Population increase has been a warm subject matter for policymakers round the arena with inside the final centuries, as the arena’s populace has multiplied dramatically. The human populace is growing at a fee of approximately eighty three million human beings according to year. Alshalalda, (Population Impact On Economic Growth) Population increase is the major concern for many nations round the globe. Which is mostly facilitated by industrialization and urbanization that brought a few crucial financial advancement in many western nations.

(Golor, 2007)Also the past century has been defined by major transformations: industrialisation and urbanisation. Langeweg, F., Hilderink, H., & Maas, R. (Population Impact On Economic Growth). Population increase and financial development in a country have a direct and reciprocal relationship. (Menike, H. A. 2018). Growth of human populations have resulted in localized overexploitation of natural resources in the past, resulting in the extinction or disintegrate of a few historical cultures. The international populace growth in a speedy way in final 1/2 of of century.(Brueckner, M., & Schwandt, H. (2015).

Research Gap “Population Impact On Economic Growth”

The existing literature is quit rich by finding the effect of population on economic performance in developing countries like India, Bangladesh and Nigeria (Population Impact On Economic Growth). The literature have ignored or used inappropriate econometric models in case of Pakistan. Thus, this study will fill this gap by inspecting the effect of population growth on economic growth of Pakistan in short and long run. Furthermore, this study used dynamic and appropriate econometric model.

Significance of the study “Population Impact On Economic Growth”

Growing population is contributing a mixed effect on economic growth in developing countries like Pakistan. The existing literature argued that a population growth with improved human capital contribute positively to economic growth and contribute negatively otherwise. Since, population of Pakistan is growing rapidly like other developing countries, therefore, it’s important to investigate the impact of population growth on economic growth.

Objective of the Research.

  • To check the short run effect of population growth on economic growth of Pakistan.
  • To check the long run effect of population growth on economic growth of Pakistan

Brief literature Review “Population Impact On Economic Growth”

Ogunleye & Owolabi, (2018) investigated the impact of populace increase on monetary increase of Nigeria. They have taken the statistics from 1981 to 2015 and carried out regular least square, the look at used fertility charge, populace increase andexchange charge as unbiased variables and reveled that populace and monetary increase are positively linked in Nigeria. Additionally, the remaining each unbiased variables located to be statistically insignificance.

Similarly, (Tartiyus, Dauda and Peter2015) ; (Population Impact On Economic Growth)additionally located the identical end result for Nigerian economy.Peterson (Population Impact On Economic Growth) uses a graph to show the dating among rising populace, consistent with capita output increase, and general monetary overall performance over the last 2 hundred years. He additionally claims that low populace increase in high-earnings countries causes monetary problems, whereas fast populace surge in developing countries is likely to stifle improvement.

In addition, he stated that migration could be a remedy to this imbalance, despite the reality that many with inside the literature disagree. Mahmud, (2015) checked hyperlink among populace and monetary increase, all of the variables used had been desk bound at the start distinction so the look at taken the statistics from 1980 to 2013 and carried out VECM to test long term and quick run dating. The look at located that there’s positive dating among populace increase and monetary improvement in India in quick run and long run. Additionally, according to (Dawson & Tiffin, 1998)there is no dating among consistent with capita earnings increase and populace increase in India.

Dao, (2013) studied at the impact of populace on monetary improvement in Africa. The paper test the impact of city and rural populace independently. Findings of this look at confirmed that rural and concrete populace each have an effect on monetary improvement. Moreover, the squared of populace is also checked to understand if this dating is nonlinear or not, which observed to be insignificance meaning this dating is direct. Essentially, Golley and Wei, (2015) studied the impact of populace on monetary increase taking the statistics of china from 1981 to 2007 and carried out OLS to dissect the information.

The look at’s outcome shows that populace increase altogether have an effect on monetary increase of china. The paper applied GDP consistent with capita to degree monetary increase. Afzal, (2009) attempted the relationship of population improvement on monetary improvement of Pakistan for the time frame of 1981 to 2005. The evaluate applied Ordinary Least Square OLS technique and located that there is positive connection of population on monetary improvement. This evaluate disregarded the since quite a while ago run connection among populace and monetary improvement as OLS simply creates quick run results. Chowdhury, (2018) examined the connection of populace improvement with monetary increase of Bangladesh for the time span of 1979 to 2017.

The paper took GDP consistent with capita as intermediary to quantify monetary turn of events and presume that population improvement adversely affects economicgrowth of Bangladesh. Additionally, Nakibullah, (1998) utilizing ganger causality argued that populace increase would not granger cause real GDP consistent with capita and presume that populace is endogenous in monetary increase of Bangladesh.

Finally, Hassan (2010) appeared into the effect of China’s populace on monetary increase. To determine monetary increase, he used GDP increase as a proxy. This look at used statistics from 1952 to 1998 and used a vector error correction mechanism to discover that populace and consistent with capita GDP in China are positively related. Furthermore, Yao et al. (2013) determined no hyperlink among populace and monetary increase.

Data and Methodology “Population Impact On Economic Growth”

The data used in this study are collected from World Bank for the time period of 1961 to 2020. Dependent variable of the study is economic growth, annual GDP growth rate is used as proxy for economic growth. Population is main independent variable, population annual growth rate is taken as proxy to measure population. Finally, Crude death rateand fertility rate are taken as control variables in this study. Crude death rate measure the number of death occurring per 1000 during a year while, fertility rate is measure as the number of live birth per 1000 women during the age of 15 to 49 years peryear.

The method of ARDL co-integration was initially established by (Pesaran and Shin, 1999) and then by (Pesaran et al, 2003).This method has some advantages over other techniques. Firstly, the data should not be integrated of same order, it also can be applied if the stationary order of the variable is mix. Secondly, ARDL approach separately estimate the short run and long run coefficients. As our sample size is less, (Population Impact On Economic Growth) showed that incase of small sample size ARDL estimates are more efficient and appropriate. And finally, the long run coefficient using ARDL method are unbiased (Harris & Solis, 2003).

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A comment on "Population Impact On Economic Growth – Evidence From Pakistan"

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