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Long-term effects of population growth on aggregate investment dynamics: selected country evidence for Africa

Simplice A, Asongu (2011): Long-term effects of population growth on aggregate investment dynamics: selected country evidence for Africa. Forthcoming in:

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Abstract

The role of Africa in world demographic change is primary and consequences on future investment dynamics could provide some insight on how unemployment, economic migration and other issues resulting there-from could be addressed. Using Johansen and Granger-causality models on data from 1977 to 2007, we investigate long-term effects of population growth on investment. Our study reinforces the lack of consensus over the impact of demographic change on economic growth. Main findings are, 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. For policy implications, the positive linkage of population growth to investment growth in the long-term should be treated with extreme caution, unless investment measures are adopted to utilize accruing work force. Family planning and birth control policies could also be considered in countries with little future investment avenues.

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