International Journal of New Political Economy

International Journal of New Political Economy

The Causality Relationship Between Population, Economic Growth and Capital Stock in OIC Countries and Its Policy Aspects

Document Type : Original Article

Authors
Davoud Mahmoudinia 1
Mir Hadi Hosseini Kondelaji 2
somayeh Jafari 3
1 Economic Department, Vali-e-Asr University, Rafsanjan
2 Department of Economics, Arak University, Arak, Iran
3 Ph.D. student in Economics, Allameh Tabataba'i University, Iran
10.29252/jep.1.2.117
Abstract
This paper examines the long run and short run relationship between population, GDP growth and capital stock in OIC countries during 1980 to 2016. Using panel Cointegration and causality techniques, the results show that there is the long run relationship, when per capita income and per capita capital stock are dependent variables. In the long run the impact of population on economic growth is positive and statistically significant. Also, the bidirectional relationship between Population and economic growth in the short-run has been accepted for OIC countries. Theoretically the population growth is a national savings that create additional capacity in the economy. Given these points, from a policy perspective, it can be argued that population growth is a stimulus for economic growth and not an obstacle to it. Therefore, rather pessimistic view of the population and its control, economic policymakers must reduce important economic barriers through a structures reform, increasing management capability as well as implementing proper monetary and fiscal policies.
Keywords
Economic growth
Population
Cointegration
Causality
OIC Countries
  1. Arrow, K. J., Dasgupta, P., and Maler, K. G. (2003). The genuine savings criterion and the value of population. Economic Theory, 21: 217- 225.

 

  1. Bloom, D, and Freeman, R. (1998). Economic development and the timing and components of population growth. Journal of policy modeling, 10(1): 57-81

 

  1. Bucci, A., Eraydın, L., and Müller, M. (2019). Dilution effects, population growth and economic growth under human capital accumulation and endogenous technological change. Journal of Macroeconomics, 62.‏

 

  1. Chio, I. (2001). Unit root testing for panel data. Journal of international money and finance, 20: 249-272

 

  1. Darrat, A. F., and Al-Yousif, Y. K. (1999). On the long-run relationship between population and economic growth: Some time series evidence for developing countries. Eastern Economic Journal,25, 301–313

 

  1. Fougere .M. and Merette, M. (1999). Population ageing and economic growth in seven OECD countries. Economic modeling, 16: 411-427.

 

  1. Hammer, Jeffrey S. (1986). Population growth and savings in LDCs: A survey article. World Development, 1:579-91.

 

  1. Hasan, M .(2010). The long run relationship between population and per capita income growth in china. Journal of policy modeling, 32: 355-372.

 

  1. Jones, C. (1997). Population and Ideas: A Theory of Endogenous Growth. NBER Working Paper No. w6285

 

  1. Kremer, M. (1993). Population Growth and Technological Change: One Million B. C. to 1990. Quarterly Journal of Economics, Vol. 108, No. 30, pp. 681-716.

 

  1. Lee, H., and Shin, K. (2019). Nonlinear Effects of Population Aging on Economic Growth? Journal of Macroeconomics, 51

 

  1. Lutkepohl, H. (1982). Non-causality due to omitted variables. Journal of Econometrics, 19: 367–378

 

  1. Maddala, G. S., and Wu, S. (1999). A comparative study of unit roots with panel data and a new simple test. Oxford Bulletin of Economics and Statistics, 61, 631−651.

 

  1. Malthus, T. R. (1992). An Essay on the Principle of Population .Cambridge:Cambridge University Press.

 

  1. McNicoll, Geoffrey. (1984). Consequences of rapid population growth: An overview. World Bank Staff working paper, No. 691.

 

  1. Phelps, E. (1961). The Golden Rule of Accumulation: AFable for Growth Men. American Economic Review, Vol. 51, No. 4. pp. 638-643.

 

  1. Pedroni, P. (1995). Panel cointegration, asymptotic and finite sample properties of pooled time-series tests, with an application to the PPP hypothesis. Indiana University, Working Paper in Economics, No. 95-031, June.

 

  1. Pedroni, P. (1999). Critical values for cointegration tests in heterogeneous panels with multiple regressors. Oxford bulletin of economics and statistic, 61: 653-70

 

  1. Portner, C. (1996). Population and Economic Growth. 1-103. Available: http://faculty.washington.edu/cportner/portner/MScDiss.pdf.

 

  1. Prettner, Klaus. (2014). The non-monotonous impact of population growth on economic prosperity, Economic Letter, Volume 124, Issue 1. pp.93-95

 

  1. Swan, T.W., (1956). Economic Growth and Capital Accumulation. Economic Record, Vol 32(2), pp.334-61.

 

  1. Sen, P., (2006). Population growth and steady state welfare in an overlapping generations model. Economics Letters, 91 325–329

 

  1. Smith, A. (1976). An Inquiry into the Nature and Causes of the Wealth of Nations, in Edwin Cannan (ed.), Chicago: University of Chicago Press.

 

  1. Simon, J. (1998). The Economics of Population: Classic Writings. Transaction Publishers, New Brunswick, New Jersey.

 

  1. Thornton, J. (2001). Population growth and economic growth: Long- run evidence from Latin America. Southern Economic Journal, 68,464-468.

 

 

  • Receive Date 20 January 2020
  • Revise Date 27 March 2020
  • Accept Date 24 May 2020
  • First Publish Date 01 July 2020
  • Publish Date 01 July 2020