Linkages between Economic Growth and Population Ageing with a Knowledge Spillover Effect

Abstract

Currently, the natural demographic process ageing becomes a worldwide phenomenon. The United Nations recognizes any country as “ageing” or “greying nation” if the share of the elderly in the total population of the concerned nation exceeds 7%. According to census 2001 and 2011, 7.47% and 8.60%, respectively, of Indians were elderly. Thus, the ageing process in India was initiated since 2001. Undoubtedly, it has a serious implication on the economic growth process. With this backdrop, the present study aims to investigate the linkages between population ageing and economic growth in India. In conjunction with this, the study also explores the ascendency of the knowledge spillover on the footprint of population ageing on economic growth in India. The study is based on the “World Bank” data. The standard econometric tool of “Granger causality test” based “VECM” setting is utilized to scrutinize the unidirectional causality between ageing and economic growth. The empirical results divulge that population ageing is negatively related to economic growth. But interestingly, “knowledge spillover” can effectively marginalize the adverse consequences of population ageing on economic growth. The originality of the study is not only in orchestrating the problem but also propounding the potential solution to cope with the scar of ageing on the economy. Moreover, the study is unique in itself as it considers the globally recognized young economy, India, to find the connotation of population ageing on economic growth. Because of that, the furnished solution is applicable to all countries irrespective of their demographic and economic position.