Abstract
The relationship between population growth and economic growth appeared differently in different countries. It became a debated issue for one country group from another where each country group classified by their income level. This article draws on data of forty countries that is twenty seven years long with each income group consists of ten countries. For panel data analysis the study introduces some econometric tests such as Unit root test, Country Pedroni (2004) cointegration test, Phillips-Peron cross section test, Johansen normalized cointegrating tests and Vector error correction test. The outcome states that in low income countries both variables are in equilibrium and reveals positive relationship. By one percent rise in the growth of population, in the long run, for high income and upper middle income countries the growth rate of GDP will drop by 1.19 percent and 0.044 percent respectively. Meanwhile, significant positive results come from lower middle income and low income countries which were the growth of GDP upswing by 0.44 percent and 0.42 percent respectively by the one percent increase in the growth of population. In high income countries, growth of GDP falls due to rise of the growth of population but the growth of population needs 1.47 year to reach to the equilibrium.
Highlights
The aim of this study is to comprehend the relationship between growth of population and growth of Gross Domestic Product (GDP) by exercising the long-term historical data and a review of empirical works of different nations in the world
It can be assessed that, the countries that belong to high income group might be successful in transforming more of their citizen into human capital than the countries that belong to comparatively low income groups
There is a possibility for the people of high income group nations that are contributing more to their respective growth of GDP growth
Summary
The aim of this study is to comprehend the relationship between growth of population and growth of GDP by exercising the long-term historical data and a review of empirical works of different nations in the world. For any nation population plays a significant role in the growth of GDP. It all depends on how many of them get transformed into human resource or into plain liability. In order to become a potential country, every nation requires a significant portion of its population to transform into human resource that in turns become a contributing part of the GDP and plays an important role in increasing the growth of the GDP. Each and every country tries to convert its population into human resource, mainly based on its distinct macroeconomic planning of the labor force. Each planning creates various opportunities and scopes for citizens through education, training and research
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