GROUP ASSIGNMENT COVER SHEET
STUDENT DETAILS
Student name:
Nguyễn Vũ Anh Thư
Student ID number:
31211022075
Student name:
Ngô Bích Vân
Student ID number:
31211024259
Student name:
Hữu Xuân Phương
Student ID number:
31211023582
Student name:
Chu Quỳnh Anh
Student ID number:
31211025313
Student name:
Đàm Gia Hương
Student ID number:
31211021796
UNIT AND TUTORIAL DETAILS
Unit name:
Applied Econometrics
Tutorial/Lecture:
Group Project
Lecturer or Tutor name:
Unit number: AE-DH47ISB-7
Class day and time: Tuesday 8:00 – 11:15
Mr. Le Anh Tuan
ASSIGNMENT DETAILS
Title:
Group Project
Length:
Due date:
Date submitted:
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Nguyễn Vũ Anh Thư
Student’s signature:
Ngô Bích Vân
Student’s signature:
Hữu Xuân Phương
Student’s signature:
Chu Quỳnh Anh
Student’s signature:
Đàm Gia Hương
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been signed.
TABLE OF CONTENTS
I. INTRODUCTION:
1. Background:
2. Overview the problems:
3. Research Aim & Question:
4. Research Gap & Contribution:
4
4
4
5
6
II. LITERATURE REVIEW:
1. Economic Growth:
2. Population Growth:
3. The effect of Population growth on Economic Growth:
7
7
7
8
III. METHODOLOGY:
1. Data selection
2. Measurement dependent variable:
3. Measurement independent variable:
4. Control variable:
a. Net Exports:
b. Inflation rate:
c. Unemployment:
d. Interest rate:
e. Exchange rate:
f. Foreign direct investment:
5. Model:
10
10
11
11
11
11
12
12
12
12
12
13
IV. DATA
13
V. EMPIRICAL RESULT
1. Heteroskedasticity test:
2. The interaction of population growth and GDP growth
17
17
20
REFERENCES LIST
22
2
Topic: The impact of population growth on economics growth in Asia
Abstract: The connection between population growth and economic development has received a lot
of attention ever since the world population surpassed the two billion mark. The relationship
between those two factors has been the subject of heated debate in all countries in Asia, regardless of
whether they have transitional economies, developed economies, or less developed economies.
According to the theory, economic growth is negatively impacted by population expansion. The
major goal of the research is to ascertain this relationship between population increase and
economic development by conducting a thorough review of the literature. According to the report,
although a country's continually increasing population may appear to be a barrier to its economic
success, the majority of nations have come to view the trend as a blessing. In the following research,
we will focus on the association between Asia's human population growth and its economic
development.
Key words: GDP growth, population growth, relationship, Asian countries
I. INTRODUCTION:
1. Background:
There has been much research on the relationship between rising economic production and
population increase (Heady & Hodge, 2009). Many researchers predict that, in part because of
anticipated sluggish population growth, economic growth in high-income countries would likely be
rather weak in the upcoming years. There has been discussion on how population growth, resource
depletion, and environmental degradation interact for many years. In truth, Asia should be concerned
about both population growth and unsustainable development.
Economic activity is a process that uses inputs to create outputs, which causes a community-wide
influx of inputs as a counterbalance (Kimberly Amadeo, 2022). A rise in the output of goods and
services through time is referred to as economic growth. Economic growth is one of the most crucial
measures of a nation's economic health (Max Roser, 2021). This measure must also take inflation
into account. People's salaries will rise as the economy expands because they are owners of the
factors of production. Many East Asian nations have had exceptional development during the past 30
3
years, which has baffled analysts and generated a number of studies attempting to explain the
phenomena. Asia's population is expected to be close to 4.68 billion, or 4,680 million, or
4,679,660,580 people, in the beginning of 2021. Asia is by far the most populous continent, with a
population around 3.5 times that of Africa, the second most populous continent. Asia's population
will grow by 620 million people before reaching a peak of 5.3 billion in 2055. Asia is home to more
than three-fifths of the world's population. The maximum level of its global market share (60.9%)
occurred in 2000. Asia will account for almost half of the rise in global population in 2021, making it
the major driver of that expansion (UN, 2019).
The function of population expansion in boosting living standards is a crucial policy concern, and
economic growth contributes significantly to raising living standards globally (Heady & Hodge,
2009). Population and economic growth have a considerable impact on contentious issues like
international migration and resource consumption, in addition to the possible consequences on
economic inequality.
2. Overview the problems:
The interplay between economic conditions and population increase was better captured by
differential per capita income, according to some researchers. Time-series measurements of the
difference in per capita income were offered yearly. The development of living standards and the
increasing of living standards globally depend on economic expansion and population increase,
respectively. But it also leads to some problems.
From the viewpoint of economics:
● Asia's quick population increase has slowed down economic progress, led to trade
imbalances, and made poverty worse:
-
When a significant segment of the population is refused employment, living
conditions decline occasionally with dangerous psychological distress.
-
In real economic terms, unemployment results from a mismatch between labour
supply and demand. (Sadikova, Faisal, & Resatoglu, 2017, p. 707)
● A rapidly expanding population has overloaded the area's educational system. Because of
inadequate support for education, the number of illiterates is also rising.
-
The primary school curriculum has not yet been adopted universally in all rural areas.
-
Children are still leaving school early or failing to show up regularly.
-
In many nations, unemployment and poverty result from a supply that exceeds
demand.
4
● Because young workers lack experience, training, and skills, labor productivity suffers as a
result.
As a result, profits, investment capacity, and salaries are all dropping.
3. Research Aim & Question:
Motivation (The reason why is this topic important): In recent years, ASIA nations have been
working to resolve a number of issues brought on by rapid population growth. Fast population
increase has recently affected economic growth rates and overburdened regional education systems;
as a result, ASIA countries must work to strike a balance between population growth and economic
development (Renkou Yanjiu, 1983)
Research aim: This study's main goal is to investigate the connection between population increase
and economic development in Asian nations from 2011 through 2020. These nations have various
demographic, economic, and economic growth characteristics. stage of economic and social growth
(Appendix 1).
Due to a paucity of data and the absence of some data, research on the relationship between
population expansion and economic development is still in its infancy. Thus, the analysis of this
research report will reveal the extent of the connection between Asian economic growth and
population. Although we are unable to test the hypotheses that exist regarding the connection
between population growth and economic expansion, we do have a set of empirical facts that we may
use to build theoretical models.
According to recent studies, population increase plays a critical influence in the nation's economic
development. As a result of population growth, GDP per capita investment has increased.
Additionally, in addition to population growth, other elements that affect a nation's prosperity include
net export, inflation rate, unemployment rate, interest rate, currency rate, and foreign direct
investment. In countries with strong population growth rates, an increase in GDP per capita will, in
Thomas Piketty's words, "improve social welfare in a way that relies on the nature of the population.
impact on per-capita GDP. GDP per capita rises when rapid population growth contributes human
resources to economic progress.
In conclusion, examining the relationship between population growth and economic expansion in
Asian economies is the study's main objective. In China, Singapore, and the Philippines, population
growth is seen to be the direct source of economic growth rather than the other way around. In
Malaysia and Hong Kong, population growth is seen to cause economic growth rather than the other
5
way around. Economic expansion can affect population growth, which in turn can support or hinder
economic expansion. (W. H. Tsen, F. Furuoka, & Furuoka, 2005)
Research question:
-
Does population growth affect positively or negatively on economic growth?
-
How does population growth affect GDP?
4. Research Gap & Contribution:
Research gap: Research articles only show the interaction between population and economy but do
not tell us about how to create a balance between population and economy and the outcome after we
reach to get that balance
Contribution: First, our report builds on recent studies on how population growth affects economics.
Second, we learn more about the relationship between population and economic growth.
II. LITERATURE REVIEW:
1. Economic Growth:
Increased income per capita due to economic expansion determines whether or not the
economic structure will alter (Amalia, 2007). Economic development, according to T.
Zulham (2019), is also the process of increasing total income and per capita while taking into
consideration population growth, any subsequent fundamental changes in a country's
economic structure, and the equitable distribution of income among its citizens.
Four variables—population, total stock of commodities and capital, land area and natural
resources, and technology use—are thought to have an impact on economic growth. In the
past, people have thought that increasing the labour force and the population are both good
for fostering economic growth. In other words, as the population grows, productivity rises,
and labour force size increases, the potential of the house market will as well.
Exact measurement methods are required to evaluate the state of an economy. The volume of
finished goods and services generated by an economy in a given year, as expressed in market
prices, is referred to as its gross domestic product (GDP) or regional gross domestic product
(PDRB) at the regional level. Because it more truly reflects the well-being of a nation's
6
people, gross domestic product per capita or gross domestic product per capita at a regional
level might be seen as a stronger indicator of economic success than the value of only PDB or
PDRB (IEOM Society International, 2021)
2. Population Growth:
We assert that population growth is a critical unifying force that links diverse population
ecosystem components and, at the same time, has a considerable impact on other issues
(Richard M. Sibly and Jim Hone, 2022). Given the existing state of information, it is
impossible to draw any definitive conclusions about how population expansion impacts the
economic development of currently disadvantaged places. According to certain theoretical
projections, rapid population increase strains the earth's limited natural resources, impedes
the creation of new private and public capital, and diverts funds from capital additions to
preserving rather than expanding the stock of capital per worker. Others highlight the
advantages, including economies of scale and specialization, the potential boost to positive
motivation brought on by increased reliance, and the more favorable views, abilities, and
motivations of younger people compared to older ones ( Richard A. Easterlin, 2022).
On the other hand, developing economies are most affected by the population expansion in
terms of employment and labour supply. Examining the lags between population growth and
labour force participation, as well as the separate effects of rapid population growth brought
on by changes in fertility, mortality, and migration Other topics explored include patterns and
trends in labour force participation rates as well as gender differences in labour supply
behaviour (David Bloom and Richard Freeman, March 1986).
The answers to the issues brought on by population growth and its effects that may be found
in contemporary literature have been divided into seven categories, but this is by no means an
exhaustive list. We should use rates rather than exact values. The population's direct negative
effects are cancelled out by remarkably positive indirect benefits. Show that neither land nor
physical capital is important for development—only labour and human capital do. Identify
the historical absence of a relationship between income growth and population increase.
Calculate the net externality of population expansion, but don't account for the impact on
women and future generations in particular. Make implicit assumptions that the environment
is limitless and construct economic models without taking this into consideration. If all else
fails, argue that population growth is not necessarily bad and that all wrongs are the product
of bad economic, ecological, or urban planning choices. Marx thought that under capitalism,
7
population growth only led to negative outcomes; now, capitalism asserts that population
growth is beneficial (Nathan Keyfitz, 1992)
3. The effect of Population growth on Economic Growth:
The population has an impact on the expansion of the local economy. GDP growth is
negatively impacted by population expansion. In general, the impact of population growth on
economic growth takes the following forms:
The population as a potential source of labor:
Population growth is another source of employment. In essence, it is a part of economic
expansion. In this environment, the workforce can be productive, which will ultimately foster
economic growth. The improvement of people's lives and productivity at work is brought on
by economic growth. An even more significant effect of population growth on economic
development is the labor supply it provides. In this sense, the populace fosters economic
development and acts as a source of energy generation. On the other hand, giving current
employees good job options is a vital condition for their advancement.
Improving labor productivity:
Labor productivity is key to raising living standards and is a priority in the Sustainable
Development Goals. It is the primary driver of economic growth and a catalyst for economic
advances thanks to its large pool of young workers and capacity to integrate science and
technology into manufacturing, service, and trade activities. productivity, excellence, and
effectiveness. Labor force participation rate as share of population APAC 2021, by country
Consumers who are residents:
On the demand side, where demand for goods and services comes from, residents act as
consumers. Citizens are producers on the supply side; regardless of whether they are
entrepreneurs, traders, or workers, they are just that—employees. The need for goods and
services by society, which is the only consumer of goods and services, is the most crucial
prerequisite for balanced economic growth. The primary engine of economic growth in this
instance is population expansion. Demand rises as a result of population growth, propelling
quick economic expansion. If people's incomes are so high that some cash is not spent
immediately but is instead saved up in household savings, which could be a source for
production expansion, efficiency results.
Hypothesis 1: Population growth has a positive and significant relationship with Asia's GDP Growth
8
Hypothesis 2: The positive impact of population growth on Asia’s GDP is more pronounced for
developing countries
Figure 1: Conceptual Framework
III. METHODOLOGY:
1. Data selection
This study examines the relationship between population growth and economic development
in Asia based on data from 2011 to 2020 for 27 countries, mainly from the World Bank and
International Financial Statistical databases. Starting with the population data, we get our data
from the World Bank - a website that aggregates data from various reliable sources. We found
the data as soon as we entered the phrase “population” in Asia. For Inflation Rate and Net
Export, we get data from International Financial Statistics. Besides, for the remaining data we
look up OECD data.
The survey included a sample of 270 samples in 27 countries in Asia however there are some
observations including Interest Rate, Exchange Rate and Population whose values ​are
unavailable and missing. Thus, the final sample includes 241 samples from 27 countries for
the period 2011 to 2020.
9
2. Measurement dependent variable:
We indicate GDP as a dependent variable. Dependent variables are those which depend on
and can be affected by other factors. Taking GDP into account, population growth, inflation
rate, interest rate and other elements are variables that can directly affect the measurement
and scale of GDP.
3. Measurement independent variable:
Population growth is demonstrated as an independent variable.
P = P 0 x ert
Where P is Total population after time “t”
P0 is Starting population
r = % Rate of Growth
T = Time in hours or years
e = Euler number
4. Control variable:
Control variables are those which are perpetual in a research study and can lead to the
influences on outcomes. In this case, net exports, inflation rate, unemployment rate, interest
rate, exchange rate, foreign direct investment are considered as control variables and can
affect the GDP.
a. Net Exports:
The net exports of a nation serve as a measure for its whole trade. When imports are greater
than exports, net exports are negative and that amount is subtracted from the GDP. On the
other hand, when imports are lower than exports, net exports are positive and that amount is
added to the GDP. Net exports are calculated by:
𝑁𝑒𝑡 𝑒𝑥𝑝𝑜𝑟𝑡𝑠 = 𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 𝐸𝑥𝑝𝑜𝑟𝑡𝑠 – 𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 𝐼𝑚𝑝𝑜𝑟𝑡𝑠
Where:
The value of exports is an assessment of how much money a country makes by exporting
goods and services abroad.
The value of imports measures how much money the country has spent importing products
and services.
10
b. Inflation rate:
The most well-known indicator of inflation - the consumer price index, also known as CPI,
determines the percentage change in the price of a number of goods and services often
consumed by families.
𝐼𝑛𝑓𝑙𝑎𝑡𝑖𝑜𝑛 =
𝑃𝑟𝑖𝑐𝑒𝑦𝑒𝑎𝑟2 − 𝑃𝑟𝑖𝑐𝑒𝑦𝑒𝑎𝑟 1
𝑃𝑟𝑖𝑐𝑒𝑦𝑒𝑎𝑟 1
× 100
c. Unemployment:
A person is considered to be unemployed if they actively seek employment but are
unsuccessful. As the number of people unemployed increases, their demand for goods
decreases, which results in the decline in the GDP. An important indicator of the health of the
economy is the unemployment rate. The unemployment rate is the most frequently cited
unemployment statistic.
𝑈 =
𝑈𝑛𝑒𝑚𝑝𝑙𝑜𝑦𝑚𝑒𝑛𝑡 𝑝𝑒𝑜𝑝𝑙𝑒
𝐿𝑎𝑏𝑜𝑟 𝑓𝑜𝑟𝑐𝑒
× 100
d. Interest rate:
The price of assets, particularly financial instruments like stocks and bonds, as well as
broader macroeconomic factors, such as economic progress, are significantly influenced by
the cost of borrowing money, or interest rates.
e. Exchange rate:
The cost of borrowing money, or interest rates, has a substantial impact on the price of assets,
particularly financial instruments like stocks and bonds, as well as larger macroeconomic
aspects, such as economic growth.
f. Foreign direct investment:
To evaluate the total level of direct investment at a particular time, usually at the end of a
quarter or a year, foreign direct investment (FDI) shares are utilized. The source of outbound
FDI is made up of the resident investor's stock holdings and net loans to foreign businesses.
11
5. Model:
After carefully considering all the variables, we suggest the following equation to investigate the
connection between population growth and economic development.
❖ Population regression:
GDP =
β0 + β1𝑃𝑜𝑝 + β2𝑁𝑒𝑡𝐸𝑥 + β3𝐼𝑛𝐹 + β4𝑈𝐸𝑚 + β5𝐼𝑛𝑅 + β6 𝐸𝑥𝑅 + β7𝐹𝐷𝐼 + 𝑌𝑒𝑎𝑟 𝑓𝑖𝑥𝑒𝑑 𝑒𝑓𝑓𝑒𝑐𝑡𝑠 + 𝑢𝑖
Included:
𝑢𝑖: error term
❖ Sample regression:
𝐺𝐷𝑃 = β0 + β1𝑃𝑜𝑝 + β2𝑁𝑒𝑡𝐸𝑥 + β3𝐼𝑛𝐹 + β4𝑈𝐸𝑚 + β5𝐼𝑛𝑅 + β6 𝐸𝑥𝑅 + β7𝐹𝐷𝐼 + 𝑌𝑒𝑎𝑟 𝑓𝑖𝑥𝑒𝑑 𝑒𝑓𝑓𝑒𝑐𝑡𝑠
IV. DATA
1. Data sources:
To demonstrate the relationship between economic development and population growth, we
collected data from reliable sources. Here is a list of the sources from which we have
collected data
The primary goal of this study is to investigate the impact of population growth on economic
development in 27 developed nations from 2011 to 2020.
The following factors influenced our decision on the data range:
+ We determine that the OECD and World Bank have access to sufficient data that will
be used to fully and properly describe our problem.
+ The chosen Asian countries, as we have said, would benefit greatly from the
recommendations for strong economic growth models.
+ The 10-year period is long enough to demonstrate the economy's experience with
recession and recovery in a convincing manner.
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Table 1: Data Sources
Label
Name
Description
Pop
Population
Population growth World Bank national accounts data
growth
(annual %)
Net Exports
Exports of goods
NetEx
Source
and services (% of
GDP) - Imports of
goods and services
World Bank national accounts data,
and OECD National Accounts data
files
(% of GDP)
InF
Inflation rate
Inflation, consumer International
prices (annual %)
Monetary
Fund,
International Financial Statistics and
data files.
UEm
InR
Unemployment
Monthly
OECD National Accounts data files
rate
unemployment rate
Interest rate
Long-term interest OECD National Accounts data files
rates (annual %)
ExR
Exchange rate
National
currency OECD National Accounts data files
per US dollar
FDI
Foreign
direct Foreign
investment
direct International
investment,
inflows
net Balance
(%
of
Monetary
Payments
Fund,
Statistics
of Yearbook and data files.
GDP)
GDP
Gross domestic GDP
product
(annual %)
growth World Bank national accounts data,
and OECD National Accounts data
files.
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2. Descriptive statistics
Descriptive data for the control variables are provided in Table 2.We can learn the mean, standard
deviation, and range of each variable from the table. As an example: GDP has a mean of 3.005%, a
standard deviation of 5.157%, a low of -33.50%, and a maximum of 13.936%.
Table 2: Descriptive statistics of variables
Variables
Obs
Mean
Std.Dev.
Minimum
Maximum
Population
268
15.07276
6.339618
-0.3073671
21.32708
Net Export
270
0.4402642
0.8939098
7.02e-09
9.967003
Exchange Rate
270
4.018242
2.965275
-0.9558115
10.05227
FDI
270
22.20692
2.186064
14.77102
26.39315
Inflation Rate
270
5.28055
9.161834
-2.54031
40.4405
Unemployment
Rate
270
4.907978
3.482486
0.1
19.026
Interest Rate
269
5.801004
7.097718
-12.2154
60.8767
GDP
270
3.004905
5.156524
-33.4999
13.9364
Correlation coefficients between the independent variables are shown in Table 3. This data result
agrees with several of the papers we came across. In other words, population expansion not only has
a negative impact on the unemployment rate but also negatively affects the inflation rate. The rapidly
growing population has altered the economy, resulting in low employment and widespread
unemployment. As the population increases, so does the percentage of employees (Awopetu, 2020).
As a result, as the workforce expands, unemployment and low employment rates increase. Rapid
population expansion has an impact on savings and investments. The explanation is as follows: A
high population has a negative impact on the employment rate, and as the population grows, so does
inflation. According to correlations, population growth differs amongst Asia's various nations.
14
Table 3: Correlation coefficient matrix
Population
Net
Exchange FDI
Export Rate
Developing
Countries
Inflation Unemployment
Rate
Rate
Population
1.0000
Net Export
0.1554
0.0108
1.0000
Exchange Rate
0.2003
0.0010
0.2363
0.0001
1.0000
FDI
0.4805
0.0000
0.0524
0.3913
0.0072
0.9057
1.0000
Developing
Countries
0.1058
0.0838
0.1029
0.0917
0.1550
0.0108
-0.3822
0.0000
1.0000
Inflation Rate
-0.2172
0.0003
-0.1010
0.0976
0.3220
0.0000
-0.2338
0.0001
0.2006
0.0009
1.0000
Unemployment
Rate
-0.1267
0.0382
-0.1739
0.0041
-0.1453
0.0169
-0.0676
0.2686
0.1442
0.0178
0.1376
0.0237
1.0000
Interest Rate
-0.0829
0.1770
0.0337
0.5826
0.1507
0.0134
-0.1646
0.0068
0.1378
0.0238
-0.0693
0.2572
0.1356ư
0.0261
Interest
Interest Rate
1.0000
Note: The correlation coefficient matrix for the key independent variables is shown in this table. The
sample spans the years 2011 to 2020 from 27 different nations. Table 1 offers the definitions of the
variables.
*Significance at the 10% level.
** Significance at 5% level.
*** Significance at 1% level.
Important detail correlation coefficient at lower alpha% is better (low error)
15
V. EMPIRICAL RESULT
We utilize the heteroskedasticity test to determine if the errors are homoscedastic or not before
running the model.
1. Heteroskedasticity test:
Homoskedasticity is a statistical phenomenon in which, after the regression equation is estimated
from a sample of observed values for the independent and dependent variables, the residual or error
does not adhere to a certain rule.
Heteroskedastic describes a situation in which a regression model's residual term, or error term,
variance fluctuates significantly. There are two methods that can be used to determine whether there
is heteroskedasticity: the Breusch-Pagan test and the White test. We used the White test in this
investigation, which was sufficient for the result. However, the same premise underlies both tests,
which are:
● HO: Homoskedasticity
● HA: Unrestricted Heteroskedastic
Stata command : imtest, white
Result
chi2(140) = 218.79
Prob > chi2 = 0.0000
Cameron & Trivedi’s decomposition of IM-test
Source
chi2
df
p
Heteroskedasticity
218.79
140
0.00000
Skewness
36.66
18
0.0058
Kurtosis
3.32
1
0.0684
Total
258.77
159
0.0000
Table 4: Heteroskedasticity Test (White test)
16
Notes: This table reports the result of heteroskedasticity tests for the regression models.
*Significance at the 10% level.
**Significance at the 5% level.
***Significance at the 1% level
The White test for heteroskedasticity is a wide test since it is easy to conduct and does not rely on the
normality assumptions. Due to its universality, White's test may also be able to identify the
specification bias. Once the linear regression model has been constructed, it is standard practice to
examine the residuals for heteroscedasticity. We want to see if the model we've created so far can
account for any patterns in the response variable Y that may ultimately manifest themselves in the
residuals.
Basic Model:
The main analysis regression results are shown in this table in accordance with the requirements of
the fundamental model. We integrate various control configurations. We refer to Column (1) as our
naive model because we don't include control variables or time-fixed effects. There are no
restrictions in Column 2, but we do account for time-fixed effects. We list the controls and a number
of time-fixed effects in Column 2 of the table (3). Column (3) has the highest R-squared in terms of
goodness-of-fit, emphasizing how crucial it is to keep independent variable variability to a minimum.
The results in this table shows that the coefficients on CPI are positive and highly significant at 1%
for all model parameters. The coefficients, which have values between 0.1 and 0.16, are significant
from an economic standpoint. According to Column (3)'s indication of the coefficient on CPI, which
is 0.107, if CPI increases by one point, EPI is expected to increase by 0.107 points.
Population change and economic growth have a complicated relationship that changes throughout
time based on the circumstances of each country. It is certain that the arable land, water, energy, and
biological resources will face significant strain to provide enough food while preserving the health of
our environment as the world's population continues to rise geometrically. Between 1 and 2 billion
people are now undernourished, according to the World Bank and the UN, which shows a
combination of food shortages, poor earnings, and insufficient food distribution. The food crisis will
arguably get worse when the number of hungry people reaches 3 billion as the world population
rises. Scientists from the Royal Society and the US National Academy of Sciences have produced a
joint statement that reinforces worries about imbalances between the world's population and the
17
resources that support human life. This declaration is based on estimates of the available natural
resources (RS&NAS, 1992). Increased population has disproportionately bad effects on the
environment. It is necessary to take into account all related issues on a global scale, including
population number and growth, resource consumption and depletion, and environmental
deterioration. Population control is obviously not a solution in this situation; it is necessary but
insufficient to get us through the crisis. Population redistribution would be a dangerously fictitious
solution to the population problem since population density is a poor indicator of population
pressure. Therefore, we need more appropriate measures and a policy framework in order to
overcome those difficulties. Demographers also presented a view on the first and second
demographic incomes in their studies, along with the new quantitative method (Faruqee and
Muhleisen (2001), Andrew Mason, and Ronald Lee) (2004). The first demographic dividend occurs
when the growth rate of the productive population is greater than that of the consumer population,
increasing the average income. per capita, driving economic growth, while the second demographic
dividend is the benefits that can be derived from projections of an aging population that increase the
incentive to save and accumulate capital in the economy , thereby increasing the number and
proportion of high-income people promoting the consumption of production outputs as well as
increasing capital for production. With rational policies, the increase in saving (from young workers
or from transferred income...) and preparedness. The retirement financial system can lead to a
healthy, wealthy aging population and, moreover, a prosperous society.
Dependent Variable: GDP growth
lpop
(1)
(2)
(3)
0.1516233
(3.11)
0.1525245
(3.57)
0.1072375
(2.15)
netexport_1000
0.0938006
lgex
0.1551825
lgfgi
0.0257027
inflation rate
-0.0517447
unemployment rate
-0.2537672
interest rate
0.814755
Constant
0.7367226
(0.92)
2.993615
(2.82)
3.81662
(1.25)
18
Year fixed effects
No
Yes
Yes
R - squared
0.0351
0.2853
0.3350
Observation
268
267
267
Table 5: Baseline results
2. The interaction of population growth and GDP growth
In this section, we'll talk about how population expansion influences GDP growth, whether it is high
or low. The interplay between population increase and GDP growth is seen in the below table. Table
6 illustrates the interaction between a dummy variable for Population growth and GDP growth. The
coefficient of the interaction is positive, which is significant at 1% level, indicating that population
growth creates a strong impact on the GDP growth.
Moreover, when comparing different years with various population growth data, we can see how it
affects the GDP; just 1-unit increase in population can lead to a fluctuation in the GDP. Jong-Wha
Lee & Kiseok Hong (2010) predicted that the GDP growth rate of the 12 developing Asian countries
would be consistently lower in the following 2 decades; in contrast, changes of population,
education, property rights can significantly boost GDP growth in the area and somewhat make up for
the economic slowdown brought on by the convergence phenomena. This prediction is partly aligned
with what has been shown in this research; that the population growth is the factor which causes a
positive effect on the GDP in Asia.
When we take into account the interaction between Population Growth and GDP Growth dummy, the
coefficients on population growth witness a significant result (< α=0.05) in the full sample. The
results from Table 6 show that the coefficients on the interaction term are positive and significant at
the 1% level for all model specifications. This provides strong support for the argument that the
positive impact of population growth on Asia's GDP is more pronounced than for developing
countries.
In conclusion, the GDP of Asia as a whole is affected more significantly by population growth than
developed countries in the region.
19
Dependent variable: GDP growth
Independent variable
lpop
-0.1485395
(-1.60)
developing countries
-3.141142
(-1.72)
c.lpop#c.developingcountries
0.3078158
(2.86)
netexport_1000
-0.0564308
(-0.18)
lgex
0.1800296
(1.73)
lgfgi
0.0286076
(0.17)
inflation rate
-0.0555277
(-1.66)
unemployment rate
-0.278504
(-3.51)
interest rate
0.0624265
(1.58)
Constant
6.492796
Year fixed effects
YES
R - squared
0.3655
Observation
267
Table 6: The interaction of population growth and GDP growth
*Significance at the 10% level.
**Significance at the 5% level.
***Significance at the 1% level
20
VI. CONCLUSION
We gathered information from 27 different Asian nations, and after eliminating the variables that
were not available, we had 241 observations. After analyzing the data, this study has given us access
to the literature on how population expansion affects various facets of the economy.
Firstly, we find that the association between population increase and economic growth is supported
by stronger evidence in the entire sample than in the missing sample cases. Secondly, we observe
various favorable and unfavorable effects on each economic sector. For instance, the population and
unemployment rate are negatively correlated.
In conclusion, the population crisis will have a significant impact on the economy between 2011 and
2020, positively.
21
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