Impact Of Population Growth On The Economicgrowth Of Ethiopia: Using An Auto Regressive

Abstract

There is still a lot of disagreement about the effects of population growth on economic growth. As a result, the argument over the beneficial and negative effects of population expansion on the economy continues. This opens the door to looking at other factors that affect economic growth. Therefore this study aimed to examine the impact of population growth on the Ethiopian economic growth from 1990/91-2020/21. A time series data from National Bank of Ethiopia, Ministry of Finance and Economic Development, Office of Population and Housing Census Commission, World Bank data base of Ethiopia and Ministry of Economic Development and Cooperation were used. Autoregressive distributed lag approach to co-integration and error correction model was applied to investigate the long-run and short-run impact population growth on economic growth. The model results revealed that number of population, foreign direct investment; personal remittance, Gross capital formation and human capital have a positive impact on economic growth in both the long run and short run. However, the model results revealed that interest rate, population growth rate and foreign aid have a negative impact on economic growth in both the long run and short run. The negative and significant error correction term shows that the short-run disequilibrium adjusts to its long-run equilibrium by 73.9% each year. Therefore, this study recommends that realistic population policies should be designed and implemented by the government to adjust/control high rate of population growth and make it a beneficial resource for the economy. Moreover, government must strive to increase accumulation of capital goods translates to investment and the production of more goods and services, which should boost the income of the population