EFFECT OF RAPID POPULATION INCREASE ON ECONOMIC

GROWTH OF NIGERIA

BY

DAME, IDENYI ERNEST

2020 /MS /14074

DEPARTMENT OF ECONOMIC AND DEVELOPMENT STUDIES

FACULTY OF SOCIAL SCIENCES

ALEX EKWUEME FEDERAL UNIVERSITY NDUFU-ALIKE IKWO,

EBONYI STATE.

JANUARY,2024 .

i
ii
 EFFECT OF RAPID POPULATION INCREASE ON ECONOMIC
GROWTH OF NIGERIA

PRESENTED

BY

DAME, IDENYI ERNEST

2020 /MS /14074

A RESEARCH PROJECT SUBMITTED TO THE DEPARTMENT OF ECONOMIC

AND DEVELOPMENT STUDIES, FACULTY OF SOCIAL SCIENCES, FEDERAL
UNIVERSITY NDUFU ALIKE IKWO, EBONYI STATE, NIGERIA , IN PARTIAL
FULFILMENT FOR THE REQUIREMENT FOR THE AWARD OF BACHELOR
OF SCIENCES (B.SC) DEGREE IN ECONOMICS.

iii
 CERTIFICATION
This is to certify that this research titled: EFFECT OF RAPID
POPULATION INCREASE ON ECONOMIC GROWTH IN NIGERIA is
the original work of DAME IDENYI ERNEST 2020/MS/14074 has not been
submitted nor presented in part to any other institution(s) for the award of any
degree or certificate. The materials used in the work are properly
acknowledged.

………………………………… ……………………
DAME IDENYI ERNEST DATE
2020/MS/8112

IV
 APPROVAL

The research work titled: EFFECT OF RAPID POPULATION INCREASE ON

ECONOMIC GROWTH IN NIGERIA carried out by DAME IDENYI ERNEST
2020/MS/14074 has been read and approved as having met the requirement of Department of
Economic and Development Studies, Federal University Ndufu- Alike, Ebonyi State, Nigeria
for the award of Bachelor of Sciences (B.sc) Degree in Economics.

______________________ __________________

PROF. U.I. UWAZIE DATE

(SUPERVISOR)

______________ __________________

PROF. K. E. UMA DATE

(HEAD OF DEPARTMENT)

______________________ _________________

PROF. SMART OTU DATE

(DEAN OF FACULTY)

_____________________ ________________

DATE

(EXTERNAL EXAMINER)

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 DEDICATION

This research is dedicated to the Almighty God for His unending mercy and favour towards

my life. To my parents, Mr. Dame Thomas and Mrs. Dame Blessing, for all their support

towards achieving this degree and to my siblings, who have always supported me as much

as they can. I say thank you.

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 ACKNOWLEDGEMENT

Honestly, it is not easy, and my heartfelt thankfulness goes to God Almighty, my way-

maker, for His unending love and grace in bringing me this far. To my parents and siblings,

for their unwavering support during my undergraduate education. and their continued belief

in me and my abilities. I cannot thank my supervisor, Prof. U.I. Uwazie, enough for making

this project journey so enjoyable and memorable. This work cannot be complete without

recognizing and praising Mr. Ohalete Precious for his exceptional work in ensuring the

success of this assignment and my overall academic performance. Thank you so much, sir,

for your intellectual assistance in econometric abilities and data analysis, which were critical

in completing my research project. I also cannot forget Dr. Makuachukwu Ojide's fatherly

guidance, which illuminated my path and contributed to the achievement of this undertaking.

My heartfelt gratitude goes to Prof. K.E Uma for his inspirational remarks and

encouragement, which have served as a springboard for my academic endeavors. Thank you,

sir

Similarly, I am grateful to my friends and classmates Okwara Umeh Junior, Chinedu Basil,

Okorie Loveth, and Ukwenyi Justice for their invaluable aid in motivating, supporting, and

being a rock for me during the duration of this endeavor.

May GOD reward you all abundantly. Amen.

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 TABLE OF CONTENTS

Cover Page …………………………………………………………………...i

Logo Page…………………………………………………………………….ii

Title Page……………………………………………………………………. iii

Certification Page ……………………………………………………….......iv

Approval Page……………………………………………………………........v

Dedication Page…………………………………………………………….....vi

Acknowledgement Page…………………………………………………........vii

CHAPTER ONE: INTRODUCTION

1.1 Background of the study………………………………………………………....1

1.2 Statement of the problem………………………………………………………....4

1.3 Research Questions…………………………………………………… ………...5

1.4 Objectives of the Study…………………………………………………………..6

1.5 Research Hypothesis……………………………………………………………..6

1.6 . Significance of study…………………………………………………………....6

1.7. Scope of the study……………………………………………………………….7

1.8. Organization of the study………………………………………………………...8

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1 Introduction………………………………………………………………………...10

2.2 Conceptual Framework……………………………………………………………10

2.2.1 Definitive term of population…………………………………………………….10

2.2.2 Reasons for Nigeria’s increasing population……………………………………..11

2.2.3 Population trends in the Nigerian economy………………………………………12

2.2.4 Consequences and effects of population growth………………………………….13

2.2.5 Economic Growth in Nigeria……………………………………………………...14

2.3 Theoretical Literature………………………………………………………………..15

2.3.1 The Classical Growth theory……………………………………………………....15

2.3.2 The Malthusian theory……………………………………………………………..16

2.3.3 Optimum Theory of Population……………………………………………………17

2.3.4 Demographic Transition theory…………………………………………………....18

2.3.5 Optimum Transition theory………………………………………………………...19

2.4 Empirical Literature Review…………………………………………………………20

2.5 Summary of the Empirical Literature Review………………………………………..27

2.6 Limitation of previous studies and knowledge gap…………………………………...32

CHAPTER 3: RESEARCH METHODOLOGY

3.1 Research Design………………………………………………………………………33

3.2 Theoretical Framework of the Study………………………………………………….33

3.3 Model Specifications…………………………………………………………………..34

3.3.1 Apriori Expectation………………………………………………………………….35

3.3.2 Model Justification…………………………………………………………………..35

3.3.3 Description of the Variables in the Model…………………………………………..36

3.4 Estimation Techniques and Procedures……………………………………………….36

3.4.1 Pre-estimation Tests…………………………………………………………………37

3.4.2 Evaluation Criteria…………………………………………………………………..38

3.4.3.Econometric Criteria (Apriori Expectation)…………………………………………38

3.4.4 Statistical criteria (IST Order Test)…………………………………………………..38

3.4.5 Econometric criteria (2ST Order Test)……………………………………………….39

3.5 Sources of Data………………………………………………………………………..40

CHAPTER FOUR: ANALYSIS AND RESULTS

4.1 Introduction…………………………………………………………………………….41

4.2 Results and Discussions……………………………………………………………….41

4.2.1 Augmented Dickey Fuller (ADF) Unit Root Test……………………………………42

4.3 Bounds Approach to Autoregressive Distributed Lag………………………………...43

4.4 Autoregressive Distributed Lag(ARDL)………………………………………………44

4.5 Apriori Expectations……………………………………………………………………45

4.6 Granger Causality Test………………………………………………………………..45

4.7 Econometric Test Results…………………………………………………………….46

4.7.1 Auto-Correlation…………………………………………………………………….46

4.7.2 Multi-collinearity Test……………………………………………………………….46

4.7.3 Normality Test………………………………………………………………………47

4.7.4 Stability Test………………………………………………………………………..48

4.8 Estimation of Employed Hypothesis………………………………………………....50

4.8.1 Test of Hypothesis 1………………………………………………………………..50

4.8.2 Test of Hypothesis 2………………………………………………………………..50

CHAPTER FIVE…………………………………………………………………………51

5.1 Summary……………………………………………………………………………...51

5.2 Conclusions…………………………………………………………………………..52

5.3 Recommendations…………………………………………………………………….53

5.4 Limitations of the Study……………………………………………………………..53

5.5 Suggestions for Further Research…………………………………………………..54

5.6 References…………………………………………………………………………..55
 LIST OF TABLES

Table 2.5.1 Summary of Literature Reviewed………………………………………………27

Table 4.1 ADF Unit Root Test Results……………………………………………………..42

Table 4.2 Results of Bound Test Approach to ARDL………………………………………43

Table 4.3 Estimated Long-run Coefficients of ARDL Model……………………………….44

Table 4.4 Apriori Expectations…………………………………………………………….45

Table 4.5 Granger Causality Test…………………………………………………………….46

Table 4.6 Breusch-Godfrey Serial Correlation……………………………………………..46

Table 4.7 Variance Inflation Factors……………………………………………………….47

 LIST OF FIGURES

Fig 4.8 Normality Test Result …………………………………………………………….48

Fig 4.9 Plot of Cumulative Sum of Residual………………………………………………49

Fig 4.10 Plot of Cumulative Sum of Squares of Residual…………………………………49

 LIST OF ACRONYMS/ABBREVIATIONS

RGDP Real Gross Domestic Product

POP Population Growth..

LFPR Labour Force Participation Rate.

UR Unemployment Rate.

Ut Error Term.

ARDL Autoregressive Distributed Lag.

ADFT Augmented Dickey Fuller Test.

 Abstract

The study ‘the effect of population growth on economic growth in Nigeria’, was embarked on
to understanding the benefits or adverse effects that population growth had on the Nigerian
economy given that the population of Nigeria has been on the increase in the last 3 decades.
Following the debate between the Malthusian theory (which states that an uncontrolled
increase in population growth would eventually result to a decline in economic growth as the
resources required to cater for the population will be insufficient) and the Anti-Malthusian
theory (which states that an increase in population can be harnessed to drive economic
growth via massive increase in a nation’s productive capacity), this study hoped to determine
which theory played out in the Nigerian economy. To ascertain this, the study adopted the
ARDL model to analyse a time series dataset from 1980-2021 on variables such as Real
Gross Domestic Product (RGDP), Population growth (POP), Labour Force Participation
Rate (LFPR) and Unemployment Rate (UER). The specific objectives were to assess the
impact of population growth on economic growth, and to determine whether population
growth Granger causes economic growth. The analysis revealed some key findings. Firstly, it
was discovered that population growth had a negative and significant effect on economic
growth. This implies that as the population grows, it exerts a downward pressure on
economic growth. Secondly, the study found that population growth does not Granger cause
economic growth, suggesting that past values of population growth do not contain
information that can help predict future economic growth.
 CHAPTER 1.

INTRODUCTION

1.1 Background of the study

Nigeria, the most populous country in Africa, has undergone significant population growth

over the past few decades. According to the Nigeria Bureau of Statistics (2021), the estimated

population of Nigeria surpassed 200 million, with projections indicating continued growth in

the coming years. This demographic phenomenon has profound implications for the countrys

economic growth, shaping the dynamics of productivity, labour force, and resource

allocation. One of the ways in which population growth impacts economic growth in Nigeria

is through its effect on the labour force. With a growing population, there is an increase in the

number of individuals entering the work force. According to Ochinyabo (2021), this can lead

to a demographic dividend if the country invests in education, healthcare, and skill

development to enable these individuals to contribute productively to the economy. Yahaya

et al. (2020) purported that the availability of a large labour force boosts production and

economic output, fostering economic growth. However, the realization of the demographic

dividend relies on several crucial factors. For one, there must be sufficient employment

opportunities and job creation to accommodate the expanding labour force. According to

Malthus (1986), if the pace of economic growth does not match the rate of population

increase, unemployment and underemployment can rise, leading to social and economic

challenges given that population grows in geometric terms while the resources required to

cater for the population grows arithmetically. Malthus and Winch (1992) explicitly explained

that the inability of the resources available to cater for the population will eventually

metamorphose into social unrest, poverty, war and a decline in a nation’s overall wealth.
The study of Yakubu et al. (2020) shows that the speedy rise in population size in developing

countries is because of high birthrate and an unchecked desire to control the rate of

procreation given the subsequent satisfaction that comes with surplus resources. It has played

out in the present-day Nigeria as the country’s youth unemployment rate stood at

approximately 42% (NBS, 2021), highlighting the importance of addressing this issue to

leverage the potential benefits of population growth.

The existing debate has been between if population growth negatively affects economic

growth as purported by the Malthusian theory or if population growth can actually be

beneficial and promote economic growth if maximized ,as stated by the anti-Malthusian

theory by Julian Simon (2014). Scholars like Simon (2014) & Sabin (2013) have put forward

that population growth could be taken advantage of and transformed into an extreme

productive labour force who could drive economic growth. However, research has shown that

this can only be possible if the country possesses an effective educational system which

equips its working population with the required skills to drive research and development.

However ,Ibrahim et al. (2020) explained that most developed economy plagued with high

rate of population growth, lack the institutions and facilities required to harness the benefits

of a large population. According to Rahman et al. (2020),population growth can significantly

impact domestic consumption patterns because, with a larger population comes increased

demand for goods and services, which can stimulate economic activities . However, to ensure

sustainable consumption patterns and avoid resource depletion, proper planning and policies

are necessary to balance consumption with available resources and environmental

considerations (Ideh et al., 2022).Despite the potential advantages, rapid population growth

can also strain resources and infrastructure, posing challenges to economic development

(Ideh et al., 2022).

The demand for essential services such as healthcare, education, and housing may outstrip the

government's capacity to provide adequate facilities and services, leading to disparities in

access and quality of life. Insufficient investment in infrastructure can hinder productivity

and the country's competitiveness in the global market (Rehman et al., 2022).Furthermore, if

economic growth does not keep pace with population growth, it can exacerbate poverty levels

(Adewole,2012). As of 2021, Nigeria's poverty rate was estimated to be around 40% (NBS,

2021), with a significant proportion of the population living below the poverty line. High

poverty rates and unequal income distribution can hinder inclusive economic growth and lead

to social unrest, undermining stability and development efforts.The impact of rapid

population growth on economic growth intertwines with other factors like educational

attainment and healthcare. Investment in education and healthcare is crucial for developing

human capital, which plays vital role in increasing productivity, fostering innovation, and

driving technological advancements. In 2021, Nigeria's literacy rate for adults aged 15 and

above was approximately 62% (NBS, 2021), highlighting the need for further efforts to

improve access to quality education.

Addressing the challenges and harnessing the potential benefits of population growth has

shown to be an endeavour for developing economies and brings about more concern than the

challenges presented by rapid population growth (Schneider, 2022). The existing debate is

that either rapid population growth is beneficial or parasitic to economic growth as seen in

several insights into the subject matter and lies at the root of the rationale behind this study.

Ogunjinmi (2022) has proposed that by addressing issues related to education, healthcare,

employment, and infrastructure, Nigeria can maximize the potential benefits of its growing

population and foster a more inclusive, resilient, and prosperous economy. A holistic and

forward-thinking approach to population and economic development will be crucial in

shaping Nigeria's future growth trajectory and achieving sustainable development goals.
1.2 Statement of the Problem

The burgeoning population in Nigeria has been growing at an accelerated pace in recent years

(Tartiyus et al., 2015), raising significant concerns about its potential implications for the

country's economic growth and overall development. The problem at hand revolves round

comprehending the challenges posed by rapid population growth and gaining deeper insights

into how it influences Nigeria's economic growth trajectory. With the surge in population

comes array of challenges that need attention. Firstly, the strain on the nation's infrastructure

and resources has intensified (Ogunleye et al., 2018) as the existing systems grapple to cope

with the escalating demands of a larger population. Consequently, issues like inadequate

transportation, limited access to utilities, and stretched public services have emerged.

Secondly, the expansion of the labor force has contributed to heightened unemployment rates,

creating a productivity gap and potential social instability (Akinbode et al., 2017). Moreover,

the rapid population growth has further exacerbated income inequality, as limited access to

opportunities impedes upward mobility for the population. Furthermore, the surge in

population has escalated food demand (Adewole, 2012), making it increasingly difficult to

attain food security due to production constraints and distribution inefficiencies.

Nevertheless, demographic trends can also bring about opportunities for economic growth. A

growing population translates into an expanding domestic consumer market, which holds the

potential to stimulate demand for goods and services, thus driving economic growth (Yahaya

et al., 2020). Additionally, a youthful and dynamic workforce resulting from population

growth presents opportunities for increased productivity and innovation (Akinbode et al.,

2017). However, seizing these opportunities requires a substantial investment in human

capital, including education and healthcare, to fully harness the population’s potentials.
The study delves into the intricate dynamics between rapid population growth and its impact

on Nigeria's economic growth. By identifying the challenges and opportunities arising from

this phenomenon, policymakers and stakeholders can devise targeted strategies to leverage

demographic trends for sustainable and inclusive economic development. Addressing the

impact of rapid population growth on economic growth is crucial for securing Nigeria's long-

term prosperity and socio-economic well-being.

1.3 Research Questions

i. What is the impact of rapid population growth on economic growth in Nigeria?

ii. What is the causal relationship between population growth and economic growth in

Nigeria?

1.4 Objectives of the study

i. To determine the impact of rapid population growth on economic growth in Nigeria.

ii. To determine whether there exists a causal relationship between population growth and

economic growth in Nigeria.

1.5 Research Hypothesis

H01: Population growth has no significant impact on economic growth in Nigeria.

H11: Population growth has a significant impact on economic growth in Nigeria.

H02: There exists no causal relationship between population growth and economic growth in

Nigeria.

H12: There exists a causal relationship between population growth and economic growth in

Nigeria.
1.6 Significance of the study

This study holds great significance for various reasons. It will provide valuable insights to

policymakers, economists, and stakeholders, aiding in evidence-based policy formulation and

planning. Understanding the implications of population growth on economic development is

crucial for achieving Sustainable Development Goals, attracting investments, and allocating

resources effectively. The study's findings will contribute to poverty alleviation strategies,

guide infrastructure development, and promote human capital development through education

and healthcare initiatives. As Nigeria undergoes a demographic transition, this research will

help manage population dynamics and regional disparities, fostering equitable growth across

nations. Therefore, exploring the relationship between population growth and economic

growth in Nigeria will offer crucial knowledge to promote sustainable development, uplift

living standards, and work towards long-term growth.

1.7 Scope of the Study

This study focuses on Population growth and Economic growth in Nigeria for the period of

1980 to 2018, using the following variables; Real Gross Domestic Product (as the dependent

variable) and Unemployment Rate (UR), Population growth (POP) & Labour Force

Participation Rate (LFPR) which are the independent variables. Secondary data will be used

to in testing the variables.

1.8 Organization of the Study

This research consist of five (5) parts (chapters 1 to 5).

Chapter one is the introduction, which covers the background of the study, statement of

research problem, objective of the study, significance of the study, scope of the study and

organization of the study. It also states the research hypotheses and the research questions.

Chapter two is the literature review, which includes the conceptual framework, theoretical
literature review, empirical literature review and the knowledge gap. Chapter three is the

research methodology. It shows the research design, data source, model specification and the

method of data analysis. Chapter four contains presentation of data and discussion, data

analysis, hypothesis testing and discussion of findings. Chapter five is the summary,

conclusion and recommendation.

CHAPTER TWO
 REVIEW OF RELATED LITERATURE

2.1 Introduction

Various studies have been carried out to investigate the impact of population on economic

growth in the literature. The results of these studies varied; due to differences in methodology

and timeline as well as the variables included in the model.

2.2 Conceptual Framework

2.2.1 Definitive term of Population

According to Thomas Frejka, 1973, the population of an area is the total number of all

individuals alive in a particular point in time.

In Higgs (1963),the population of a country is the number of its inhabitants and any account

taken of differences of quantity, it is of quality in close relation to numbers. Thus, population

is a label for a human aggregate.

A growing population means large labour force that can contribute directly to development

and economic progress, and a larger population equals more total output. Furthermore, a

growing population can provide growing market for most goods and services, encouraging

businesses to spend more on capital goods and machines, resulting in increased economic

activity, income and employment (Peterson, 2017).

2.2.2 Reasons for Nigeria’s increasing population

The main factor causing an increased population is the birth rate. Birth rate has influenced the

population growth in many ways due to improved medical facilities and services. Child

mortality has drastically reduced because in earlier times, there were not advanced health

service like better drugs and immunization that will reduce child mortality. Presently, there

are improved medical services which reduce child, infant and even mother mortality
(Odusina, 2006). Secondly,early marriages in the Northern Part of Nigeria poses a big

problem. Early women marriages leads to increased birth rate and prolong their child bearing

years, which makes them give birth too many children (Odusina, 2006). The third reason is

increase in material welfare given to citizens. When people are materially well off, they begin

giving birth to as many children as they wish without thinking about the implication of their

actions since they are thriving well. Its also based on the arguments of Thomas Malthus on

the poor laws in England, which suggested that relief materials should not be discouraged

because an increase in material welfare makes them have more babies (Gachechiladze, 1988).

2.2.3 Population trends in the Nigerian economy

As the Nigerian population policy aptly acknowledges, the people are the most valuable

resources of nations and constitute the primary producers and consumers of national wealth

and development dividends. Thu,human-beings are at the centre of concern for sustainable

development. The International Conference on Population and Development (ICPD) held in

Cairo in 1994 emphasized the interrelationship between population, economic growth and

social development. According to ICPD Programme of Action (POA), “there is a general

agreement that persistent widespread poverty as well as serious social and gender inequalities

have significant impact and is influenced by demographic parameters such as population

growth, structures and distribution”. Thus, there is a need to fully integrate population

concerns into all aspects of development strategies, planning and decision making at all levels

with the goal of improving the quality of life of the people (UNSN, 2001).

Proximate Determinants of Population Growth in Nigeria at a growth rate of 2.8 per cent per

annum between 1952 and 1991, Nigeria is one of the fastest growing countries in the world.

The growth rate isn’t expected to change drastically in the short run. Nigeria’s population is

to double in less than 25 years. The high population growth rate is essentially due to
persistently high fertility in the face of decreasing mortality between 1960s and the 1980s,

fertility rate (TFR) had remained high at about six children per woman (UN 2000a, 2000b)

while the Crude Death Rate (CDR) had decreased from 27 to 15 deaths per 1000 population

within the same period. The infant mortality Rate (IMR

0 declined from 187 to 90 deaths per 1000 live births between 1960s and 1980s. Available

data show that international migration does not contribute significantly to growth of Nigeria

population (UNSN, 2001). Nigeria is one of the fastest growing countries in the world. With

an estimated population of 140 million in 2006, and an annual population growth rate of

2.9% (NPC, 2006), Nigeria is the most populous nation in sub Saharan Africa and the tenth

populous country in the world. However, the composition of this population is mainly in the

youthful category, 49% being youths below the age of 21 and a dependency ratio estimated at

89%. A large proportion of this population favours and is living in the rapidly expanding

urban area, estimated at over 45.2% and will likely hit 55.4% mark by the year 2015 (UNDP,

2000). As at 2018, Nigeria’s population was 198.39M, that is 2.53% increase from 2017,

2019 was 203.30M that is 2.48% from 2018, 2020 was 208.33M that is 2.47% from 2019,

2021 was 213.40M that is 2.44% from 2020, 2022 was 218.54M a 2.41% increase from 2021.

With this, the population dynamics shows profound inequities and disproportions when

analyzed with the development indicators, such as: 21 doctors per 100,000 people, infant

mortality rate of 112 per 1000 live births, maternal mortality of over 980 per 100,000 live

births, life expectancy at birth projected at 50.1 years, is getting lesser and lesser (UNDP,

2000).

2.2.4 Consequences and effects of population Growth

The Consequences and effects of population growth on economic development differ

between the developed and developing countries (Adewole, 2012). In the developed
countries, population growth has enhanced the growth of such economies because they are

wealthy, have abundant capital and labour. On the contrary the consequences of rapid

population growth on the development of LDCs are not the same (Tartiyus, 2015). Most

developing countries are poor, surplus labour and population growth adversely affects their

economic development. Precisely every increase in population has led to more problems than

benefits.The effects of population growth include: High population growth rates require

massive investment in Social infrastructure. Due to the shortage of investment funds, social

infrastructure like education, health, transport and housing is likely to decrease. This results

in overcrowding, declining quality of services and migration (Hansen, 2018).

2.2.5 Economic Growth in Nigeria

The concept "economic growth" deals with increase in output level of an economy, whi can
also mean an increase in income level. Economic growth can be seen in the productivity
level, volume of trade, investment in both human and physical capital. Economic growth
refers to an increase in overall productivity, measured by the gross domestic product (GDP).
Economic growth is measured in two ways which are:
(i) Real economic growth
(ii) Nominal economic growth
Real economic growth means that the rate of change in total productivity increases, and
nominal economic growth means that the country's GDP rises simply by raising commodity
prices and wage rates (Umaru et al, 2012).
According to Haller (2012), economic growth is, in a limited sense, an increase of the
national income per capita. It involves analysis, especially in quantitative terms, of this
process and focuses on the functional relations between the endogenous variables. In broad
sense, it involve the increase of the GDP, GNP and NI, therefore of the national wealth,
including the production capacity, expressed in both absolute and relative size, per capita,
encompassing the structural modifications of the economy. In other words, economic growth
is the process of increasing the sizes of national economies, the macro-economic indications,
especially the GDP per capita, in an ascendant but not necessarily linear direction, with
positive effects on the economic-social sector.

2.3 Theoretical Literature

(a) The Classical Growth Theory

In the late 18th and early 19th century, the classical economists like Adam Smith, J.S. Mill,

Malthus and D. Ricardo developed a theory of growth which is based upon three factors,

namely population growth, natural resources and capital accumulation. The classicalists say

that there are two types of people in an economy like workers whose asset is their labour, and

capitalists who own land and capital (Christopher, 2016). The workers are given just the

subsistence wages, if due to some new inventions or the favourable weather conditions etc.,

production increases, it will create surplus which is accumulated by the capitalists. However,

such accumulations increase the demand for labour. As the population is fixed in short-run,

the increase in demand for labour will result in rise in wages. The excess of wages over

subsistence level will lead to growth in the population demand for food. The price of food

rises to cover the high cost of production on low quality land. The effects of increased

population and high-priced food drive the real wages to the subsistence level. Thus, in

classical growth model, application of diminishing returns and high costs of production on

low quality land represents a constraint to growth so that the living standard remains at

subsistence level. If the technological progress occurs, the change occurs temporarily

(Malthus, 1978, 287).

The Classical Growth Theory is a theory on economic growth that argues that economic

growth will end because of an increasing population and limited resources. Classical Growth

Theory economists believed that temporary increases in real GDP per person would cause a

population explosion that would consequently decrease real GDP (Eltis, 1975).
Classical Growth Theory economists behind this theory developed an idea of a ‘subsistence

level’ to model the theory. They believed that if real GDP rose above this subsistence level of

income that it would cause the population to increase and bring real GDP back down to the

subsistence level. Alternatively, if the real GDP fell below this subsistence level, parts of the

population would die off and real income would rise back to the subsistence level. This

envisages that expansion of oil export has no greater role to play in stimulating economic

growth (Eltis, 2000).

(b) The Malthusian Theory

This theory was propounded by Thomas Malthus, who was a British economist and was the

first to propose a systematic theory to population. He based his findings on the British

economy of that time and proposed in his principles that human population growth rate was

increasing at a geometric population while food production was increasing at an

arithmetic progression. Malthus's early writings were pamphlets that addressed economic and

political issues of his time. In opposition to the popular 18th century European view that

society was constantly improving, he wrote about the dangers of excessive population

growth. In his 1798 work, An Essay on the Principle of Population, Malthus examined the

relationship between population growth and resources. From this, he developed the

Malthusian theory of population growth in which he wrote that population growth occurs

exponentially, so it increases according to birth rate. For example, if every member of a

family tree reproduces, the tree will continue to grow with each generation. On the other

hand, food production increases arithmetically, so it only increases at given points in time.

Malthus wrote that, left unchecked, populations can outgrow their resources. According to

Malthus, there are two types of 'checks' that can reduce a population's growth rate. Preventive

checks are voluntary actions people can take to avoid contributing to the population. Because

of his religious beliefs, he supported a concept he called moral restraint, in which people
resist the urge to marry and reproduce until they are capable of supporting a family. This

often means waiting until a later age to marry. He also wrote that there are 'immoral' ways to

check a population, such as vices, adultery, prostitution, and birth control. Due to his beliefs,

he favored moral restraint and didn't support the latter practices. Positive checks to

population growth are things that may shorten the average lifespan, such as disease, warfare,

famine, and poor living and working environments. According to Malthus, eventually these

positive checks would result in a Malthusian catastrophe (also sometimes called a Malthusian

crisis), which is a forced return of a population to basic survival.

(c) Optimum Theory of Population

The economists like Carr Saunders considered ‘optimum population’ as that which produces

maximum welfare. On the other hand, Prof. Cannan defined this theory in terms of ‘return to

labour’. He remarked, “Knowledge and circumstances remaining the same, there is what may

be called maximum return when the amount of labour is such that both an increase and

decrease in it would diminish proportionate return.” Similarly, Bounding has rightly

observed, “Optimum population is that at which standard of living is maximum.

The optimum theory is based on two important assumptions:

1. The proportion of working population to total population remains constant as the

population of the country increases.

2. As the population of a country increases, the natural resources, the capital stock and state

of technology remain unchanged.

(d) Demographic Transition Theory

The Demographic Transition Model (DTM) was propounded by an American Demographer

Warren Thompson in 1929 and is based on historical population trends of two demographic
characteristics; birth rate and death rate, to suggest that a country’s total population growth

rate cycles through stages as that country develops economically (Thompson, 2015). Each

stage is characterized by a specific relationship between birth rate (number of annual births

per one thousand people) and death rate (number of annual deaths per one thousand people).

As these rates change in relation to each other, their produced impact greatly affects a

country’s total population. Within the model, a country will progress over time from one

stage to the next as certain social and economic forces act upon the birth and death rates

(Thompson, 2015).

The stages of the Demographic Transition Model

In Stage 1, which applied to most of the world before the Industrial Revolution, both birth

rates and death rates are high. As a result, population size remains fairly constant but can

have major swings with events such as wars or pandemics.

In Stage 2, the introduction of modern medicine lowers death rates, especially among

children, while birth rates remain high; the result is rapid population growth.

In Stage 3, birth rates gradually decrease, usually as a result of improved economic

conditions, an increase in women’s status, and access to contraception. Population growth

continues, but at a lower rate.

In Stage 4, birth and death rates are both low, stabilizing the population. These countries tend

to have stronger economies, higher levels of education, better healthcare, a higher proportion

of working women, and a fertility rate hovering around two children per woman.

A possible Stage 5 would include countries in which fertility rates have fallen significantly

below replacement level (2 children) and the elderly population is greater than the youthful

population.
(e) Optimum Transition Theory

This theory, propounded by Edwin Cannan in his book “Wealth” published in 1924 and

popularized by Robbins, Dalton and Carr-Saunders, concerns itself between population size

and wealth creation. The definition of optimum population as given by Edwin Cannan is an

ideal population which when combined with the other available resources or means of

production of the country will yield the maximum returns or income per head (Robbins,

1927).

However, Robbins, Dalton, and Carr-Saunders have each given this theory their own

definitions: Robbins defined the theory of optimum transition as the best population which

makes the maximum returns gotten in an economy possible.

Dalton defines it as the population which gives the maximum income per head (Gottlieb,

1945).

Carr-Saunders defines it as the population which produces the maximum economic welfare

(Spengler, 1933).

From the definitions given above, it can be clearly seen that each of these economists are

basically concerned with the maximum benefit of the economy as it concerns population but

the more scientific and realistic view is the view as given by Dalton.

This theory, just like other theories, is based on certain assumptions. These assumptions

includes:

(i) The economy has a certain amount of natural resources that may change over time. The

techniques of production adopted by this economy are constant. Constant stock of capital.
(ii) The preferences and habits of the citizens of that economy don’t change. Even with an

increase in population, the ratio of the working population to the total population remains

constant.

(iii) No change in the working hours of the population. These assumptions explain that ceteris

paribus, an increase in the optimum population of the economy would lead to a reduction in

the income per head.

2.4 Empirical Literature Review

This section examines past and current empirical findings of various researches which exist

in the literature as regards the impact of petroleum sector on economic growth in Nigeria.

Nwakeze and Omoju (2011) reviewed the relationship between economic growth and savings

in Nigeria using secondary (annual time series) data that spanned through 1980 to 2007. The

variables incorporated in the model for the study are saving rate, population, real per capita

GDP, interest rate, inflation rate and financial depth. The study relied on vector error

correction regression model for its analysis. The empirical estimation results revealed that

savings and rapid growing population have negative and positive influence on economic

respectively in Nigeria.

Rutger and Jeroen (2011) investigated the impact of population dynamics (age-structure) on

economic growth in Nigeria from 1997 to 2008. The variables included in the model are asset

(wealth) index (used as proxy for district GDP), GDP per capital growth, growth rate of

working-age share, urbanisation rate, landlocked, life expectancy, trade openness. The result

of the study revealed a robust positive effect of working age population on growth rate of

GDP using OLS. Therefore, the researchers recommended the need for government to create

conducive investment environment as this will provide more employment that can absorb the

growing youth population.

Adewole (2012) in his research Effect of Population on Economic Development in Nigeria:

A Quantitative Assessment adopted the ordinary least square method of analysis to examine

the time series properties using the Phillips-Perron (PP) nonparametric unit root test. The

study used trend analysis of the study with the scope spanning between 1981 and 2007. The

analysis revealed that population growth has a positive and significant impact on economic

sustainability proxied as the real gross domestic product (RGDP) and Per Capita Income.

Adediran (2012) analysed the effect of population growth on economic development in

Nigeria from 1981-2007. The study adopted ordinary least square method (OLS), and found

that population growth has a significant and positive relationship with economic growth of

Nigeria. The study used the real GDP and Per Capita income (PCI) as proxies for economic

development and population growth respectively.

Akintunde et al (2013) examined the relationship between population dynamics and

economic growth in sub-Saharan African from 1975 to 2005 using five year average. The

researchers employed the use of both pooled OLS and dynamic panel techniques on data

obtained from thirty-five (35) countries in the sub-Saharan countries. Among the variables

listed in the model include gross capital formation (as a percentage of GDP), gross domestic

product per capital, primary school enrolment, mortality rate, fertility rate among others. The

empirical research result revealed that total fertility rate has a negative impact on economic

growth while life expectancy at birth was found to have a positive relationship with economic

growth during the considered period. The researchers concluded that for economic growth

and development to be achieved in studied economies, population growth must be properly

addressed.

Abdulrahman (2013) examined population growth and food security in Nigeria from 2010-

2012. The study applied linear regression model and from the analysis using relevant data,
the study noted that, Nigeria is witnessing population expulsion, where population moves

substantially. Some of the factors identified includes; early marriage, poverty and illiteracy,

religious beliefs, improved sanitary condition, availability of medical facilities and low

mortality rate. The study also learnt that food production within the period of study increased

at marginal level, this is why people are vulnerable to hunger as well as hunger related

diseases. The study includes that population expulsion due to in efficiencies in agricultural

sector out run food supply, Nigeria therefore is in full spank of food insecurity

Nwosu, Dike and Okwara (2014), used time series data spanning through 1960 to 2008 to

investigate the role of population growth on economic growth in Nigeria and how economic

growth is affected through population growth. This study employed a linear model to analyse

economic growth fluctuations against population growth and Granger Causality method to

check the causal relationship that existed between the two core variables. The study found

the existence of a sustainable long run equilibrium relationship between economic growth

and population growth, and also a unidirectional causality relationship between population

growth and economic growth.

Olabiyi (2014) investigated the effects of population dynamics on economic growth of

Nigeria between 1980 and 2010 using the vector auto regressive (VAR) model. The variables

of interest are infant mortality rate, fertility rate, trade openness, government expenditure,

real gross domestic product and primary school enrolment The study was based on annual

time series data drawn on variables of interest within the stated period, The researcher found

that as fertility rate continued to decline, economic growth was rising; also the researcher

established a positive relationship between infant mortality rate and economic growth.

Mohammed, Amade (2015) conducted a research on the impact of population growth on

economic growth in Nigeria from 1980 to 2010. The data were analysed using both
qualitative and quantitative statistics. The variables of interest were real gross domestic

product (RGDP), population growth rate, crude death rate, life expectancy at birth, and export

growth rate. The result revealed that a positive relationship exists between economic growth

(proxied by GDP growth) and population growth rate.

Eli H. Tartiyus et al. (2015) conduct a study on the impact of population growth on economic

growth in Nigeria from 1980 to 2010 using Error Correction model. The result of co-

integration test shows the existence of long run equilibrium relationship between population,

economic growth and other variables. The coefficients of population, fertility, and export

have positive relationships with GDP Growth.

Lawanson (2016) examined Rapid Population Growth and Economic Development in Nigeria

from 1979-2011 using the ordinary least square technique, the study showed that a growing

economy such as Nigeria needs a growing population, that is, an increased supply of workers

and consumers, though the exact nature of this relationship is complicated {population shows

a positive but insignificant effect on economic growth (at first difference) and a negative but

significant effect on economic growth (at first difference lagged) in Nigeria}.

Orumie (2016) examined the effect of the Unemployment Rate and Population Growth Rate

on Gross Domestic Product in Nigeria. The study applied the multiple regression model

conducted on data obtained from the National Bureau of statistics bulletin and Central Bank

of Nigeria within the period 1970 – 2010. The result of the analysis indicated that there is a

systematic relationship between the gross domestic product to population growth and

unemployment rate. The result also revealed that unemployment and population growth

contribute commensurable to gross domestic product. Furthermore, the result showed that

unemployment contributes more to the national gross domestic product during this period in

line with existing work. The paper failed to indicate whether the relationship between the
unemployment rate and population growth with GDP is positive or negative. It also failed to

suggest concrete recommendations for the study.

Emecheta et al. (2016) carried out a study on Population Dynamics and Economic Growth in

Nigeria using time series data spanning from 1970 to 2014. The data were analysed using the

ordinary least square estimation technique. The result revealed among others that all the core

variables (i.e. fertility, mortality, and net-migration) of the study are inversely related to

economic growth during the investigated period. The study further revealed that gross fixed

capital formation (GFCF) and savings are strong drivers of economic growth in Nigeria.

Tartiyus, Dauda & Peter (2015) carried out a research titled ‘Impact of Population Growth on

Economic Growth in Nigeria’, using secondary data obtained from the World Development

Indicators from 1980-2010 which were analysed using regression analysis; OLS as well as

descriptive statistics. The result revealed that there is a positive relationship between

economic growth (proxied by GDP growth) and population, fertility and export growth; while

negative relationships were found between economic growth (proxied by GDP growth) and

life expectancy, and crude death rate.

Aidi et al (2016) using more recent data investigated the relationship between population

growth and economic growth in Nigeria. The researchers employed Granger-Causality

technique for the study and found that neither population growth Granger-Cause economic

growth nor economic growth Granger-Cause population during the period understudied (1970

to 2013).

Adenola and Saibu (2017) examined the relationship between demographic change and

economic growth in Nigeria from 1986 to 2014 using OLS. They found that population has a

positive but insignificant relationship with Nigeria‘s economic growth.

Olusogo et al., (2018) explored a positive relationship between population and economic

growth from 1981 to 2015 using OLS. The findings are line with theoretical provision, as

population to a large extent determine the amount of labour which is an important factor of

production.

Ogunleye et al. (2018) explored the effect of population growth on the economic growth of

Nigeria over the period of 1981 to 2015. Using the OLS regression, their findings of the study

showed that population growth has a positive and significant effect on economic growth of

Nigeria, while fertility was negative and significant for economic growth in Nigeria.

Exchange rate and crude death rate are however insignificant for economic growth of

Nigeria.

Olusogo, Oluwarotimi & Muazu (2018) explored the effect of population growth on the

economic growth of Nigeria from 1981 to 2015. Data used were GDP and exchange rate,

Population growth rate, fertility rate, and crude death rate. Ordinary least squares regression

was used to analyze these data. The findings of the study revealed that population growth has

a positive and significant effect on the economic growth of Nigeria, while fertility was

negative and significant for economic growth in Nigeria. The exchange rate and crude death

rate are however insignificant for the economic growth of Nigeria.

Onyeoma (2020) studied the influence of the rising population on Poverty and

Unemployment in Nigeria using Autoregressive Distributed Lag Bounds (ARDL) approach

on annual data from 1980-2018. It explores the dynamic relationship between population

growth and selected macroeconomic variables of economic growth, poverty, and

unemployment as well as the direction of causality between them. The study also found that

population growth and its components exerted a negative impact on the overall economic

conditions in Nigeria.
Ochinyabo (2021), examined the rapid population growth and economic development issues

in Nigeria. The study applied the multiple regression model conducted on data obtained from

the National Bureau of statistics bulletin and Central Bank of Nigeria within the period 1970

– 2010. The result of the analysis indicated that there is a systematic relationship between the

gross domestic product to population growth and unemployment rate. The result also

revealed that unemployment and population growth contribute commensurable to gross

domestic product. Furthermore, the result showed that unemployment contributes more to the

national gross domestic product during this period in line with existing work. The paper

failed to indicate whether the relationship between the unemployment rate and population

growth with GDP is positive or negative. It also failed to suggest concrete recommendations

for the study.

Ideh,Nenbee&Vite (2022), examined the dynamism between public healthcare expenditure,

population growth and economic development in Nigeria. The study applied the multiple

regression model conducted on data obtained from the National Bureau of statistics bulletin

and Central Bank of Nigeria within the period 1970 – 2021. The result of the analysis

indicated that there is a systematic relationship between the gross domestic product to

population growth and unemployment rate. The result also revealed that unemployment and

population growth contribute commensurable to gross domestic product. Furthermore, the

result showed that unemployment contributes more to the national gross domestic product

during this period in line with existing work. The paper failed to indicate whether the

relationship between the unemployment rate and population growth with GDP is positive or

negative. It also failed to suggest concrete recommendations for the study.

Schneider (2022), used time series data spanning through 1980 to 2021 to investigate

population growth, electricity demand and environmental sustainability in Nigeria. This study

employed a linear model to analyse economic growth fluctuations against population growth
 and the vector autoregressive model to check the causal relationship that existed between the

two core variables. The study found the existence of a sustainable long run equilibrium

relationship between economic growth and population growth, and also a unidirectional

causality relationship between population growth and economic growth.

2.5 Summary of the Empirical literature review

Authours/ Year Location of Scope of Research Topic Method of the Findings

the Study the study
study
Nwakeze and Nigeria 1980- The relationship The use of The empirical
Omoju (2011) 2007 between Vector error estimation results
economic correction revealed that savings
growth and model and rapid growing
savings in (VECM) population have
Nigeria negative and positive
influence on economic
respectively in Nigeria.
Rutger and Jeroen Nigeria 1997- the impact of The use of The result of the study
(2011) 2008 population ordinary least revealed a robust
dynamics (age- square method positive effect of
structure) on OLS working age population
economic on growth rate of GDP
growth using OLS.
Adewole (2012) Nigeria 1981- Effect of The use of The analysis revealed
2007 Population on Ordinary least that population growth
Economic square method has a positive and
Development in (OLS) significant impact on
Nigeria: A economic sustainability
Quantitative proxied as the real
Assessment gross domestic product
adopted the (RGDP) and Per Capita
ordinary least Income.
square method of
analysis to
examine the time
series properties
using the
Phillips-Perron
(PP)
nonparametric
unit root test
Adediran (2012) Nigeria 1981- the effect of The study The study found that
 2007 population adopted population growth has a
growth on ordinary least significant and positive
economic square method relationship with
development in (OLS) economic growth of
Nigeria. Nigeria.
Akintunde et al Sub-sahara 1975- the relationship The The empirical research
(2013) countries 2005 between researchers result revealed that total
population employed the fertility rate has a
dynamics and use of both negative impact on
economic pooled OLS economic growth while
growth in sub- and dynamic life expectancy at birth
Saharan African panel was found to have a
techniques on positive relationship
data obtained with economic growth
from thirty- during the considered
five (35) period.
countries in
the sub-
Saharan
countries
Abdulrahman Nigeria 2010- population Linear the study noted that,
(2013) 2012 growth and food regression Nigeria is witnessing
security in model population expulsion,
Nigeria where population
moves substantially and
that food production
within the period of
study increased at
marginal level, this is
why people are
vulnerable to hunger as
well as hunger related
diseases.
Nwosu, Dike and Nigeria 1960- the role of This study The study found the
Okwara (2014) 2008 population employed a existence of a
growth on linear model to sustainable long run
economic analyse equilibrium relationship
growth in economic between economic
Nigeria growth growth and population
fluctuations growth, and also a
against unidirectional causality
population relationship between
growth and population growth and
Granger economic growth.
Causality
method to
check the
causal
 relationship
that existed
between the
two core
variables
Olabiyi (2014) Nigeria 1980- effects of The Study The researcher found
2010 population used the vector that as fertility rate
dynamics on auto regressive continued to decline,
economic (VAR) model economic growth was
growth of rising; also the
Nigeria researcher established a
positive relationship
between infant
mortality rate and
economic growth.

Mohammed, Nigeria 1980- impact of The data were The result revealed that
Amade (2015) 2010 population analysed using a positive relationship
growth on both exists between
economic qualitative and economic growth
growth in quantitative (proxied by GDP
Nigeria statistics. growth) and population
growth rate.

Eli H. Tartiyus et Nigeria 1980- impact of Error The result of co-

al. (2015) 2010 population Correction integration test shows
growth on Model the existence of long
economic run equilibrium
growth in relationship between
Nigeria population, economic
growth and other
variables. The
coefficients of
population, fertility,
and export have
positive relationships
with GDP Growth.

Lawanson (2016) Nigeria 1979- Rapid The ordinary the study showed that a
2011 Population least square growing economy such
Growth and method (OLS) as Nigeria needs a
Economic growing population,
Development in that is, an increased
Nigeria supply of workers and
consumers, though the
exact nature of this
 relationship is
complicated
{population shows a
positive but
insignificant effect on
economic growth (at
first difference) and a
negative but significant
effect on economic
growth (at first
difference lagged) in
Nigeria}.
Orumie (2016) Nigeria 1970- effect of the The study The result of the
2010 Unemployment applied the analysis indicated that
Rate and multiple there is a systematic
Population regression relationship between
Growth Rate on model the gross domestic
Gross Domestic conducted on product to population
Product in data obtained growth and
Nigeria. from the unemployment rate.
National The result also revealed
Bureau of that unemployment and
statistics population growth
bulletin and contribute
Central Bank commensurable to
of Nigeria gross domestic product.
Furthermore, the result
showed that
unemployment
contributes more to the
national gross domestic
product during this
period in line with
existing work.
Emecheta et al. Nigeria 1970- Population The data were The result revealed
(2016) 2014 Dynamics and analysed using among others that all
Economic the ordinary the core variables (i.e.
Growth in least square fertility, mortality, and
Nigeria estimation netmigration) of the
technique. study are inversely
related to economic
growth during the
investigated period.
The study further
revealed that gross
fixed capital formation
(GFCF) and savings are
strong drivers of
economic growth in
 Nigeria.

Tartiyus, Dauda & Nigeria 1980- Impact of OLS The result revealed that
Peter (2015) 2010 Population there is a positive
Growth on relationship between
Economic economic growth
Growth in (proxied by GDP
Nigeria’ growth) and population,
fertility and export
growth; while negative
relationships were
found between
economic growth
(proxied by GDP
growth) and life
expectancy, and crude
death rate.

Aidi et al (2016) Nigeria 1970- Relationship The The study found that
2013 between researchers neither population
population employed growth Granger-Cause
growth and Granger- economic growth nor
economic Causality economic growth
growth in technique for Granger-Cause
Nigeria. the study population during the
period understudied
Adenola and Nigeria 1986- the relationship OLS They found that
Saibu (2017) 2014 between population has a
demographic positive but
change and insignificant
economic relationship with
growth in Nigeria‘s economic
Nigeria growth.
Olusogo et al., Niogeria 1981- the effect of OLS Their findings of the
(2018) 2015 population study showed that
growth on the population growth has a
economic positive and significant
growth of effect on economic
Nigeria growth of Nigeria,
while fertility was
negative and significant
for economic growth in
Nigeria. Exchange rate
and crude death rate are
however insignificant
for economic growth of
 Nigeria.

Olusogo, Nigeria 1981- effect of OLS The study found that

Oluwarotimi & 2015 population population growth and
Muazu (2018) growth on the its components exerted
economic a negative impact on
growth of the overall economic
Nigeria conditions in Nigeria.

Onyeoma (2020) Nigeria 1980- influence of the Autoregressive The study found that
2018 rising population Distributed population growth and
on Poverty and Lag Bounds its components exerted
Unemployment (ARDL) a negative impact on
in Nigeria approach the overall economic
conditions in Nigeria.

Ochinyabo(2021) Nigeria 1980- the rapid Autoregressive The study discovered

2018 population Distributed that population growth
growth and Lag Bounds and exerted a negative
economic (ARDL) impact on the overall
development approach economic growth in
issues in Nigeria Nigeria.

Ideh,Nenbee&Vit NIGERIA 1970- the dynamism The study The result of the
e (2022) 2021 between public applied the analysis indicated that
healthcare multiple there is a systematic
expenditure, regression relationship between
population model the gross domestic
growth and conducted on product to population
economic data obtained growth and
development in from the unemployment rate.
Nigeria. National The result also revealed
Bureau of that unemployment and
statistics population growth
bulletin and contribute
Central Bank commensurable to
of Nigeria gross domestic product.
Furthermore, the result
showed that
unemployment
contributes more to the
national gross domestic
product during this
period in line with
existing work.
Schneider (2022) NIGERIA 1980- Population This study The study found the
2021 growth, employed a existence of a
electricity linear model to sustainable long run
demand and analyse equilibrium relationship
environmental economic between economic
sustainability in growth growth and population
Nigeria. fluctuations growth, and also a
against unidirectional causality
population relationship between
growth and population growth and
Granger economic growth.
Causality
method to
check the
causal
relationship
that existed
between the
two core
variables

2.6 Limitations of previous Studies and Knowledge Gap

The reviews above shows that the empirical finding on the impact of population growth is not

uniformed. While some studies find significant impact of population growth on economic

growth, other studies agreed on insignificant and weak effect of population growth on

economic growth. Also, there is also a controversy on the nature of the relationship between

population growth on economic growth while some of the studies agree on a positive

relationship subsisting between population growth and economic growth; other studies put

forward a negative relationship. The reason for these discrepancies may be linked to the

methodologies employed in these previous studies. This study was an attempt to fill in the

gap on what is needed to address the is impact of population growth on economic growth
using more dynamic model that shows both the short run and long run relationship between

economic growth and population growth.

CHAPTER 3

METHODOLOGY

3.1 Research Design

This chapter presents the study design and the methodology used in gathering data needed for

the study. The study used time series data using EVIEWS9 for empirical data analysis. It is

concerned with issues of model specifications, description of variables, techniques of

estimation, method of data analysis and the sources of data.

3.2 Theoretical Framework of the Study

This study will be guided by the Malthusian theory which was propounded by Thomas

Malthus (1798). The theory proposes that population growth occurs exponentially, so it

increases according to birth rate. Therefore, an uncontrolled population growth will

negatively impact the economic growth of a nation. This study will hope to this assumption

and see if it applies in the Nigerian economy. To motivate empirical investigations, we draw

on the implications of the theoretical model in Adediran (2012). The advantage that the

model presents is its introduction of the labour force participation rate which depicts the

effect of population growth on the labour market which in turn will reflect on the output of

the economy.

3.3 Model Specification

In view of the theoretical predictions, we shall study the relationship between population

growth and economic growth in Nigeria by using the multiple regression model below;

The functional form is stated as;

RGDP = f(POP, LFPRUR)…………………………………………………. (1)

In other to estimate the above equation, we put equation (1) in an econometric form;

RGDP = β0 + β1POP + β2LFPR + β3UR + Ut……………………………… (2)

Where;

RGDP = Real Gross Domestic Product

POP = Population Growth

LFPR = Labour Force Participation Rate

UR = Unemployment Rate

β0 is the intercept parameter while β1, β2 & β3 are coefficients of the variables.

Ut is the error terms or stochastic term.

The parameter β0 (intercept) signifies that even without the impacts of the variables in the

model, the economy will still function given that economic growth is not equal to zero. The

parameters β1, β2 & β3 are coefficients of the independent variables, and they denote the

degree of change of the dependent variable as a result of a unit change of the independent

variables. The Ut is the error term and it is used to capture the impact of other variables that

are not included in the model.

3.3.1 Apriori Expectation

It is expected in this study that Population Growth would be negatively related to Real Gross

Domestic Product, Labour Force Participation Rate is expected to be positively related with

Real Gross Domestic Product and Unemployment Rate is expected to be negatively related to

Real Gross Domestic Product.

3.3.2 Model Justification

Model justification refers to the reason behind the choice of variables that constitute the

model. This model was chosen because it is more favourable to study the relationship of these

population/labour related variables to economic growth. The model was drawn from the

related literature reviewed in the course of this research work. The dependent variable Real

Gross Domestic Product, was used to proxy economic growth and this helped to show the

effects of these variables on the economy.

3.3.3 Description of the Variables in the Model

Real Gross Domestic Product: Real gross domestic product (GDP) is an inflation-adjusted

measure that reflects the value of all goods and services produced by an economy in a given

year. Real GDP is expressed in base-year prices.

Population Growth: It is the increase in the number of people in a given area. Population

growth can be measured in a neighbourhood, country, or even global level.

Labour Force Participation Rate: Labor force participation rate is the proportion of the

population ages 15 and older that is economically active: all people who supply labor for the

production of goods and services during a specified period.

Unemployment Rate: Unemployment rate is the percentage of people in the labour force

who are unemployed. Consequently, measuring the unemployment rate requires identifying

who is in the labour force.

3.4 Estimation Technique and Procedures

The decision on the appropriate technique to be used in a research work depends on the

research problems as well as the objectives of the study (Koutsoyannis 1997). This research

work used a multi-dimensional econometric procedure in estimating the relationship existing

between monetary policy and banking performance in Nigeria.

The Auto Regressive Distributed Lag (ARDL)model was employed to estimate the model.

This estimation technique was employed because it is an easy estimation technique and it is

very easy to comprehend.

The result of this work shall be evaluated in three ways, namely; economic, statistically and

econometric criteria.

Augmented Dickey-Fuller test was employed to test the presence of unit root in the series,

after which ARDL Cointegrating and Long Run Form was employed to test the long-run

relationship between bank performance and the independent variables. The econometric

(second order) test will be conducted to test for the linearity, multi collinearity,

autocorrelation, heteroscedasticity and normality.

3.4.1 Pre-estimation Tests

Stationarity Test (Unit Root): A times series is stationary if it has a constant mean and

constant finite variance (Gujarati 2007). Engle and Granger (1987) have shown that the direct

application of OLS technique to non-stationary data produces regression results that are

spurious in nature. In order to estimate the relationship among the variables in our model,

there is need to check the stationary level of all variables and to do this we would adopt the

Augmented Dickey-Fuller test.

Augmented Dickey-Fuller Test: ADF test was developed by Dickey-Fuller in 1976, to test

for the existence of unit root in a given time series data. The basis for this test is when the

assumption of non-autocorrelation between the error terms is violated. To him there is a

tendency for a time series data to contain a unit root. Consequently, an attempt has to be

made to render the data stationary prior to specification and estimation.

Co-integration Test: Two variables are co-integrated if they have a long-run or equilibrium

relationship between them. According to Granger, a test for co-integration can be thought of a
pre-test to avoid spurious regression situation. It is expected theoretically that any regression

involving non-stationary time series may produce spurious results. However, co-integration

test that have a combination of stationary and non-stationary time series may have a long-run

equilibrium relationship.

In this study, Co-integrating and Long Run Form would be used to test for the long run

relationship among the variables in the model because it is capable of determining the

number of co-integrating vectors for any given number of non-stationary series and its

application is appropriate in the presence of more than two variables.

3.4.2 Evaluation Criteria

This is the post evaluation test and it shows the techniques used in the evaluation of result.

There are three (3) post-estimation tests that were conducted for evaluation of results

obtained from the model: economic (a priori expectations), statistical and econometric

criteria.

3.4.3 Economic Criteria (Aprori Expectation)

This tests the stability and reliability of the models. It checks the conformity of the

parameters of the model in signs and magnitude. The economic criterion will inform us if the

signs of the variable’s coefficient conform to the economic theory.

3.4.4 Statistical Criteria (1st Order Test)

The statistical criterion shall focus on testing the individual significance of each regressor

using coefficient of determination (R²) and the t-test.

Coefficient of Determination (R²): The R² is used in measuring the goodness of fit of the

estimated regression model. It measures how the variations in the independent variables

explain the dependent variable.

The F-Test: This test is applied to ascertain the aggregate or overall significance of all the

parameters of the regressive models. We reject the null hypothesis if the probability value is

greater than 0.05 at 5% significant level and we do not reject the null hypothesis if the

probability value is less than 0.05 at 5% significant level

3.4.5 Econometric Criterion (2nd Order Test)

Test for Auto-correlation: this will help to check for the existence of serial correlation

among the variables. It implies a test of randomness of the error term (Ut). The null

hypothesis of the test states that there is no serial correlation among the residuals. Serial

correlation is a situation where the residuals are correlated, that is, they are interdependent.

The Durbin Watson table would be used to conduct this test.

Multi-co linearity Test: Multi-co linearity is meant to be the existence of a perfect, or exact,

linear relationship among some or all explanatory variables of a regression model. It will be

investigated by checking if most of the individual coefficient of the independent variables are

insignificant when they are supposed to be significant, to check whether the t-statistics are

low, f-statistics are high, standard error are high, p-value goes high. If these are discovered in

the model, then it has Multi co linearity problem and needs to be corrected.

Decision: when there is serious multi co linearity; if most of the variables are insignificant, t-

value is low with high p-value, f-statistics are high and standard error is also high. Therefore,

one of the variables must be removed.

Normality Test: This test will be carried out to check if the error term follows the normal

distribution. The normality test that will be adopted is the Jarque-Bera (JB) test of normality.

Hypothesis:

H₀: The variables are not normally distributed.

H₁: The variables are normally distributed.

Decision Rule: Reject the null hypothesis if the kernel density estimate is bell shaped,

otherwise we fail to reject.

Heteroscedasticity Test: Hetero-scedasticity occurs when the variance of the error term

additional of the chosen values of the explanatory variables is not constant. In order to

capture heteroscedasticity and specification bias, the cross-product term will be introduced

among regressions.

3.5 Sources of Data

In order to study the relationship between the variables, this study uses secondary data in

form of time series annual data from 1980 – 2021 on real gross domestic capital, population

growth, labour force participation rate and unemployment rate. These data are sourced from

World Development Indicators (WDI).

 CHAPTER FOUR

DATA PRESENTATION AND DISCUSSION

4.1 Introduction

This chapter explained the econometric approach and the analytical statistics used to evaluate

the effect of population growth on economic growth. Presented in this chapter are the

empirical results based on the analysis conducted. Specifically, the statistical, econometric,

and post-estimation tests are also carried out to validate the reliability of the model of the

study.

4.2 Results and Discussions

The tests discussed in this chapter are conducted using the EVIEWS 12 software and the

concise results of the analysis conducted are presented below.

4.2.1 Augmented Dickey-Fuller (ADF)Unit Root Test

It is very important to conduct the unit root test in order to determine the level of stationarity

of the variables and to avoid spurious results. This study will adopt the Augmented Dickey

Fuller (ADF) test approach to unit root to test the stationary state of the variables.

Hypothesis:

H0: There is no unit root in the model.

H1: There is unit root in the model.

Decision rule: For the variables to be stationary, the decision rule states that if the test-

statistic is greater than the critical value at 5% in absolute terms, we do not reject the null

hypothesis otherwise we reject the null hypothesis.

Conclusion
The result of the unit root conducted is presented in Table 4.1:

Table 4.1: ADF unit root test result

Variables Test Statistic At Level Test Statistic At 1st Difference Order Of
ADF Critical Value ADF Critical Value Integration
At 5% At 5%
RGDP 0.617131 -2.938987 -3.260906 -2.938987 I(1)
POP -3.458205 -2.936942 I(0)
LFPR -1.349840 -2.936942 -6.928826 -2.938987 I(1)
UR 1.583365 -2.936942 -4.944597 -2.938987 I(1)

Source: Author’s Compilation using EVIEWS12

Table 4.1 shows the stationary level of the variable used in the model. It can be observed that

at 5 percent level of significance one variable (POP) is stationary at level that is order I(0),

while others are stationary at first difference that is order I(1). Given that there is a mix in

stationarity level amongst the variables, there is a justification for the use of ARDL model.

4.3 Bounds Testing Approach to Autoregressive distributed lag

From the stationary test, it was found that the variables Real Gross Domestic Product, Labour

Force Participation Rate and Unemployment rate are stationary at first difference, while

Population Growth is stationary at level. Thus, co-integration test will be performed to

ascertain the existence of long-run or equilibrium relationships among the variables in our

model. The ARDL bounds testing approach will be employed.

The following hypothesis will be tested:

H0: There is no co-integration among our variables.

H1: There is co-integration among our variables.

Decision rule: We reject the null hypothesis of no co-integration among the variables if the

computed F-Statistic is greater than the critical value of the I(1) bound and 1(0) at 5%.
Table 4.2 Result of Bound Test Approach to ARDL
TEST STATISTIC VALUE K
F-STATISTIC 21.37141 3
CRITICAL VALUE BOUNDS
SIGNIFICANCE I(0) BOUND I(1) BOUND
10% 2.37 3.2
5% 2.79 3.67
2.5% 3.15 4.08
1% 3.65 4.66
Source: Authors’ Compilation using E views 12.

Table 4.2 depicts that the computed f-statistics (21.37141) are greater than the upper and the

lower bounds at a 5% significant level. Therefore, there is co-integration and there exists a

long-run relationship among the variables.

4.4. Autoregressive Distributed Lag (ARDL)

Table 4.3: Estimated Long-Run Coefficients of ARDL Model

Dependent variable: RGDP

ARDL Result

Variable Coefficient Std. Error t-Statistic Prob.

POP -4.0410 1.8910 -2.1357 0.0453

LFPR 9.5408 6.3608 1.4997 0.1493

UR -1.1410 3.7209 -3.0689 0.0061

C -1.6511 1.2111 -1.3653 0.1873

R-Squared 0.999084 Durbin-Watson 1.932901

Adjusted R-Squared 0.998351 Stat
F-statistics 1363.235
F-Prob. 0.000000 Source: Authors’

Compilation using E views 12

Result Findings

Population Growth (POP): A percentage increase in Population Growth will decrease Real

Gross Domestic Product by 4.0410, and it is statistically significant because the p-value of
0.0453 is less than 0.05. Therefore, there exists a negative relationship between Population

Growth and Real Gross Domestic Product.

Labour Force Participation Rate (LFPR): A percentage increase in labour force

participation rate increases Real Gross Domestic Product by 9.5408, and it is statistically

insignificant because the p-value of 0.1493is greater than 0.05. Therefore, there exists a

positive relationship between labour force participation rate and Real Gross Domestic

Product.

Unemployment Rate (UR): A percentage increase in unemployment rate decreases Real

Gross Domestic Product by1.1410, and it is statistically significant because the p-value of

0.0061 is less than 0.05. Therefore, there exists a negative relationship between

Unemployment Rate and Gross Domestic Product.

Coefficient of determination (R2): In the ARDL model, The R² 0.999084 shows that 99.9%

of the dependent variable is predicted by the independent variables.

F-statistics: In the ARDL model, the F-statistics probability is 0.000000 is less than 0.05

while the coefficient of the F-statistics is1363.235is greater than an absolute value of 1.96,

this indicates that the overall model is statistically significant and good.

4.5 Aprori Expectations

From the results presented in Table 4.4, it will be concluded that the actual signs of

Government Expenditure on Transport, Employment Rate, and Foreign Direct Investment

conform to our apriori expectations.

Table 4.4: Apriori Expectations

Variables Expected sign Actual sign Conclusion

Population Growth - - Conforms

 Labor Force Participation Rate + + Conforms

Unemployment Rate - - Conforms

Source: Authors’ Compilation

4.6 Granger Causality Test

Granger Causality test is a statistical hypothesis test utilized to determine whether one time

series is useful in forecasting another.

Decision Rule: If the probability value is less than any α level, then the hypothesis would be

rejected at that level. This implies that at 5% significance level, if the probability value is less

than 0.05, then there exists causality between the variables.

Table 4.5: Granger Causality Test

Null Hypothesis Obs F-Statistics Prob.
POP does not Granger cause RGDP 39 0.56972 0.5710
RGDP does not Granger cause POP 39 6.94020 0.0030

Author’s Computation using Eviews12

4.7 Econometric Test Results

4.7.1 Auto-correlation

This is to test whether errors corresponding to different observations are uncorrelated. It

checks the randomness of the residuals. The Breusch-Godfrey Serial Correlation LM test was

adopted for this test.

H0: There is no auto-correlation.

H1: There is auto-correlation.

Table 4.6 Breusch-Godfrey Serial Correlation LM Test

Breusch-Godfrey Serial Correlation LM Test:

F-statistic 0.816877 Prob. F(2, 18) 0.4575

Obs*R-squared 3.078824 Prob. Chi-Square(2) 0.2145

Since the probability values of 0. 4575 and 0. 2145 are greater than 0.05 we accept the null

hypothesis and conclude that there exists no auto-correlation.

4.7.2 Multicollinearity Test:

Multi-co linearity is a statistical phenomenon in which two or more predictor variable in a

multiple regression model are highly correlated. Collinearity (or multicollinearity) is the

undesirable situation where the correlation among the independent variables is strong

(Central Michigan University, 2014). The variance inflation factor was adopted

Hypothesis:

H0: There exists no multicollinearity in the model

H1: There exists multicollinearity in the model.

Decision Rule: If the Mean VIF is less or equal to 10, we will accept the null hypothesis of

no multi-collinearity among the independent variables. Otherwise, we do not accept.

Table 4.7 Variance Inflation Factors

Variance Inflation Factors

Coefficient Uncentered Centered

Variable Variance VIF VIF

POP 3.9921 674.9733 1.434138

LFPR 5.8817 16.69746 1.250844

UR 2.4819 15.24545 1.729240

C 3.0922 761.8369 NA

From the table above, it can be seen that most of the variables in the centered VIF are less

than 10 indicating that there is no multicollinearity in the model.

4.7.3 Normality Test

In order to check if our residual is normally distributed, the JB test was adopted. The curve

was used to check if the residual follows the normal distribution pattern.

H0: The residuals are not normally distributed.

H1: The residuals are normally distributed.

Decision rule: if the probability value is less than 0.05 we do not reject H 0 otherwise we

reject and conclude that the variables are normally distributed. The normality test result is

presented thus:

Figure 4.8 Normality Test Result

9
Series: Residuals
8 Sample 1982 2021
7 Observations 40
6
Mean 9.29e-05
5 Median 8.00e+08
4 Maximum 1.88e+10
Minimum -1.70e+10
3
Std. Dev. 7.34e+09
2 Skewness -0.098300
1 Kurtosis 3.468791

0 Jarque-Bera 0.430693
-1.0e+10 0.02500 1.0e+10 2.0e+10
Probability 0.806262

The probability value of 0.806262 is greater than 0.05 and as such we reject the null

hypothesis, accepting the alternate hypothesis and conclude that the variables are normally

distributed.

4.7.4 Stability Test

The stability of the long-run coefficient and the short-run movements for the ARDL is

examined using the Cumulative Sum (CUSUM) and Cumulative Sum Squares (CUSUMSQ).
The rule is that if the plots of the CUSUM and CUSUMSQ statistics stay within the critical

bounds of 5% significance level, the model is said to be stable. In line with this condition, a

critical look at the plots in Figures below shows that the ARDL co-integrating and Long run

form model is stable because the CUSUM and CUSUMSQ statistics fall within the 5%

critical bounds.

Figure 4.9 Plot of cumulative sum of residuals

Since the cumulative sum (CUSUM) and cumulative sum of squares (CUSUMQ) fall within

5%, it shows that the model is stable.

20
15
10
5
0
-5
-10
-15
-20
1990 1995 2000 2005 2010 2015 2020

CUSUM 5% Significance

Figure 4.10 Plot of cumulative sum of square of residuals

1.6

1.2

0.8

0.4

0.0

-0.4
2006 2008 2010 2012 2014 2016 2018 2020

CUSUM of Squares 5% Significance

4.8: Estimation of Employed Hypotheses

The research hypotheses of this study include:

4.8.1: Test of Hypothesis 1

H01: Population growth has no significant impact on economic growth in Nigeria.

H11: Population growth has a significant impact on economic growth in Nigeria.

Decision:

Given that the absolute t value of 2.135673 is greater than 1.96 and the probability value of

0.0453 is less than 0.05, Thus it is statistically significant. Therefore, we conclude by

rejecting the null hypothesis that population growth has no significant impact on economic

growth in Nigeria.

4.8.2: Test of Hypothesis 2

H02: There exists no causal relationship between population growth and economic growth in

Nigeria.
H12: There exists a causal relationship between population growth and economic growth in

Nigeria.

Decision:

Given that the probability value of 0.5710 is greater than 0.05, Thus it is statistically

insignificant. Therefore, we conclude by not rejecting the null hypothesis which implies that

there exists no causal relationship between population growth and economic growth in

Nigeria.

CHAPTER FIVE

SUMMARY, CONCLUSION, AND RECOMMENDATION

5.1 Summary

The project titled "The Effect of Population Growth on Economic Growth" employed the

Autoregressive Distributed Lag (ARDL) model to investigate the relationship between

population growth and economic growth. The study covered the period from 1991 to 2021

and aimed to achieve certain objectives which included to assess the impact of population

growth on economic growth, and to determine whether population growth Granger causes

economic growth. The analysis revealed some key findings. Firstly, it was discovered that

population growth had a negative and significant effect on economic growth. This implies

that as the population grows, it exerts a downward pressure on economic growth. Secondly,

the study found that population growth does not Granger cause economic growth, suggesting
that past values of population growth do not contain information that can help predict future

economic growth.

5.2 Conclusion

The research project titled "The Effect of Population Growth on Economic Growth" has

offered valuable insights into the intricate relationship between population growth and

economic development. Employing the Autoregressive Distributed Lag (ARDL) model and

analyzing data spanning four decades, from 1981 to 2021, the study examined key variables

such as population growth rate, real GDP, labour force participation rate, and unemployment

rate. The primary objective was to unravel the impact of population growth on economic

growth and ascertain whether population growth exhibited Granger causality with respect to

economic growth.

The findings of this comprehensive study have significant implications for policymakers and

researchers alike. Firstly, the analysis revealed a consistent and statistically significant

negative effect of population growth on economic growth. This result underscores the

challenges posed by rapid population growth, as it tends to exert a noticeable downward

pressure on economic growth. Increased population can lead to higher unemployment rates,

resource constraints, and difficulties in providing essential services, all of which can hinder

economic development. Secondly, the study's outcome demonstrated that population growth

does not Granger cause economic growth. This implies that past variations in population

growth rates do not contain sufficient predictive power to accurately anticipate future

economic growth patterns. In essence, while population dynamics play a role in shaping

economic performance, they are just one facet of a multifaceted economic landscape

influenced by an array of other factors.

Therefore, this research project emphasizes the need for a nuanced and holistic approach to

address the challenges and opportunities associated with population growth and economic

development. While population growth was found to have a negative impact on economic

growth, it should be viewed within the broader context of economic and social policies.

Policymakers should consider strategies that encompass improvements in education,

healthcare, workforce development, and resource management to mitigate the adverse effects

of population growth on economic growth.

5.3 Recommendation

Based on the findings of this study, several recommendations can be made:

 Policy Integration: Policymakers should adopt a holistic approach that considers both

population growth and other economic determinants. Policies that address education,

healthcare, and employment opportunities should be integrated into strategies to manage

population growth effectively.

 Investment in Human Capital: Emphasize investments in human capital development,

including education and skill-building programs, to ensure that a growing population

contributes positively to economic growth through increased productivity and innovation.

 Resource Management: Given the potential strain on resources associated with population

growth, implement resource management strategies that ensure sustainability and

equitable distribution of resources.

 Long-Term Planning: Develop long-term economic plans that anticipate demographic

changes and proactively address the challenges and opportunities associated with

population growth.

Therefore, while population growth can have a negative impact on economic growth, it is not

the sole determinant. A comprehensive approach that addresses various factors influencing
economic growth is essential for achieving sustainable and inclusive economic development.

5.4. Limitation of study.

The major limitation of this work was the limited resources and time frame which

was required in carrying out this research work in the sense that the time was such a short one

that I was constantly under pressure to finish ahead of time.

Furthermore, another limitation comes in the form of difficulty in sourcing data which

significantly captures the variables of interest since there was occurrence of conflicting data

on same variable from varying data source.

5.5. Suggestion for further study.

The study suggests that further research should be carried out on the birth control measures

on the economic growth of Nigeria or the impact of mortality rate on population growth of

Nigeria. The government should try to keep a balance of the total population of the economy

by putting in place birth control strategies so as to avoid an over populated country .

Population is on the growing trend in Nigeria and at such the government should step in now

so as to keep it in check and ensure that the population only grows in such a way that

development is not retarded.

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APPENDIX

UNIT ROOT TEST

RGDP- At Level
Null Hypothesis: RGDP has a unit root
Exogenous: Constant
Lag Length: 1 (Automatic - based on SIC, maxlag=4)

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic 0.617131 0.9885

Test critical values: 1% level -3.610453
5% level -2.938987
10% level -2.607932

*MacKinnon (1996) one-sided p-values.

Augmented Dickey-Fuller Test Equation

Dependent Variable: D(RGDP)
Method: Least Squares
Date: 09/21/23 Time: 00:24
Sample (adjusted): 1983 2021
Included observations: 39 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

RGDP(-1) 0.006988 0.011324 0.617131 0.5410

D(RGDP(-1)) 0.551642 0.139081 3.966345 0.0003
C 3.00E+09 3.15E+09 0.953810 0.3465

R-squared 0.369146 Mean dependent var 9.96E+09

Adjusted R-squared 0.334099 S.D. dependent var 1.12E+10
S.E. of regression 9.12E+09 Akaike info criterion 48.77924
Sum squared resid 2.99E+21 Schwarz criterion 48.90721
Log likelihood -948.1952 Hannan-Quinn criter. 48.82516
F-statistic 10.53276 Durbin-Watson stat 2.100819
Prob(F-statistic) 0.000250

RGDP- At 1st Difference

Null Hypothesis: D(RGDP) has a unit root
Exogenous: Constant
Lag Length: 0 (Automatic - based on SIC, maxlag=4)

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic -3.260906 0.0238

Test critical values: 1% level -3.610453
5% level -2.938987
10% level -2.607932

*MacKinnon (1996) one-sided p-values.

Augmented Dickey-Fuller Test Equation

Dependent Variable: D(RGDP,2)
Method: Least Squares
Date: 09/21/23 Time: 00:25
Sample (adjusted): 1983 2021
Included observations: 39 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

D(RGDP(-1)) -0.415535 0.127429 -3.260906 0.0024

C 4.55E+09 1.87E+09 2.439243 0.0196

R-squared 0.223236 Mean dependent var 7.11E+08

Adjusted R-squared 0.202242 S.D. dependent var 1.01E+10
S.E. of regression 9.04E+09 Akaike info criterion 48.73849
Sum squared resid 3.03E+21 Schwarz criterion 48.82380
Log likelihood -948.4005 Hannan-Quinn criter. 48.76909
F-statistic 10.63351 Durbin-Watson stat 2.132424
Prob(F-statistic) 0.002389

POP- At Level
Null Hypothesis: POP has a unit root
Exogenous: Constant
Lag Length: 0 (Automatic - based on SIC, maxlag=4)

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic -3.458205 0.0146

Test critical values: 1% level -3.605593
5% level -2.936942
10% level -2.606857

*MacKinnon (1996) one-sided p-values.

Augmented Dickey-Fuller Test Equation

Dependent Variable: D(POP)
Method: Least Squares
Date: 09/21/23 Time: 00:27
Sample (adjusted): 1982 2021
Included observations: 40 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

POP(-1) -0.345994 0.100050 -3.458205 0.0014

C 0.892727 0.262724 3.397967 0.0016

R-squared 0.239379 Mean dependent var -0.014916

Adjusted R-squared 0.219363 S.D. dependent var 0.084165
S.E. of regression 0.074363 Akaike info criterion -2.311005
Sum squared resid 0.210135 Schwarz criterion -2.226561
Log likelihood 48.22011 Hannan-Quinn criter. -2.280473
F-statistic 11.95918 Durbin-Watson stat 1.604906
Prob(F-statistic) 0.001356

LFPR- At Level
Null Hypothesis: LFPR has a unit root
Exogenous: Constant
Lag Length: 0 (Automatic - based on SIC, maxlag=4)

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic -1.349840 0.5968

Test critical values: 1% level -3.605593
5% level -2.936942
10% level -2.606857

*MacKinnon (1996) one-sided p-values.

Augmented Dickey-Fuller Test Equation

Dependent Variable: D(LFPR)
Method: Least Squares
Date: 09/21/23 Time: 00:28
Sample (adjusted): 1982 2021
Included observations: 40 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

LFPR(-1) -0.070410 0.052162 -1.349840 0.1851

C 2.959030 1.756368 1.684744 0.1002

R-squared 0.045755 Mean dependent var 0.678990

Adjusted R-squared 0.020644 S.D. dependent var 3.076291
S.E. of regression 3.044372 Akaike info criterion 5.113173
Sum squared resid 352.1917 Schwarz criterion 5.197617
Log likelihood -100.2635 Hannan-Quinn criter. 5.143705
F-statistic 1.822068 Durbin-Watson stat 2.146517
Prob(F-statistic) 0.185054
LFPR- At 1st Difference
Null Hypothesis: D(LFPR) has a unit root
Exogenous: Constant
Lag Length: 0 (Automatic - based on SIC, maxlag=4)

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic -6.928826 0.0000

Test critical values: 1% level -3.610453
5% level -2.938987
10% level -2.607932

*MacKinnon (1996) one-sided p-values.

Augmented Dickey-Fuller Test Equation

Dependent Variable: D(LFPR,2)
Method: Least Squares
Date: 09/21/23 Time: 00:29
Sample (adjusted): 1983 2021
Included observations: 39 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

D(LFPR(-1)) -1.114711 0.160880 -6.928826 0.0000

C 0.673531 0.506755 1.329105 0.1920

R-squared 0.564750 Mean dependent var -0.081194

Adjusted R-squared 0.552987 S.D. dependent var 4.622731
S.E. of regression 3.090715 Akaike info criterion 5.144602
Sum squared resid 353.4432 Schwarz criterion 5.229913
Log likelihood -98.31975 Hannan-Quinn criter. 5.175211
F-statistic 48.00863 Durbin-Watson stat 1.985127
Prob(F-statistic) 0.000000

UR- At Level
Null Hypothesis: UR has a unit root
Exogenous: Constant
Lag Length: 0 (Automatic - based on SIC, maxlag=4)

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic 1.583365 0.9993

Test critical values: 1% level -3.605593
5% level -2.936942
10% level -2.606857

*MacKinnon (1996) one-sided p-values.

Augmented Dickey-Fuller Test Equation

Dependent Variable: D(UR)
Method: Least Squares
Date: 09/21/23 Time: 00:31
Sample (adjusted): 1982 2021
Included observations: 40 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

UR(-1) 0.086363 0.054544 1.583365 0.1216

C -0.256674 0.262665 -0.977195 0.3347

R-squared 0.061892 Mean dependent var 0.138625

Adjusted R-squared 0.037204 S.D. dependent var 0.526160
S.E. of regression 0.516279 Akaike info criterion 1.564369
Sum squared resid 10.12868 Schwarz criterion 1.648813
Log likelihood -29.28738 Hannan-Quinn criter. 1.594901
F-statistic 2.507044 Durbin-Watson stat 1.846655
Prob(F-statistic) 0.121627

UR- At 1st Difference

Null Hypothesis: D(UR) has a unit root
Exogenous: Constant
Lag Length: 0 (Automatic - based on SIC, maxlag=4)

t-Statistic Prob.*

Augmented Dickey-Fuller test statistic -4.944597 0.0002

Test critical values: 1% level -3.610453
5% level -2.938987
10% level -2.607932

*MacKinnon (1996) one-sided p-values.

Augmented Dickey-Fuller Test Equation

Dependent Variable: D(UR,2)
Method: Least Squares
Date: 09/21/23 Time: 00:32
Sample (adjusted): 1983 2021
Included observations: 39 after adjustments

Variable Coefficient Std. Error t-Statistic Prob.

D(UR(-1)) -0.794861 0.160753 -4.944597 0.0000

C 0.113725 0.087520 1.299415 0.2018

R-squared 0.397875 Mean dependent var 0.002221

Adjusted R-squared 0.381601 S.D. dependent var 0.671568
S.E. of regression 0.528110 Akaike info criterion 1.610894
Sum squared resid 10.31929 Schwarz criterion 1.696205
Log likelihood -29.41244 Hannan-Quinn criter. 1.641503
F-statistic 24.44904 Durbin-Watson stat 2.045811
Prob(F-statistic) 0.000017
ARDL Test
Dependent Variable: RGDP
Method: ARDL
Date: 09/21/23 Time: 00:38
Sample (adjusted): 1985 2021
Included observations: 37 after adjustments
Maximum dependent lags: 4 (Automatic selection)
Model selection method: Akaike info criterion (AIC)
Dynamic regressors (4 lags, automatic): POP LFPR UR
Fixed regressors: C
Number of models evaluated: 500
Selected Model: ARDL(4, 4, 3, 2)

Variable Coefficient Std. Error t-Statistic Prob.*

RGDP(-1) 0.866040 0.204916 4.226311 0.0004

RGDP(-2) 0.512667 0.274732 1.866063 0.0768
RGDP(-3) -0.841052 0.326686 -2.574493 0.0181
RGDP(-4) 0.504828 0.202160 2.497178 0.0214
POP 6.08E+10 3.33E+10 1.826079 0.0828
POP(-1) 1.84E+10 4.42E+10 0.415610 0.6821
POP(-2) -5.58E+09 3.49E+10 -0.159927 0.8745
POP(-3) 3.12E+10 2.82E+10 1.107092 0.2814
POP(-4) -4.04E+10 1.89E+10 -2.135673 0.0453
LFPR -1.38E+08 5.21E+08 -0.264834 0.7938
LFPR(-1) 1.26E+09 5.83E+08 2.168956 0.0423
LFPR(-2) -1.72E+09 6.70E+08 -2.561391 0.0186
LFPR(-3) 9.54E+08 6.36E+08 1.499653 0.1493
UR -1.14E+10 3.72E+09 -3.068941 0.0061
UR(-1) 1.68E+10 5.11E+09 3.288414 0.0037
UR(-2) -7.79E+09 3.61E+09 -2.156958 0.0434
C -1.65E+11 1.21E+11 -1.365318 0.1873

R-squared 0.999084 Mean dependent var 2.85E+11

Adjusted R-squared 0.998351 S.D. dependent var 1.44E+11
S.E. of regression 5.85E+09 Akaike info criterion 48.12066
Sum squared resid 6.84E+20 Schwarz criterion 48.86081
Log likelihood -873.2321 Hannan-Quinn criter. 48.38159
F-statistic 1363.235 Durbin-Watson stat 1.932109
Prob(F-statistic) 0.000000

*Note: p-values and any subsequent tests do not account for model
selection.

LONG RUN FORM & BOUND TEST

ARDL Long Run Form and Bounds Test
Dependent Variable: D(RGDP)
Selected Model: ARDL(4, 4, 3, 2)
Case 2: Restricted Constant and No Trend
Date: 09/21/23 Time: 00:42
Sample: 1981 2021
Included observations: 37

Conditional Error Correction Regression

Variable Coefficient Std. Error t-Statistic Prob.

C -1.65E+11 1.21E+11 0.000000 0.0000

RGDP(-1)* 0.042483 0.053961 0.787297 0.4403
POP(-1) 6.45E+10 4.97E+10 0.000000 0.0000
LFPR(-1) 3.63E+08 8.11E+08 0.000000 0.0000
UR(-1) -2.40E+09 2.02E+09 0.000000 0.0000
D(RGDP(-1)) -0.176444 0.233709 -0.754971 0.4591
D(RGDP(-2)) 0.336224 0.213916 1.571756 0.1317
D(RGDP(-3)) -0.504828 0.202160 -2.497178 0.0214
D(POP) 6.08E+10 3.33E+10 0.000000 0.0000
D(POP(-1)) 1.47E+10 4.33E+10 0.000000 0.0000
D(POP(-2)) 9.13E+09 2.39E+10 0.000000 0.0000
D(POP(-3)) 4.04E+10 1.89E+10 0.000000 0.0000
D(LFPR) -1.38E+08 5.21E+08 0.000000 0.0000
D(LFPR(-1)) 7.62E+08 5.88E+08 0.000000 0.0000
D(LFPR(-2)) -9.54E+08 6.36E+08 0.000000 0.0000
D(UR) -1.14E+10 3.72E+09 0.000000 0.0000
D(UR(-1)) 7.79E+09 3.61E+09 0.000000 0.0000

* p-value incompatible with t-Bounds distribution.

Levels Equation
Case 2: Restricted Constant and No Trend

Variable Coefficient Std. Error t-Statistic Prob.

POP -1.52E+12 1.54E+12 -0.987358 0.3353

LFPR -8.54E+09 2.91E+10 -0.293292 0.7723
UR 5.64E+10 7.18E+10 0.785628 0.4413
C 3.88E+12 4.20E+12 0.924115 0.3664

EC = RGDP - (-1517127282153.8127*POP -8544653185.7319*LFPR +

56437777929.4155*UR + 3883563476875.2690)

F-Bounds Test Null Hypothesis: No levels relationship

F-Bounds Test Null Hypothesis: No levels relationship
Test Statistic Value Signif. I(0) I(1)
Test Statistic Value Signif. I(0) I(1)
Asymptotic: n=1000
F-statistic 3.914477 10% Asymptotic: 2.37n=1000 3.2
F-statistic
k 21.37141
3 10%
5% 2.37
2.79 3.2
3.67
k 3 5%
2.5% 2.79
3.15 3.67
4.08
2.5%
1% 3.15
3.65 4.08
4.66
1% 3.65 4.66
Actual Sample Size 37 Finite Sample: n=40
Actual Sample Size 40 Finite Sample: n=40
10% 2.592 3.454
10% 2.592 3.454
5% 3.1 4.088
5% 3.1 4.088
1% 4.31 5.544
1% 4.31 5.544
Finite Sample: n=35
10% 2.618 3.532
5% 3.164 4.194
1% 4.428 5.816
CAUSALITY TEST
Pairwise Granger Causality Tests
Date: 09/23/23 Time: 19:00
Sample: 1981 2021
Lags: 2

Null Hypothesis: Obs F-Statistic Prob.

POP does not Granger Cause RGDP 39 0.56972 0.5710

RGDP does not Granger Cause POP 6.94020 0.0030

LFPR does not Granger Cause RGDP 39 0.58111 0.5647

RGDP does not Granger Cause LFPR 1.97275 0.1547

UR does not Granger Cause RGDP 39 0.65906 0.5238

RGDP does not Granger Cause UR 8.15549 0.0013

LFPR does not Granger Cause POP 39 0.63700 0.5351

POP does not Granger Cause LFPR 2.65153 0.0851

UR does not Granger Cause POP 39 5.59206 0.0080

POP does not Granger Cause UR 0.64416 0.5314

UR does not Granger Cause LFPR 39 0.04119 0.9597

LFPR does not Granger Cause UR 3.19721 0.0534

AUTO-CORRELATION
Breusch-Godfrey Serial Correlation LM Test:
Null hypothesis: No serial correlation at up to 2 lags

F-statistic 0.816877 Prob. F(2,18) 0.4575

Obs*R-squared 3.078824 Prob. Chi-Square(2) 0.2145

Test Equation:
Dependent Variable: RESID
Method: ARDL
Date: 09/21/23 Time: 00:45
Sample: 1985 2021
Included observations: 37
Presample missing value lagged residuals set to zero.

Variable Coefficient Std. Error t-Statistic Prob.

RGDP(-1) 0.109405 0.309945 0.352983 0.7282

RGDP(-2) 0.087702 0.333905 0.262656 0.7958
RGDP(-3) -0.276295 0.412095 -0.670465 0.5111
RGDP(-4) 0.085814 0.227626 0.376995 0.7106
POP 1.50E+09 3.36E+10 0.044684 0.9649
POP(-1) -6.44E+09 4.55E+10 -0.141530 0.8890
POP(-2) 4.73E+09 3.54E+10 0.133509 0.8953
POP(-3) 2.46E+09 2.85E+10 0.086370 0.9321
POP(-4) 6.75E+09 1.98E+10 0.340194 0.7376
LFPR -1.06E+08 5.49E+08 -0.193647 0.8486
LFPR(-1) -1.80E+08 6.08E+08 -0.296635 0.7701
LFPR(-2) -2.43E+08 7.31E+08 -0.332881 0.7431
LFPR(-3) 1.72E+08 6.76E+08 0.254787 0.8018
UR 1.06E+08 3.76E+09 0.028322 0.9777
UR(-1) 2.22E+09 5.93E+09 0.373951 0.7128
UR(-2) -1.87E+09 4.68E+09 -0.399495 0.6942
C -1.82E+10 1.24E+11 -0.147029 0.8847
RESID(-1) -0.177766 0.421436 -0.421811 0.6782
RESID(-2) -0.443628 0.347216 -1.277671 0.2176

R-squared 0.083211 Mean dependent var -5.38E-05

Adjusted R-squared -0.833577 S.D. dependent var 4.36E+09
S.E. of regression 5.90E+09 Akaike info criterion 48.14189
Sum squared resid 6.27E+20 Schwarz criterion 48.96911
Log likelihood -871.6249 Hannan-Quinn criter. 48.43352
F-statistic 0.090764 Durbin-Watson stat 2.046741
Prob(F-statistic) 0.999998

MULTICOLLINAERITY
Variance Inflation Factors
Date: 09/21/23 Time: 00:47
Sample: 1981 2021
Included observations: 41

Coefficient Uncentered Centered

Variable Variance VIF VIF

POP 3.99E+21 674.9733 1.434138

LFPR 5.88E+17 16.69746 1.250844
UR 2.48E+19 15.24545 1.729240
C 3.09E+22 761.8369 NA

NORMALITY TEST
9
Series: Residuals
8 Sample 1982 2021
7 Observations 40
6
Mean 9.29e-05
5 Median 8.00e+08
4 Maximum 1.88e+10
Minimum -1.70e+10
3
Std. Dev. 7.34e+09
2 Skewness -0.098300
1 Kurtosis 3.468791

0 Jarque-Bera 0.430693
-1.0e+10 0.02500 1.0e+10 2.0e+10
Probability 0.806262

STABILITY TEST

CUSOM
20
15
10
5
0
-5
-10
-15
-20
1990 1995 2000 2005 2010 2015 2020

CUSUM 5% Significance

CUSOM OF SQAURES
1.6

1.2

0.8

0.4

0.0

-0.4
2006 2008 2010 2012 2014 2016 2018 2020

CUSUM of Squares 5% Significance