An Empirical Study of the Effects of Demographic Factors on Economic Growth in Advanced and Developing Countries

Serhii Kozlovskyi; Mykola Pasichnyi; Ruslan Lavrov; Natalya Ivanyuta; Anton Nepytaliuk

doi:10.18778/1508-2008.23.27

Authors

Serhii Kozlovskyi Sc.D., Professor, Vasyl’ Stus Donetsk National University, Vinnytsia, Ukraine https://orcid.org/0000-0003-0707-4996
Mykola Pasichnyi Sc.D., Associate Professor, Kyiv National University of Trade and Economics, Kyiv, Ukraine https://orcid.org/0000-0001-7663-776X
Ruslan Lavrov Sc.D., Professor, Chernihiv National University of Technology, Chernihiv, Ukraine https://orcid.org/0000-0002-9655-4467
Natalya Ivanyuta Sc.D., Associate Professor, Donetsk Law Institute of the Ministry of Internal Affairs of Ukraine, Mariupol, Ukraine https://orcid.org/0000-0001-9177-9280
Anton Nepytaliuk Ph.D. student, Vasyl’ Stus Donetsk National University, Vinnytsia, Ukraine https://orcid.org/0000-0002-7890-3889

DOI:

https://doi.org/10.18778/1508-2008.23.27

Keywords:

population, human capital, demographic sustainability, institutional framework, economic growth

Abstract

In this article, an updated approach to investigate the effects of demographic factors on economic growth is proposed. The initial hypothesis was that these factors significantly affected production proportions, determining development vectors. The predictable shifts in production dynamics are considered for the institutional framework. The article investigates the statistically significant relationships between the demographic variables and economic growth for the sample of the OECD countries (excluding Columbia) and Armenia, Belarus, Bulgaria, Croatia, Georgia, Kazakhstan, Romania, the Russian Federation, and Ukraine, from 1990 to 2017; unbalanced panel data was used. The investigation aimed to highlight the intrinsic interconnection between the changes in demographic variables (e.g., the working‑age population growth rate and the average life expectancy growth rate) and economic growth. Our investigation focused on the issue of whether demographic influence on economics was the same for advanced and developing countries in the sample. Over the period, a significant increase in life expectancy adversely affected the real GDP per capita growth rate. However, the empirical study pointed out that life expectancy was strongly linked to nominal GDP per capita. In advanced countries, the demographic indicator was considerably higher than in emerging markets. We found that the rise in the working‑age stratum of the nation’s population radically reduced the output dynamics as well, but that interconnection was not robust. The institutional framework should be taken into account in order to achieve a favorable performance of public governance in the long‑run. The main demographic variables should be properly forecasted and calibrated for potential endogenous economic triggers. Both public and private investments are important when considering the economic growth rates that are achieved. We propose a balanced approach to macroeconomic policy regarding both demographic and institutional determinants.

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