Demographic factors and economic growth: the bi-directional causality in South East Asia

Abstract

This study has demonstrated new evidence sustaining the idea that variation in demographic factors is an important determinant of growth in per capita income. Using an annual panel dataset from 1990 to 2013 at the country-level in the Southeast Asia, this study is conducted to analyze the following key areas in comparing with current literature. First, the determination of the impact of a number of the demographic factors on the economic growth by using a various aspect of demographic factors, including: population growth, life expectancy, and age structure. Second, the interpretation of the bi-directional causality among: (i) the population growth and the economic growth; and (ii) the life expectancy and the economic growth. Furthermore, the two new econometric techniques, Driscoll and Kraay estimation, and structural equation model, in parallel with the panel regression technique are applied. It is noticeable about the following key contribution, including: (i) the specification of the various aspects of demographic factors on the economic growth is analyzed in the new context (Southeast Asia) where most countries have experienced the demographic transition, and have received the demographic dividend; and (ii) the worth analysis of the bi-directional causality has been recognized since it is one of the first in its line of current literature that confirms the inverse effect of the economic growth on population growth, and life expectancy imultaneously.