The Impact of Population Growth on Economic ...

The Impact of Population Growth on Economic Growth in China

Author Name : Ahmed Nur Muhyidin Haasan

ABSTRACT

This study investigates the complex relationship between population growth and economic growth in China, emphasizing the dynamic effects of demographic transitions on GDP per capita from 1990 to 2023. Using an Autoregressive Distributed Lag (ARDL) model, the research assesses both short-run and long-run impacts of key macroeconomic variables—population size, labor force, capital formation, and trade openness—on economic growth. The findings reveal that capital formation consistently exerts a strong and positive influence on GDP per capita, while the labor force shows a positive short-run but negative long-run effect, suggesting issues related to labor market efficiency. Population growth, though statistically insignificant in both timeframes, displays potential for economic enhancement under supportive policy frameworks. Trade openness demonstrates weak and inconsistent influence. The result confirms a long-term cointegration relationship among the variables, with the economy exhibiting strong self-correction in the short term. Diagnostic tests affirm the robustness and validity of the model. This study concluded that population growth (LPOP) has a negative statistically significant impact on the economic growth of China. Contrary, there are positive and significant effects on GDP growth with regard to labor force participation (LLAB), gross capital formation (LDFCF), and trade openness (LTRD). The findings indicate that the high population growth could limit the economic performance but that the economic growth of China can be efficiently stimulated by expanding labor force, capital investment, and trade liberation.

Keywords: Population Growth, Economic Growth, Capital Formation, Labor Force Participation, Trade Openness, Demographic Transition, GDP per Capita, China.