The Causality Relationship Between Population, Economic Growth and Capital Stock in OIC Countries and Its Policy Aspects

Abstract

This paper examines the long run and short run relationship between population, GDP growth and capital stock in OIC countries during 1980 to 2016. Using panel Cointegration and causality techniques, the results show that there is the long run relationship, when per capita income and per capita capital stock are dependent variables. In the long run the impact of population on economic growth is positive and statistically significant. Also, the bidirectional relationship between Population and economic growth in the short-run has been accepted for OIC countries. Theoretically the population growth is a national savings that create additional capacity in the economy. Given these points, from a policy perspective, it can be argued that population growth is a stimulus for economic growth and not an obstacle to it. Therefore, rather pessimistic view of the population and its control, economic policymakers must reduce important economic barriers through a structures reform, increasing management capability as well as implementing proper monetary and fiscal policies.