Population Pyramid And Economic Growth: An Econometric analysis of Sri Lanka

Abstract

Economists are torn between basically three schools of thoughts where the first theory states that the population growth will stimulate the economic growth of a country and other believes that the population growth will bring detrimental or adverse impact to the economic growth. Not only that, but there is another school of thought, which believes that the population growth is a neutral factor in economic growth. Given this diverse of opinions, through this study it is expected to established a firm relationship between the population growth and the economic growth of Sri Lanka. This study developed an econometric model using time series data from 1980 to 2015 and tested the relationship not only the GDP of Sri Lanka, but other significant variables of an economy such as Domestic Savings, Private consumption and Total Investment as well.  The results of this study indicate absence of a long term relationship between the population growth and the GDP of Sri Lanka and there will be no any relationship between the other selected variables and the population growth of Sri Lanka. The Granger Causality Analysis found out a unidirectional relationship between the GDP and the population growth, running from population growth to GDP. The study concludes that in Sri Lankan context, the population growth will not have any significant impact on the economic growth.