Abstract:
Ethiopia is one of the countries with high fertility, rapidly growing and largely young population. At the
same time, it is among countries with weak and poorly focused population policy. In light of this, this
study intended to assess the causation between demographic factors and economic development in
Ethiopia. To this end, it applied vector-error-correction model (VECM) to data on economic,
demographic and other variables obtained from secondary sources, accompanied by descriptive
analysis of the relationship of population with HDI, agricultural landholdings and forestland. VECM
results indicated robust and negative long run relationship between per capita income and population
growth and a positive one between the former and growth of workers – with bidirectional causality in
both cases. That is, rises in per capita income reduce the growth of (dependent) population and
enhance that of workers, and vice versa. Conversely, slower growth of population or faster growth of
workers raises per capita income. Short run relationships turned out to be weak and non-robust to
alternative model specifications. The descriptive analysis signified inverse associations of population
growth with landholding, forest coverage and HDI score. These findings point to a need for meaningful
efforts to incorporate population matters into the policy arena.
