The Effect of population growth on economic growth in South Africa for the period of 1950 to 2022

Abstract

This study examines the relationship between population dynamics and economic growth in South Africa, assessing both the short-run and long-run effects. The study uses annual South African data covering 1960-2022 for the formal econometric analysis, with broader historical discussion covering 1950-2022, used to contextualise demographic and economic trends. The analysis applies cointegration, Dynamic Ordinary Least Squares (DOLS), Autoregressive Distributed Lag (ARDL) modelling, error-correction models, Granger causality tests, structuralbreak analysis and nonlinear ARDL (NARDL) asymmetry testing.

The results produce five principal findings. First, population size is positively associated with aggregate real GDP in the long run, conditional on capital formation and human-capital development as cointegration is found in all long-run DOLS and ARDL bounds tests. Second, population dynamics provide predictive information for economic performance, and the direction of causality is robust from population size to real GDP. Causality is interpreted as predictive causality and not strict structural causality. Third, the short-run population-growth effect is weaker, with delayed effects in the short-run compared to the long-run relationship, while error-correction terms confirm adjustment towards long-run equilibrium. Fourth, structural and regime changes affect GDP level movements and short-run dynamics but do not overturn the long-run populationoutput relationship. Fifth, NARDL Wald tests show that positive and negative deviations of population from its long-run trend have asymmetric effects on economic performance in both the short-run and long-run, with negative deviations having a greater economic cost than gains of positive deviations on the South African economy.

The study concludes that population growth is neither automatically growth-enhancing nor inherently growth-reducing. Its economic effect depends on capital formation, education, labourmarket absorption, demographic structure and institutional conditions. The findings support policies that treat demographic planning, investment, human-capital formation and employment creation as connected components of South Africa’s long-run growth strategy rather than treating demographic factors as separate social-sector issues.