Population and Economic Growth in Mexico: Regime dynamics and causality
DOI:
https://doi.org/10.60758/49h8sw08Keywords:
Cluster analysis, Population dynamics, Economic growth, CausalityAbstract
The dynamic relationship between population and economic growth has not reached a consensus on whether it is positive, negative, or neutral. Using annual panel data for the 32 Mexican states over the period 1940-2020, this paper examines the joint dynamics of population growth and GDP per capita. In a first stage, the analysis applies regime dynamics and hierarchical cluster analysis to segment the sample into a set of Mexican states with similar trajectories. The empirical results of this first stage reveal four clusters. In the second stage, based on these internally homogeneous and clearly differentiated clusters, Granger, VAR and cointegration causality tests are carried out. The results confirm that population growth and income per capita have different causalities depending on the cluster and stage identified by a structural change, an event related to the effectiveness of the population policy to reduce fertility.
References
Aksoy, Y., Basso, H., Smith, R. & Grasl, T. (2019). Demographic structure and macroeconomic trends. American Economic Journal: Macroeconomics, 11(1), 193–222. https://doi.org/10.1257/mac.20170114
Alba, F., & Potter, J. E. (1986). Population and development in Mexico since 1940: An interpretation. Population and Development Review, 12(1), 47–75. https://doi.org/10.2307/1973351
Ali, S., Ali, A., & Amin, A. (2013). The impact of population growth on economic development in Pakistan. Middle-East Journal of Scientific Research, 18(4), 483–491.
Baca, N. (2007). Política de población y planeación en México. Quivera, 9(1), 45–61.
Baltagi, B., Feng, Q. & Kao, C. (2016). Estimation of Heterogeneous Panels with Structural Breaks. Journal of Econometrics, 191(1), 176–195. https://doi.org/10.1016/j.jeconom.2015.03.048
Barlow, R. (1994). Population growth and economic growth: Some more correlations. Population and Development Review, 20(1), 153–65. https://doi.org/10.2307/2137634
Bawazir, A. A. A., Aslam, M., & Osman, A. F. B. (2020). Demographic change and economic growth: empirical evidence from the Middle East. Economic Change and Restructuring, 53(3), 429–450. https://doi.org/10.1007/s10644-019-09254-8
Bloom, D. E., Canning, D., & Malaney, P. N. (2000). Population dynamics and economic growth in Asia. Population and Development Review, 26, 257–290.
Brida, J. G., & Punzo, L. F. (2003). Symbolic time series analysis and dynamic regimes. Structural Change and Economic Dynamics, 14(2), 159–183. https://doi.org/10.1016/s0954-349x(02)00050-4
Brida, J. G., Anyul, M. P., & Punzo, L. F. (2003). Coding economic dynamics to represent regime dynamics. A teach-yourself exercise. Structural Change and Economic Dynamics, 14(2), 133–157. https://doi.org/10.1016/s0954-349x(03)00003-1
Brida, J. G., Pereyra, J. S., Puchet Anyul, M., & Risso, W. A. (2013). Regímenes de desempeño económico y dualismo estructural en la dinámica de las entidades federativas de México, 1970-2006. Economía Mexicana. Nueva Época, 22(1), 101–149. https://doi.org/10.2139/ssrn.1881760
Brida, J. G., Risso, W. A., Sanchez Carrera, E. J., & Segarra, V. (2021). Growth and inequality in the Mexican states: Regimes, thresholds, and traps. Papers in Regional Science, 100(5), 1295–1322. https://doi.org/10.1111/pirs.12616
Bucci, A., Prettner, K., & Prskawetz, A. (2019). Human capital and economic growth. The Impact of Health, Education and Demographic Change, Springer. https://doi.org/10.1007/978-3-030-21599-6
Cabrera, G. (1994). Demographic dynamics and development: The role of population policy in Mexico. Population and Development Review, 20, 105–120. https://doi.org/10.2307/2807942
Calinski, R. B., & Harabasz, J. A. (1974). Dendrite method for cluster analysis. Communications in Statistics - Theory and Methods, 3(1), 1–27. https://doi.org/10.1080/03610927408827101
Chang, T., Chu, H. P., Deale, F. W., Gupta, R., & Miller, S. M. (2017). The relationship between population growth and standard-of-living growth over 1870–2013: evidence from a bootstrapped panel Granger causality test. Empirica, 44(1), 175–201. https://doi.org/10.1007/s10663-016-9315-9
Chirwa, T. G., & Odhiambo, N. M. (2019). The nexus between key macroeconomic determinants and economic growth in Zambia: a dynamic multivariate Granger causality linkage. Empirical Economics, 57(1), 301–327. https://doi.org/10.1007/s00181-018-1439-2
Choudhry, M. T. & Elhorst, J. P. (2010). Demographic transition and economic growth in China, India and Pakistan. Economic Systems, 34(3), 218–236. https://doi.org/10.1016/j.ecosys.2010.02.001
Coale, A. & Hover, E. M. (1958). Population Growth and Economic Development in Low-Income Countries. A Case Study of India’s Prospects. Princeton University Press. https://doi.org/10.1126/science.129.3356.1127
Coale, A. J. (1977). Population growth and economic development: the case of Mexico. Foreign Affairs, 56, 415–429.
Darrat, A. F. & Al-Yousif, Y. (1999). On the long-run relationship between population and economic growth: Some time series evidence for developing countries. Eastern Economic Journal, 25(3), 301–313.
Dawson, P. J. & Tiffin, R. (1998). Is there a long-run relationship between population growth and living standards? the case of India. Journal of Development Studies, 34(5), 149–156. https://doi.org/10.1080/00220389808422540
Duda, R. O. & Hart, P. E. (1973). Pattern classification and scene analysis. New York, Wiley
Engle, R. F. & Granger, C. W. (1987). Co-integration and error correction: representation, estimation, and testing. Econometrica, 55(2), 251–276. https://doi.org/10.2307/1913236
Feenstra, R. C., Inklaar, R. & Timmer, M. P. (2015). The next generation of the Penn World Table. American Economic Review, 105(10), 3150–82. https://doi.org/10.1257/aer.20130954
Furuoka, F. (2009). Population growth and economic development: New empirical evidence from Thailand. Economics Bulletin, 29(1), 1–14.
Furuoka, F. (2018). Is population beneficial to economic growth? An empirical study of China. Quality & Quantity, 52(1), 209–225. https://doi.org/10.1007/s11135-016-0463-6
Galor, O. & Weil, D. N. (2000). Population, technology, and growth: From Malthusian stagnation to the demographic transition and beyond. American Economic Review, 90(4), 806–828. https://doi.org/10.1257/aer.90.4.806
Garza-Rodriguez, J., Andrade-Velasco, C., Martinez-Silva, K., Renteria-Rodriguez, F., & Vallejo-Castillo, P. (2016). The relationship between population growth and economic growth in Mexico. Economics Bulletin, 36(1), 97–107.
German-Soto, V. (2005): Generación del producto interno bruto mexicano por entidad federativa, 1940-1992. El Trimestre Económico, 72(3), 617–653. https://doi.org/10.20430/ete.v72i287.574
German-Soto, V. (2015). Population Statistics by Mexican federal entity. Online estimates. [downloaded by https://works.bepress.com/vicente_german_soto/54/].
González-Rosas, J. (2022). ¿Es la reducción de la fecundidad en México efecto de la política de población de 1974? Una respuesta con base en la teoría estable acotada. Papeles de Población, 28(112), 59–88. https://doi.org/10.31819/9783954872626-004
Gower, J. C. (1966). Some distance properties of latent root and vector methods used in multivariate analysis. Biometrika, 53(3-4), 325–338. https://doi.org/10.1093/biomet/53.3-4.325
Gregory, A. & Hansen, B. (1996). Residual-Based Tests for Cointegration in Models with Regime Shifts. Journal of Econometrics, 70, 99–126. https://doi.org/10.1016/0304-4076(69)41685-7
Hansen, G. D. & Prescott, E. C. (2002). Malthus to Solow. American Economic Review, 92(4), 1205–1217. https://doi.org/10.1257/00028280260344731
Hasan, M. S. (2010). The long-run relationship between population and per capita income growth in China. Journal of Policy Modeling, 32(3), 355–372. https://doi.org/10.1016/j.jpolmod.2009.09.005
Huang, T.H. & Xie, Z. (2013). Population and economic growth: a simultaneous equation perspective. Applied Economics, 45(27), 3820–3826. https://doi.org/10.1080/00036846.2012.734596
Irmen, A. (2004). Malthus and Solow -a note on closed- form solutions. Economics Bulletin, 10(6), 1–7.
Jung, W. S. & Quddus, M. (1986). Economic development and population growth. International evidence. Economic Analysis Review, 1(1), 33–46.
Kapuria-Foreman, V. (1995). Population and growth causality in developing countries. The Journal of Developing Areas, 29(4), 531-540.
Kremer, M. (1993). Population growth and technological change: One million bc to 1990. The Quarterly Journal of Economics, 108(3), 681–716. https://doi.org/10.2307/2118405
Kruskal, J. B. (1956). On the shortest spanning tree of a graph and the traveling salesman problem. Proceedings of the American Mathematical Society, 7, 48–50. https://doi.org/10.1090/s0002-9939-1956-0078686-7
Kuznets, S. (1967). Population and economic growth. Proceedings of the American Philosophical Society, 111(3), 170–193.
Li, H. & Zhang, J. (2007). Do high birth rates hamper economic growth? The Review of Economics and Statistics, 89(1), 110–117. https://doi.org/10.1162/rest.89.1.110
Liu, S. & Hu, A. (2013). Demographic change and economic growth: Theory and evidence from China. Economic Modelling, 35, 71–77. https://doi.org/10.1016/j.econmod.2013.06.041
Maddison, A. (1995). Monitoring the world economy, 1820-1992. Paris, Development Center of the Organization for Economic Co-operation and Development.
Mahmoudinia, D., Hosseini Kondelaji, M. H., & Jafari, S. (2020). The causality relationship between population, economic growth and capital stock in OIC countries and its policy aspects. International Journal of Economics and Politics, 1(2), 117–132. https://doi.org/10.29252/jep.1.2.117
Malthus, T. R. (2018). An essay on the principle of population: The 1803 edition. Yale University Press.
Mantegna, R. N. & Stanley, H. E. (1999). Introduction to econophysics: correlations and complexity in finance. Cambridge university press. https://doi.org/10.1017/cbo9780511755767
Mantegna, R. N. (1999). Hierarchical structure in financial markets. The European Physical Journal B-Condensed Matter and Complex Systems, 11(1), 193–197.
Mendoza-Velázquez, A., German-Soto, V., Monfort, M. & Ordóñez, J. (2020). Club convergence and inter-regional inequality in Mexico, 1940-2015. Applied Economics, 52(6), 598–608. https://doi.org/10.1080/00036846.2019.1659491
Mierau, J. O. & Turnovsky, S. J. (2014). Demography, growth, and inequality. Economic Theory, 55(1), 29–68. https://doi.org/10.1007/s00199-013-0749-z
Mulok, D., Asid, R., Kogid, M., & Lily, J. (2011). Economic growth and population growth: Empirical Testing using Malaysian data. Interdisciplinary Journal of Research in Business, 1(15), 17-24.
Musa, A. (2015). Econometric model on population growth and economic development in India: an empirical analysis. Proceedings of the International Symposium on Emerging Trends in Social Science Research, Chennai-India, 3-5.
Nakibullah, A. (1998). Population growth and development: the case of Bangladesh. Applied Economics Letters, 5(4), 231–234. https://doi.org/10.1080/135048598354870
Rahman, M. M., Saidi, K., & Mbarek, M. B. (2017). The effects of population growth, environmental quality and trade openness on economic growth: a panel data application. Journal of Economic Studies, 44(3), 456–474. https://doi.org/10.1108/jes-02-2016-0031
Rammal, R., Toulouse, G., & Virasoro, M. A. (1986). Ultrametricity for physicists. Reviews of Modern Physics, 58(3), 765–788. https://doi.org/10.1103/revmodphys.58.765
Romer, P. M. (1986). Increasing returns and long-run growth. Journal of Political Economy, 94(5), 1002–1037. https://doi.org/10.1086/261420
Romer, P. M. (1990). Endogenous technological change. Journal of Political Economy, 98(5), S71-S102. https://doi.org/10.1086/261725
Sebikabu, D. R., Ruvuna, E. & Ruzima, M. (2020). Population growth’s effect on economic development in Rwanda. In Gouranga G. Das, Rukundo Bosco Johnson (editors) Rwandan Economy at the Crossroads of Development, 73-95. Springer, Singapore. https://doi.org/10.1007/978-981-15-5046-1_5
Simon, J. L. (1989). On aggregate empirical studies relating population variables to economic development. Population and Development Review, 15(2), 323–332. https://doi.org/10.2307/1973707
Solow, R. M. (1956). A contribution to the theory of economic growth. The Quarterly Journal of Economics, 70(1), 65–94.
Song, S. (2013). Demographic changes and economic growth: Empirical evidence from Asia. Honors Projects. 121.
Thirlwall, A. P. (1972). A cross section study of population growth and the growth of output and per capita income in a production function framework. The Manchester School, 40(4), 339–356. https://doi.org/10.1111/j.1467-9957.1972.tb01123.x
Thornton, J. (2001). Population growth and economic growth: long-run evidence from Latin America. Southern Economic Journal, 68(2), 464–468. https://doi.org/10.1002/j.2325-8012.2001.tb00431.x
Tsen, W. H. & Furuoka, F. (2005). The relationship between population and economic growth in Asian economies. ASEAN Economic Bulletin, 22(3), 314–330. https://doi.org/10.1355/ae22-3e
United Nations Department of Economic and Social Affairs, Population Division (2022). World Population Prospects 2022: Summary of Results. UN DESA/POP/2022/TR/NO. 3. https://doi.org/10.18356/9789210011839c004
Yao, W. J., Hsieh, Y. C., & Hamori, S. Y. (2007). An Empirical Analysis about Population, Technological Progress, and Economic Growth in Taiwan. Economics Bulletin, 15(23), 1–13.
Yao, W., Kinugasa, T., & Hamori, S. (2013). An empirical analysis of the relationship between economic development and population growth in China. Applied Economics, 45(33), 4651–4661. https://doi.org/10.1080/00036846.2013.795284
Downloads
Published
Issue
Section
License
Copyright (c) 2023 Prof., Vicente German-Soto, Prof.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
LAER Copyright and License
Authors submitting articles to Latin American Economic Review (LAER), automatically grant this journal a license to publish. Copyright of all published material remains with the authors, who can reuse it in future work without needing to make reference to LAER. Similarly, any other contribution of material to the website (for example text, photographs, graphics, video or audio) automatically grants us a right to publish. Copyright, however, remains with the author(s).
Authors release their work under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License (CC BY-NC-ND 4.0). This license allows anyone to copy, distribute and transmit the work, provided the use has no derivatives, is non-commercial and appropriate credit to the author(s) is given. (If you remix, transform, or build upon the material, you may not distribute the modified material.)
A human-readable summary of the licence:
https://creativecommons.org/licenses/by-nc-nd/4.0/
Full legal text: