Professional Documents
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FACULTY OF ECONOMICS
(EEB 5023)
PREPARED FOR:
AIDAROHANI SAMSUDIN
(800024)
PREPARED BY:
(800109)
The Correlation Between Population and Economic Growth in Malaysia
TABLE OF CONTENT
CHAPTER 1
INTRODUCTION
1.1 Abstract 2
CHAPTER 2
LITERATURE REVIEW
CHAPTER 3
CHAPTER 4
CHAPTER 5
REFERENCES 16
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The Correlation Between Population and Economic Growth in Malaysia
CHAPTER 1: INTRODUCTION
1.1 ABSTRACT
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The Correlation Between Population and Economic Growth in Malaysia
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The Correlation Between Population and Economic Growth in Malaysia
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The Correlation Between Population and Economic Growth in Malaysia
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The Correlation Between Population and Economic Growth in Malaysia
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The Correlation Between Population and Economic Growth in Malaysia
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The Correlation Between Population and Economic Growth in Malaysia
Next, also in the case of life expectancy, Fogel (1994) argues that
declines in European mortality during the industrial revolution followed
economic growth. Preston (1975, 1980) attributes most of the decline in death
rates observed around the world between 1930 and 1970 to factors such as
advances in health care technology, and only a small portion to economic
growth. Working with data from 1960 for developing countries, Pritchett and
Summers (1996) find a significant effect of income and education in reducing
infant mortality and argue that the relationship is causal, but they find no
significant effect of income on life expectancy. It may seem plausible, even
obvious, that economic growth leads to improved health and longevity, but the
evidence is far from conclusive.
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The Correlation Between Population and Economic Growth in Malaysia
By gathering all the relevant data and econometric models from various
empirical studies, the dependent and the independent variables have been
identified as follow:
Dependent Variable
Total Amount of Gross Domestic Product (GDP) in Malaysia
Independent Variables
Total Number of Population in Malaysia
Average Life Expectancy in Malaysia
Where;
GDP = the Malaysia Gross Domestic Product
pop = the total population in Malaysia
life = the average life expectancy in Malaysia
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The Correlation Between Population and Economic Growth in Malaysia
Sample Size
There are 31 sample size has been selected for each variables from
the year 1974 to the year 2004. The data used is in time series data which is
mean that it has been collected yearly.
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The Correlation Between Population and Economic Growth in Malaysia
30000000
25000000
GDP
GDP,POP,ALE
20000000
15000000 POP
A LIFE E
10000000
5000000
0
year
1974
1978
1982
1986
1990
1994
1998
2002
The above graph shows the trend of economic growth, population and
also average life expectancy in Malaysia between years 1974 until year 2004.
According to the graph it’s clearly proved that for 31 years, Malaysia’s
economic growth had responded positively with an increment of population.
Whereas, the average life expectancy illustrate only small changes to the
economic growth due to the average value used in this paper.
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The Correlation Between Population and Economic Growth in Malaysia
Estimation Result
The Ordinary Least Squares estimation result identify that a joint F-test
of the explanatory variables in the linear model indicated that it is significant
overall at the 1% level. With respect to the coefficient estimates, the
population coefficient estimate was contradictory to the previously referenced
correlation between economic growth and population done by Malthus ,
Mankiw, Romer and Weil (1992), and Brander and Dowrick (1994). However
this coefficient was consistent with the result found by Everett Hagen (1975),
Charles Kindleberger (1965) and Simon and Gobin (1979) that there is a
positive relationship between population and economic growth.
them healthy. This result was consistent with Pritchett and Summers (1996)
which they find no significant effect of economic growth on life expectancy
even though the economic growth leads to improved health and longevity, but
the evidence is far from conclusive.
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The Correlation Between Population and Economic Growth in Malaysia
Secondly, the available evidence from the empirical studies does not clearly
show or still ambiguous because still did not prove on how that population growth will
exerts a negative influence on the economic development. Next, difficulties arise
from ethical perspectives and policy issues by comparing Europe countries with
Malaysia for example, and especially the North – South debate, such as an issue of
concerning sexuality such as transgender issues in, reproduction, relationships
between men and women where the Europe countries did not forbid their citizens to
stay together without married or married with the same gender which is differ with
the Malaysia norms, culture, and policy, and also questions relating to family
planning itself.
Lastly, as what has been discussed in the literature review it has been proven
that only developed country will face the inverse relationship between the two
variables while the developing country is vice – versa. Thus, Malaysia is still
considered as the developing country unlike Europe countries or Japan. Therefore,
probably in the next 20 years when Malaysia which is previously focused on the
labor intensive in the Small Medium Industries (SMI’s), agricultural sector, and also
when the local government encouraged more Foreign Direct Investments (FDI’s) will
switch to the capital intensive, then it will get the different results by following the
sound economic theories.
However, in order to enhance the result for the future research, it also has to
take into the consideration the limitation that has been obeyed. Firstly, do not
exclude any externalities either positive or negative. Secondly, give a room for the
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The Correlation Between Population and Economic Growth in Malaysia
government actions, for example in Malaysia the government policy in term of family
planning is different from other countries.
Next, it is also has to take into the consideration of the local environment such
as the local norm and culture such as discourage sex before married and also
abortion. Finally, do not ignore the effect of education in determining the economic
growth when the rate of population is increase.
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The Correlation Between Population and Economic Growth in Malaysia
REFFERENCES
Coale, A.C. & Hoover, E.M.1958. Population Growth and Economic Development in
Low Income Countries: A Case Study of India, Princeton University Press,
Princeton.
Deaton, A.S. & C.H. Paxson. 1997. The Effects of Economic and Population Growth
on National Saving and Inequality, Demography, 34(1), pp. 97-114.
Ehrlich, P.R. 1968. The Population Bomb, Ballentine, New York. Elo, I.T., & Preston.
1992. Effects of Early-life Condition on Adult Mortality: A Review, Population
Index, 58(2), pp.186-222.43
Higgins, M. & Williamson, J.G. 1997. Asian Demography and Foreign Capital
Dependence, Population and Development Review, 20: 553-559.
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