Demographic transition, a process during which populations move from high fertility and high mortality rates; to a period of low mortality rates and high fertility; and finally to both low fertility and low mortality rates (Kirk, 1996), is a fundamental component of development (Dyson, 2010) that occurs often, but not always, in tandem with economic growth (Caldwell, 2006). Although the process has been widely studied in the Asian emerging markets, where as much as one-third of East Asia’s economic “miracle” is attributed to demographic change (Bloom and Canning, 2011), very little is known in the case of Sub-Saharan Africa (Thuku et al., 2013; Canning et al., 2015; Ahmed et al., 2016). This study therefore contributes to the body of knowledge by offering an African perspective on the subject. By building on the idea developed in the literature that demographic transition is responsible for economic growth (Dao, 2012), the study empirically examines its impact on economic growth in Namibia. Like previous studies, a key question is whether economic growth causes the demographic transition or vice versa (Ranganathan et al., 2015). This question is addressed in this study by looking at the relationship between Namibia’s GDP per capita and mortality rate, fertility rate, population growth, and dependence ratio. Statistical results of such empirical examination will provide insights into how the changing demographics of Namibia society may impact its future economic growth.
Like other countries in southern Africa (Botswana, Lesotho and South Africa), Namibia is witnessing a major demographic transformation with more than 65% of the population expected to be in the working age group by 2050 (Figure 1). The country’s fertility rate has fallen over the fifteen years – from about 4 children per woman in 2000 to 3.4 in 2016 – due to increased contraceptive use, higher educational attainment among women, and greater female participation in the labor force. The total dependency ratio has decreased from 78% in 2000 to 68% in 2016, with youth dependency ratio also falling from 72% to 62% over the same time period (United Nations Population Division, 2017). Despite rapid urbanization— the percentage of the population residing in urban areas has increased steadily from 32% in 2000 to 48 percent in 2016— Namibia is still mostly rural, with about four in ten people living in urban areas (United Nations Population Division, 2017; Republic of Namibia, 2014).
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Health status is one of the most important keys to success because societies with better health are more likely to prosper. Estimates generated by the United Nations (UN) inter-agency group for child mortality estimation reveals that Namibia’s infant mortality per 1,000 live births improved from 48.5 in 2000 to 32.3 in 2016; under-five mortality per 1,000 live births improved from 74.6 to 45.2; and maternal mortality ratio declined by 25% – from 352 deaths to 265 deaths per 100,000 live births from 2000 to 2015. Similarly, immunization coverage improved from 69% in 2000 to 85% in 2016 (UN-IGME, 2017). Experience in other countries shows that similar transitions boost potential growth, but if not managed properly, lead to long-term stagnation, inequities, and less inclusive growth.
The rest of the paper is organized as follows. Section II briefly presents a review of existing literature on demographic changes and economic growth. Section III contains the descriptive data and the theoretical framework and derivation of the estimation equations, followed by and econometric results in Section IV. Finally, Section V presents some concluding remarks and policy implications.