Population dynamics and sustainable economic growth in South Africa

This study examines how population dynamics are associated with economic growth in South Africa using annual data for 1960–2022. This relationship is examined using pairwise Granger-causality tests for variables in levels and growth rates, Johansen and Engle-Granger cointegration tests, dynamic ordinary least squares (DOLS), and autoregressive distributed lag (ARDL) bounds testing. The Granger causality test suggests that population size consistently predicts real GDP in levels across two- to five-year lags, whereas population growth provides little robust predictive information for GDP growth. Both Johansen`s trace and maximum-eigenvalue tests identify one cointegrating relationship among real GDP, population and gross fixed capital formation. In addition, the Engle-Granger residual cointegration tests and ARDL bounds tests confirm the existence of a long-run relationship. We find that an increaseCapital formation significantly increases GDP growth in both levels and growth rate. In addition, evidence indicates that the rising population significantly raises GDP, but this effect weakens and becomes insignificant when education and demographic structure are controlled for. The short-run impact of population growth on GDP growth is insignificant. These results suggest that demographic expansion may support South Africa`s pursuit of UN Sustainable Goal (SDG) 8, especially sustainable growth, only when accompanied by investment, improved education and effective labour-market absorption. Therefore, South African policymakers should prioritise productive investment, vocational and skills development, youth employment and labour-intensive growth for its growing population.