Benue State University, Makurdi

Economic Growth Response to Shocks in Demographic Changes and Domestic Savings in Nigeria

Yusuf Dansuma Lawal, Adofu Ilemona and Okwudili Walter Ugwuoke

Abstract

The study examined economic growth response to unanticipated shocks in demographic changes and domestic savings in Nigeria using annual time series data from 1986 to 2022. The study utilized Cholesky Impulse Response on the basis of the Vector Autoregression (VAR) model analysis as its estimation technique. The study revealed that economic growth responded positively to changes in population growth, working age population ratio and demographic dividend as changes in demographic components. Similarly, it was also revealed that economic growth responded negatively to changes in other demographic changes components like; old age dependency ratio, young age dependency ratio and net migration rate. In addition, it was found that economic growth responded positively to changes in public domestic savings and private domestic savings. This means that an increase in public and private savings mobilization resulted to increase in economic growth of the Nigerian economy. Based on the findings of the study, it was recommended that; policymakers should implement measures to encourage active population growth through incentives such as tax breaks, maternity leave, and other social programs aimed at promoting family growth. The government should, therefore, focus on creating more job opportunities for the working age population in the country, through policies such as investment in infrastructure, entrepreneurship development, invest in education and training programs to improve the skills and knowledge of the working age population, thus promoting demographic dividend. Finally, policymakers should, therefore, encourage savings mobilization by implementing policies such as tax breaks for saving, financial literacy campaigns, and incentives for private sector investment in infrastructure development.

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