Economic Growth, Investment, Population Growth and Unemployment in Ethiopia

Abstract

The study examines the correlation between economic growth, investment, population growth and unemployment in Ethiopia. For the purposes of this study, secondary time series data collected from the National Bank of Ethiopia, IMF and World Bank databases were used. The study extracts the perceived relationship between the variables through principal component (PCA) analysis. Both the Kaiser-Meyer-Olkin measure of sampling adequacy and Bartlett’s test of sphericity were used to determine the appropriateness of the dataset for PCA. The results revealed that an increase in unemployment is positively correlated, but in the opposite direction to economic growth, investment, total population and the working-age population. On top of the rapid spread of COVID-19, the present protests as a result of the political instability and ethnic problems across the country will lead to an increase in unemployment and the loss of many lives. Policymakers therefore need to emphasize and assure an increase in economic growth and investment in order to create more jobs in line with the increasing demand for jobs, particularly by young people. Moreover, the government must address the ongoing ethnic problems and political instability before it hits the economy adversely.

Unraveling the intricate relationship between unemployment, population, and poverty in Sub‐Saharan Africa: Does quality of life matter?

“…Therefore, poverty is the connection between these variables (Liu et al, 2015). In recent times, studies such as Meo et al (2018), Mushongera et al (2015), Sinding (2018), Ruch and Geyer (2018), Ncube et al (2014), Ngoran et al (2015), Olotu et al (2015), Oshora et al (2021), and Quy (2016) opined that increasing rate of poverty had attracted considerable attention and debate such that, poverty has become a thorn in the flesh of both the developed and developing countries. Especially developing countries as policymakers struggle to find lasting ways to alleviate the situation.…”

“…The attention to the increasing poverty rate in SSA is high for several reasons. Poverty is one of the dire challenges facing sustainable development and progress in SSA countries as the incidence of poverty tends to be high within the region (Ngoran et al, 2015;Olotu et al, 2015;Oshora et al, 2021;Vijayakumar, 2013).…”