STATISTICAL ANALYSIS OF THE RELATIONSHIP

BETWEEN ECONOMIC GROWTH AND POPULATION

GROWTH OF NEPAL

A PROJECT WORK SUBMITTED TO THE

DEPARTMENT OF STATISTICS AND COMPUTER
PATAN MULTIPLE CAMPUS
INSTITUTE OF SCIENCE AND TECNOLOGY
TRIBHUVAN UNIVERSITY
NEPAL

FOR THE AWARD OF

BACHELOR OF SCIENCE (B.Sc.) IN STATISTICS

BY
DIWAS RAI
SYMBOL No.: 500220085
T.U. REGISTRATION No.: 5-2-22-414-2017

ASHAR, 2079
 RECOMMENDATION

This is to recommend that DIWAS RAI, Symbol No. 500220085, T.U. Registration
No. 5-2-22-414-2017, has carried out project work entitled “STATISTICAL
ANALYSIS OF THE RELATIONSHIP BETWEEN ECONOMIC GROWTH
AND POPULATION GROWTH OF NEPAL” for the requirement to the project
work in Bachelor of Science (B.Sc.) degree in Statistics under my supervision in the
Department of Statistics and Computer, Patan Multiple Campus, Institute of Science
and Technology (IoST), Tribhuvan University T.U.), Nepal.

To my/our knowledge, this work has not been submitted for any other degree.

He has fulfilled all the requirements laid down by the Institute of Science and
Technology (IoST), Tribhuvan University (T.U.), Nepal for the submission of the
project work for the partial fulfilment of Bachelor of Science (B.Sc.) degree.

-------------------------
Prakash Bahadur Amatya
Supervisor
Department: Statistics and Computer Department
Campus: Patan Multiple Campus
University: Tribhuvan University

ASHAR, 2079
 DECLARATION

This project work entitled “STATISTICAL ANALYSIS OF THE

RELATIONSHIP BETWEEN ECONOMIC GROWTH AND POPULATION
GROWTH OF NEPAL” is being submitted to the Department of Statistics and
Computer, Patan Multiple Campus, Institute of Science and Technology (IoST),
Tribhuvan University (T.U.), Nepal for the partial fulfilment of the requirement to the
project work in Bachelor of Science (B.Sc.) degree in Statistics. This project work is
carried out by me under the supervision of Prakash Bahadur Amatya in the
Department of Statistics and Computer, Patan Multiple Campus, Institute of Science
and Technology (IoST), Tribhuvan University (T.U.), Nepal.

This work is original and has not been submitted earlier in part or full in this or any
other form to any university or institute, here or elsewhere, for the award of any
degree.

----------------
Diwas Rai
Symbol No. 500220085
T.U. Registration No. 5-2-22-414-2017

ASHAR, 2079
 LETTER OF FORWARD

Date: __/__/____

On the recommendation of Prakash Bahadur Amatya, this project work is submitted

by Diwas Rai, Symbol No. 500220085, T.U. Registration No. 5-2-22-414-2017,
entitled “STATISTICAL ANALYSIS OF THE RELATIONSHIP BETWEEN
ECONOMIC GROWTH AND POPULATION GROWTH OF NEPAL” is
forwarded by the Department of Statistics and Computer, Patan Multiple Campus, for
the approval to the Evaluation Committee, Institute of Science and Technology
(IoST), Tribhuvan University, Nepal.

He has fulfilled all the requirements laid down by the Institute of Science and
Technology (IoST), Tribhuvan University (T.U.), Nepal for the project work.

--------------------

Prakash Bahadur Amatya

Head of Department
Department of Statistics and Computer
Patan Multiple Campus
Tribhuvan University
 BOARD OF EXAMINATION AND CERTIFICATE OF
APPROVAL

This project work (PRO-406) entitled “STATISTICAL ANALYSIS OF THE

RELATIONSHIP BETWEEN ECONOMIC GROWTH AND POPULATION
GROWTH OF NEPAL” by Diwas Rai, Symbol No. 500220085, T.U. Registration
No. 5-2-22-414-2017, under the supervision of Prakash Bahadur Amatya in the
Department of Statistics and Computer, Patan Multiple Campus, Institute of Science
and Technology (IoST), Tribhuvan University (T.U.), is hereby submitted for the
partial fulfilment of the Bachelors of Science (B.Sc.) degree in Statistics. This report
has been accepted and forwarded to the Controller of Examination, Institute of
Science and Technology, Tribhuvan University, Nepal for the legal procedure.

----------------------- -----------------------

Prakash Bahadur Amatya Internal Examiner

Supervisor Department of Statistics and Computer

Department of Statistics and Computer Patan Multiple Campus

----------------------- -----------------------

External Examiner Prakash Bahadur Amatya

Head of Department

Department of Statistics and Computer

Patan Multiple Campus

 ACKNOWLEDGEMENTS

First of all, I would like to express my sincere gratitude to Tribhuvan University for
providing this opportunity to carry out the project work as a partial fulfilment of B.Sc.
degree in Statistics.

I would also like to express my gratitude to Patan Multiple Campus for giving the
opportunity to conduct a project work on a topic “STATISTICAL ANALYSIS OF
THE RELATIONSHIP BETWEEN ECONOMIC GROWTH AND POPULATION
GROWTH OF NEPAL” the project helped me to learn how to conduct research and
broadened my understanding.
I am very grateful to my academic advisor, Mr Prakash Bahadur Amatya, Lecturer for
his consistent generous cooperation, comments and guidance that helped develop this
study. And also like to express my thanks to respected teacher Mr Prakash Bahadur
Amatya sir, for providing the data and resources material without which project work
would not have been feasible.

Finally, I would like to thank my friend Rojan Bajracharya who assisted and
supported me in completing this research study, whether directly or indirectly.

------------

Diwas Rai
Symbol No. 500220085
T.U. Registration No. 5-2-22-414-2017
ASHAR, 2079
 ABSTRACT

This research intends to examine as well as establish relationship between economic

growth and population growth of Nepal from 1980 to 2020. Considering the GDP
growth rate as the indicator of economic growth and also taken as independent
variable whereas the population growth rate is taken as dependent variable.
Regression equation is estimated to find the relationship of economic growth and
population growth and correlation test is performed to measure the association
between them. Trend analysis and descriptive analysis are also performed based on
those variables.

The major finding is over a 41-years period in Nepal from 1980 to 2020, there appears
to be no substantial relationship between population and GDP. The population has
only doubled, whereas the global economy has grown fivefold in same period of time.

Keywords: GDP, Population growth, economic growth

 SUMMARY
The goal of this study is to look into and establish a relationship between
Nepal's economic growth and population growth from 1980 to 2020. As an indication
of economic growth, the GDP growth rate is used as an independent variable, while
the population growth rate is used as a dependent variable. The relationship between
economic growth and population growth is determined using a regression equation,
and the correlation test is used to investigate associations. On the basis of those
factors, trend analysis and descriptive analysis are also performed. According to the
results of correlation study, population growth and GDP have a very weak but
positive relation. However, regression coefficient does not exist, according to
regression analysis. In addition, the entire regression model was discovered to be
insignificant.

Despite common belief, population growth lead to additional manpower for

economic development or higher customer demand for products. Instead, the rising
population leads to resource exploitation, culminating in resource scarcity and
unsustainable development. Over a 41-year period in Nepal, there appears to be no
significant relationship between population and GDP.
 LIST OF ACRONYMS AND ABBREVIATIONS
CBS: Central Bureau of Statistics
d.f.: Degrees of Freedom
GDP: Gross Domestic Product
LCU: Local Currency
NRB: Nepal Rasta Bank
S.S.: Sum of Square
Std.: Standard
C.V.: Coefficient of Variation
 LIST OF TABLES
Table 1: Descriptive statistics of variables......................................................12
Table 2: Correlation matrix of variables.........................................................16
Table 3: Regression coefficient.......................................................................16
Table 4: ANOVA............................................................................................17
Table 5: R 2......................................................................................................18
 LIST OF FIGURES
Figure 4.1: Trend analysis of population growth............................................13
Figure 4.2: Trend analysis of GDP growth.....................................................14
Figure 4.3: Comparison of yearly growth of population and GDP.................15
Figure 4.4: Residual plot.................................................................................18
 TABLE OF CONTENTS

RECOMMENDATION.......................................................ii
LETTER OF FORWARD.................................................iv
BOARD OF EXAMINATION AND CERTIFICATE OF
APPROVAL....................................................................................v
ACKNOWLEDGEMENTS...............................................vi
ABSTRACT.......................................................................vii
SUMMARY.......................................................................viii
LIST OF ACRONYMS AND ABBREVIATIONS..........ix
LIST OF TABLES...............................................................x
LIST OF FIGURES............................................................xi

CHAPTER 1 INTRODUCTION................................................1

1.1 GENERAL BACKGROUND....................................................................1

1.2 STATEMENT OF THE PROBLEM...........................................................2
1.3 OBJECTIVES OF THE STUDY................................................................2
1.4 SIGNIFICANCE OF THE STUDY.............................................................2
1.5 LIMITATION OF THE STUDY................................................................2

CHAPTER 2 LITERATURE REVIEW....................................4

2.1 EMPIRICAL REVIEW............................................................................4

CHAPTER 3 RESEARCH METHODOLOGY........................8

3.1 RESEARCH DESIGN.............................................................................8

3.2 SOURCE OF DATA................................................................................8
3.3 METHOD OF ANALYSIS.......................................................................8
3.3.1 Regression analysis........................................................................8
3.3.2 Correlation analysis........................................................................9
 3.3.3 Trend analysis................................................................................9
3.3.4 Test Statistics.................................................................................9
3.3.5 F-test:..............................................................................................9
3.3.6 T-test:...........................................................................................10
3.3.7 Coefficient of Determinations ( R 2):............................................10

CHAPTER 4 ANALYSIS OF DATA.......................................12

4.1 DESCRIPTIVE ANALYSIS OF THE STUDY............................................12

4.2 TREND AND PATTERN ANALYSIS......................................................13
4.2.1 Trend analysis of population growth............................................13
4.2.2 Trend analysis of GDP growth.....................................................14
4.2.3 Comparison of yearly growth rate of population and GDP.........15
4.3 INFERENTIAL ANALYSIS OF THE STUDY............................................16
4.3.1 Correlation analysis......................................................................16
4.3.2 Regression analysis......................................................................16
4.3.3 Residual Analysis.........................................................................18

CHAPTER 5 SUMMARY AND CONCLUSION...................20

5.1 SUMMARY OF MAJOR FINDINGS.......................................................20

5.2 CONCLUSION.....................................................................................20
5.3 RECOMMENDATION..........................................................................20
References...........................................................................22
Appendix.............................................................................25
 CHAPTER 1 INTRODUCTION

1.1 General Background

In the history of human, population size has had a significant role in economy
entity. As world population is increasing, the relation between population growth and
economic growth is crucial. On one hand, it is believed that as the population grows,
more people would spend more money, consume more energy, enjoy more
entertainment, and buy more food, resulting the economic growth. In addition,
population is viewed as a source of labour force for production and economic growth.
Meanwhile, an overpopulation may result in unemployment, low per capita income,
and as a result low quality of life. Moreover, overpopulation may result in
exploitation of natural resources, which are limited. As a result, there would be a
negative impact on the economy of the country.

In the country which has not attained economic development, there is high
birth and death rate due to various reason caused by the poor economic conditions.
Poor economic development means low health facilities, low literacy rate, high
unemployment rate, low income and such. As a result, birth rate steps up due to low
literacy led to early marriage and no proper family planning. In addition, illiteracy
makes it difficult to produce skilled labor for the country's economy to grow
sustainably. At the same time, pitiful conditions of health facilities and consumption
of less nutrition food will lead to miserable increment in death rate. Whereas in
economically sound countries, there will be less death rate because of availability of
advance and latest health facilities as well as people are more into healthy life style.
Meanwhile birth rate also decreases as outcome of the awareness in people of benefits
of having small family and due to high living cost of the developed country. Which is
why having more children is seen as burden than the future source of income.

Low population growth in high income countries is likely to create social and
economic problem where as high population growth in low income countries may
slow their development. Therefore, the debate of the relationship between population
growth and economic growth is quite controversial.
1.2 Statement of the Problem
This study aims to inspect the relation between economic growth and
population growth. Based on that the questions raised for this study are as follows:

-What is the trend and pattern of economic growth and population growth?

-What degree of relationship is between dependent and explanatory variable

under study?

-Is regression statistically significant to explain the regressand?

1.3 Objectives of the Study

The general objective of this study is to investigate the relationship between
economic growth and population growth of Nepal. In addition to broad objectives,
this study establishes the following objectives:

-To identify the nature of descriptive statistics of study variables with the use
of appropriate statistical measurement.

-To analyze the trend of economic growth and population growth.

-To investigate the degree of relationship between economic growth and

population growth.

1.4 Significance of the Study

-This study is mainly purposed to investigate the relationship between
economic growth and population growth of Nepal.

-This study is useful for the further research on factors affecting the economic
growth of Nepal.

1.5 Limitation of the Study

-This study will be based on the published secondary data covering the period
of 41 years from 1980 to 2020.

-Regression analysis is assumed that the cause and effect relationship between
the variables remains unchanged. This assumption may not always hold good.
 -Since, only one explanatory variable is considered. There might be other
more significant variable that explains the dependent variable.
 CHAPTER 2 LITERATURE REVIEW

2.1 Empirical Review

Malthus examined population growth and resources in his one of the studies.
According to him, the human population grows more rapidly than the food supply
until natural calamities, war or disease reduces the population. Therefore, a rising
population lowers the standard of living, which in turn raises mortality and lowers
fertility, eventually bringing population growth to a halt (Malthus, 1798).

Simon observed that two variable correlations between the rate of population
growth and the rate of growth of per capita income usually show no significant
relation (Simon, 1989).

James and Steve re-examined the effects of population growth and fertility on
economic growth and concluded that high birth rates appear to reduce economic
growth through investment effect and capital dilution. In other words, decline in birth
rate have medium-term positive impact on per capita income growth through labour
supply. This study was performed using a 107 country panel data set covering 1960-
85 (James A. Brander and Steve Dowrick, 1993).

Barlow suggests that per capita income growth rates are uncorrelated with
population growth rates as result of interpretation of slower population growth does
not cause faster economic development. Therefore, he added lagged fertility as third
variable and the three-variable model showed per capita income growth to be
negatively related to current population growth and positively related to lagged
fertility (Barlow, 1994).

Schmidt, Kelley and Robert concluded that the impact of the rate of
population growth on per capita output growth is not statistically significant in the
1960s or 1970s and is negative, statistically significant, and large in the 1980s. This
was due to the net impact of population growth appeared to be nil. However, in 1980s
the net impact was negative. The study suggests more balanced perspective on the
consequences of demographical change because it rests on the idea of population has
both negative and positive effect; and these effects vary over the short and the long
term (Schmidt, Allen C. Kelley and Robert M., 1995).
 David and Jeffrey did a study, between population and economic growth by
introducing demographic variable. This study explained the role of demographic
transition of East Asia’s bloom in economy during 1965-90. This economic analysis
was done using data of 78 (Asian and non-Asian) countries. They concluded
population dynamics about 1.4-1.9 percent of East Asia’s annual growth in GDP per
capita from 1965-90. They also suggest that it was possible due to East Asian
countries had social, economic and political institutions and policies; that made them
to realize the perks of demographic distribution of population (David E. Bloom and
Jeffrey G. Williamson , 1998).

Rohan Kothare state that India is the prime example of Malthus theory as
India is facing problem of overpopulation of 1 billion people and more than 3 billion
people are under poverty line. This is due to failure of keeping up with increasing
number of populations in creating employment opportunities and production of
resources to manage them. However, it is considered as short time problems but in
long run, it leads to new development. In the case of India still sustained economic
growth due to advancement in agriculture, industrial and financial structure.
Following the neo-classical growth model, India has advanced as a result of
population growth (Kothare, 1999).

David Bloom, David Canning and Jaypee Sevilla also studied economic
growth and demographic transition. They emphasized the age-distribution of
population has significant impact on how the economy of country will perform. If
population consist of significant amount of young people, then it requires high
amount of resources for their care. High elderly population also cause same effect as
very young population. They also concluded combined with reduced fertility and
increases in the working age population, have contributed to economic growth in the
developing world (David E. Bloom, David Canning and Jaypee Sevilla, 2001).

Kannan Navaneetham studied the age based structural transition and its
relation with the economic growth of countries in South Asia (Bangladesh, India and
Sri Lanka) and South-east Asia (Indonesia, Malaysia, Philippines, Singapore and
Thailand). In these countries, the age-based structure was not uniform, implying that
there was a disparity in fertility and mortality rates. Shifting age structure from a
young aged population to old aged population had positive result on the economic
growth of all South-east Asian countries except the Philippines. Later years in spite of
increase in such shifting of population did not raise the economy as same level.
Philippines differed from other Southeast Asian countries with respect to total fertility
rate, trade openness and public institutional quality; which explains the rate of
population growth negatively influenced the economic growth rate in the Philippines.
The South Asian countries did not perform well in terms of economic growth relative
to Southeast Asian countries with their age structural transition because they were not
open to trade in the time of analysis. The study also found that age share 25-49 had a
significant negative impact on economic growth as this age group is the major
consumer and are more likely to save little which is important as saving is a source of
capital for investment and economic growth. Whereas age group of 50-64 has positive
impact on economy and 65+ age group is expected to have negative impact since they
depend on working age for consumption (Navaneetham, 2002).

Paul Beaudry and Fabrice Collard used cross–country observations on the

effect of population growth to explain difference in working-age population growth
rates may be a key to understanding difference in economic performance between
industrialized countries from 1960 to 1974. They concluded differences in adult
population growth, as a result of their interaction with a major technological
transition, may be an essential factor in interpreting the differences in industrialized
countries' economic experiences in mid–1970s (Paul Beaudry and Fabrice Collard,
2003).

Andrew Mason investigated population change and economic development

between 1960 and 1990 of East Asia. He summarized the demographic change played
an import role in the region’s economic success and whether the fertility decline was a
by-product of economic development or a response to population policy. East Asia
prevented the problem of rapid population growth by reducing the fertility rate and
slowing down the population growth. Industrialization, social and economic
development, government’s proper policies and comprehensive public programs
encouraged helped to reduce the fertility to decline (Mason, 2003).

Feng Wang and Andrew Mason studied demographic dividend and prospects
for economic development in China. They have pointed that the People's Republic of
China has seen major demographic and economic changes in the recent 25 years.
 In last two decades, China has become one of the most active and fast growing
economies. After one child policy, the productive population grew faster than the total
population, which resulted steady increase in per capita income. However, this growth
trend must ultimately come to an end as the demography transition shifts from
working age to old age people and steady birth rate. This eventually effect the
reduction of per capita income and consumption. The fact that demographic factor
played significant role in China’s economic growth over last two decades is inevitable
(Feng Wang and Andrew Mason , 2005 ).

Peterson examined the relationship between population growth and economic

growth using the historical data; determining links between population growth,
growth in per capita output, and overall economic growth over the past 200 years.
Peterson pointed out that the low population growth in high-income countries is likely
to cause social and economic issues, whereas high population growth in low-income
countries may hinder development (Peterson, 2017).
 CHAPTER 3 RESEARCH METHODOLOGY

3.1 Research Design

In this study, data are mainly collected from secondary sources. The secondary
data are used to show the relation of GDP growth to population growth. The simple
regression model is set to find the impact of population growth in economic growth.
T-test is done to view the significance of the regression coefficient of estimate and R2
test is done to estimate the overall significance of regression. Karl Pearson’s
correlation is used to find the degree of association between dependent variable and
explanatory variable. The trend of variables are also analysed via graphical method.

3.2 Source of data

To conduct this study, data are taken from secondary sources. The data are
collected from following sources:

a) Central Bureau of Statistics (CBS)

b) Nepal Rastra Bank (NRB)

c) World Bank

3.3 Method of analysis

3.3.1 Regression analysis
To accomplish the objective of this study, regression is carried out. According
to (Cochran, 1977) regression analysis is done to show the causal relationship of
independent variables to dependent variable. The simple regression model is used.
The model is as follows:

Y 1=β 0 + β 1 X 1+ eij

Where,

Y 1= GDP growth in percent

X 1 = Population growth in percent

β 0= Intercept of model
β 1= Coefficient of independent variable

e ij= residual

3.3.2 Correlation analysis

To determine the degree of an association between variables, Karl Pearson’s
correlation test is performed. It is done to understand whether there is an association
between two variables or not.

The coefficient of correlation is expressed by “r” and it range from -1 to 1. -1

for a perfect negative linear relationship, +1 for a perfect positive linear relationship
and 0 indicates variables are not related.

Strength of association Correlation Coefficient (r)

Weak correlation 0.1<|r|<0.3
Moderate correlation 0.3<|r|<0.5
Strong correlation 0.5<|r|

3.3.3 Trend analysis

The trend and pattern of GDP growth and population growth of Nepal from
1980 to 2020 are analysed; individually and together as well to fulfil the objective of
study.

3.3.4 Test Statistics

3.3.5 F-test:
F-test or variance ratio test is usually applied to test the significance difference
between the variances of two independent normal populations. It can also be applied
to test whether the two samples are taken from a normal population having same
variance or not. The F-statistic is the Mean Square Regression divided by the Mean
Square Residual. In regression model, F-test explains the validity of model. If the
calculated value is greater than tabulated value; model is considered fit.

ESS
k−1
F=
RSS
N −k

Where,

ESS =Explained Sum of square,

 RSS = Residual sum of square,

k = Number of explanatory variables,

s n = Number of observations

3.3.6 T-test:
It is the test for significance of and observed sample regression coefficient.
The observed sample regression coefficient is expected different from zero. The
procedure of t-test is briefly as follows:

β
t=
S . E .( )

Where,

β = estimated coefficient

S . E .( β)= standard error of 

Level of significance=α

Degrees of freedom = n-1

T-tabulated at α level of significance and n-1 degrees of freedom

Decision criteria: If the calculated t-statistics is greater than the tabulated t-

values than the estimated coefficient is said to be significant at the given level

3.3.7 Coefficient of Determinations ( R2):

The coefficient of determinations is the proportion of variance in the
dependent variable, which can be explained by the independent variables. This is an
overall measure of the strength of association and does not reflect the extent to which
any particular independent variable is associated with the dependent variable. The
coefficient of determination can have value ranging from zero to one (i.e., 0 ≤ R ≤ 1). If
2
R is equal to 0.90, it indicates that the independent variables used in the regression
model explain 90 percent of total variation in dependent variable. A value of zero
signifies no variation; and a value of one signifies the variation of dependent variables
and independent variables are equal.

2 ESS
R=
TSS
Where,

2
TSS= y

Here,

y=Y −Y

And x=X −X

ESS = Explained sum of square,

And TSS = Total sum of square

 CHAPTER 4 ANALYSIS OF DATA

4.1 Descriptive analysis of the study

The descriptive summary of study variables are shown below:

Table 1: Descriptive statistics of variables

Std.
N Minimum Maximum Mean Deviation C.V.
Population growth 41 -0.26849 2.72921 1.6725 0.84263 0.50381

GDP growth 41 -2.97741 9.68113 4.33707 2.80266 0.64621

Table 1 shows the summary of the descriptive statistics of variables taken

under the study. It shows that mean of GDP and population growth are 4.33707 and
1.6725 respectively. The mean is the average value of a data set. Since, mean of GDP
growth is higher than population growth. On average, GDP growth rate is higher than
population growth rate. The standard deviation is the measure of dispersion of a data
set relative to its mean. Higher standard deviation means the data are further from the
mean and a lower standard deviation denotes the values are closer to the mean of the
data set. It is found that standard deviation of GDP growth rate and population growth
rate are 4.33707 and 1.6725 respectively; which indicates both GDP growth rate and
population growth rate are less spread out from their respective means. But population
growth rate is less spread out than GDP growth rate comparatively. The coefficient of
variation (C.V.) is the measure of dispersion of data points around the mean, higher
the coefficient of variation greater the level of dispersion around mean. The above
table shows that both population growth and GDP growth has low C.V., which is
0.50381 and 0.64621 respectively. These shows, both variables have low level of
dispersion around their respective mean. The minimum and maximum value of
Population growth is found to be -0.26849 and 2.72921 respectively. Likewise, the
minimum and maximum value of GDP growth is -2.97741 and 9.68113 respectively.
4.2 Trend and pattern analysis
4.2.1 Trend analysis of population growth

3 2.729203599867
2.5 76

2
1.5
1
0.5
0 -
0.268486268243
-0.5 194
11111111111111111111222222222222222222222
99999999999999999999000000000000000000000
8 8 8 8 8 8 8 8 8 8 9 9 9 9Population
9 9 9 9 9 9 growth
0 0 0 0 0in0%0 0 0 0 1 1 1 1 1 1 1 1 1 1 2
0 1 2 3 4 5 6 7 8 9 0 1 2 3Linear
4 5 6 7(Population
8 9 0 1 2 3 4growth
5 6 7 8in9 %
0 1) 2 3 4 5 6 7 8 9 0

Figure 4.1: Trend analysis of population growth

Figure 4.1 depicts the trend of population growth from year 1980 to 2020.
Population was 15016408 in the year 1980 and it has become 29136808 in the year
2020. Population growth rate was above average from 1980 to 2000 and below
average from 2002 to 2017. The highest growth rate is 2.72921% in year 1993. After
that, growth rate started decline substantially and reached lowest value that is -
0.26849% in the year 2013. From year 2014 to 2020, population growth rate is in
uptrend but overall linear trend line show the population growth rate is in down trend.
 4.2.2 Trend analysis of GDP growth

12
10 9.6811300152305
9
8
6
4
2
0
-2 -
2.9774058575497
-4 5
11111111111111111111222222222222222222222
99999999999999999999000000000000000000000
88888888889999999999000000000011111111112
01234567890123456789012345678901234567890
GDP growth % Linear (GDP growth %)

Figure 4.2: Trend analysis of GDP growth

Figure 4.2 depicts the trend of the GDP from 1980 to 2020. It shows that the
movement of growth rate of GDP fluctuates up and down around its average value i.e.
4.33707%. The lowest GDP growth rate in 1983 was 2.97741%, followed
immediately after by the highest GDP growth rate of 9.68114% in 1984.The linear
trend lines shows the GDP growth rate is in sideways trend.
 4.2.3 Comparison of yearly growth rate of population and GDP

12

109.68113001523059

4
2.72920359986776
2

0
-
-2 0.26848626824319
- 4
2.97740585754975
-4
11111111111111111111222222222222222222222
99999999999999999999000000000000000000000
88888888889999999999000000000011111111112
0 1 2 3 4 5 6 7 8Population
9 0 1 2 3 4growth
5 6 7 8in
9%0 1 2 3 4 5 6 7GDP
8 9 growth
0 1 2 3 4in5%6 7 8 9 0

Figure 4.3: Comparison of yearly growth of population and GDP

Figure 4.3 shows the population growth rate and GDP growth rate from 1980
to 2020. It shows the maximum GDP growth rate recorded was 9.68114% in year
1984 and the population growth rate recorded was 2.7293% in year 2016. The lowest
GDP growth rate in 1983 was -2.9775% and the population growth rate in 2013 was -
0.26849%. The population growth rate declined from 1984 to 2013, and increased
from 2014 to 2020. GDP has also been on a short-term upward trend from 1980 to
1988, followed by several ups and downs until 2017, and seems to have declined
sharply after 2018. The relationship between population growth and GDP growth
seems weak.
4.3 Inferential analysis of the study
4.3.1 Correlation analysis
To measure the relationship between the variables, Karl Pearson’s correlation
test is used and the relation is shown below.

Table 2: Correlation matrix of variables

GDP Population
growth rate growth rate

Pearson GDP growth 1.000 .050

Correlation rate

Population .050 1.000

Table
growth rate
shows
the summary of the correlation test. It depicts that there is very weak correlation
between the population growth rate and GDP growth rate. The Karl Pearson’s
correlation coefficient between two variables is 0.05, which is insignificant. Since the
correlation coefficient is 0.05, there is a very weak but positive relationship between
population growth and GDP.

4.3.2 Regression analysis

To investigate the relationship between the dependent and explanatory
variable simple regression model is fitted. The result, which is computed as the fitted
model, is displayed below:

Table 3: Regression coefficient

Model Beta Std. Error t P-value

1 (Constant) 4.059 .994 4.084 .000

Population .166 .532 .313 .756

growth rate
a. Dependent Variable: GDP growth rate
 From table 3: the equation of the regression model can be written as follows:

Y =4.059+0.166 X 1

Where,

Y= GDP growth rate

And X 1 = Population growth rate.

The constant value 4.059 is the intercept that represents the total output of the
GDP growth rate of Nepal given that the change in population growth rate is zero. In
other words, it indicates the total output of Nepal's GDP growth rate when the
population growth rate remains constant. the coefficient of explanatory variable is
0.166, which interprets that 0.166 unit change in dependent variable(Y) occurs per
unit change in explanatory variable(X ¿ ¿1)¿. The table 3 shows the value of t-
statistics for population growth is 0.313 and p- value is 0.756. Since, the P-value is
0.756 and it is greater than the level of significance (α) i.e. 0.05. Therefore, the
regression coefficient is insignificant in this model.

For the overall test of regression, ANOVA is performed and tested hypothesis
with F-test.

Hypothesis for testing:

Null hypothesis (H0): the overall model is insignificant, i.e., H0: β1≠0

Against,

Alternative hypothesis (H1): the overall model is significant, i.e., H1: β1 = 0

The level of significance is α at 0.05

Table 4: ANOVA

Sum of
Model Squares d.f. Mean S.S. F-cal. F-tab.
1 Regression .787 1 .787 .098 4.0913
Residual 313.408 39 8.036
Total 314.195 40
a. Dependent Variable: GDP growth rate
 b. Predictors: Population growth rate

Table 4 shows the Sum of squares and degrees of freedom for the regression,
residual and total. Also displays the mean sum of square for the regression and the
residual. At last, it shows the value for the F-calculated and F-tabulated. The value of
the F-calculated is 0.098 and F-tabulated is 4.0913. The decision rule is stated as
follows, do not reject the null hypothesis if the significance value is greater than the
significance level (α = 0.05). Since, F-calculated is less than F-tabulated at 5% level
of significance and (1, 39) degrees of freedom. Therefore, it can be concluded that
overall regression model is insignificant.

Table 5: R2

R Adjusted
Model R Square R Square
1 0.05 0.003 -0.023

In the following table 5, the R-square value is 0.003, which indicates that just
0.3 percent of the total variation in GDP growth is explained by the variable specified
in the regression and rest of the variability is unexplained by the specified variable in
the regression model.

4.3.3 Residual Analysis

Residuals
6

0
3.9 4 4.1 4.2 4.3 4.4 4.5 4.6
-2

-4

-6

-8

-10

Figure 4.4: Residual plot

 The difference between the observed value of the dependent variable and the
predicted value is called the residual (e) i.e., Residual = Observed value - Predicted
value. A residual plot graph presented above shows the residuals on the vertical axis
and the dependent variable on the horizontal axis. From chart above, we can see that
the points are randomly spread in a range of -7.5 to 6. In the residual plot, the points
are randomly scattered around the residual = 0 line. We can conclude that the linear
model is appropriate for this modelling this data.
 CHAPTER 5 SUMMARY AND CONCLUSION

5.1 Summary of Major Findings

The major findings on trend and pattern of GDP growth and Population are as
given below:

1. The size of GDP is on increasing trend from the beginning of the study
to 2020. It has increased 5 times in size from 1980 to 2020. However,
the rate of growth is randomly fluctuated in the range of -3 to 10
percent.
2. The size of population has only doubled from the year 1980 to 2020.
The trend of population growth rate was in decreasing trend from 1994
to 2013 and rising after 2013 to 2020.

The major findings of population growth on GDP are as follows:

1. According to result of correlation analysis, there is a very weak but

positive relationship between population growth and GDP.
2. According to regression analysis, the regression coefficient does not
exist. The overall regression model also found to be insignificant.

5.2 Conclusion
Despite the various theories that population growth leads to increased
manpower for economic development and increased customer demand for products,
contrary to popular opinion, rising population leads to resource exploitation, resulting
in resource scarcity and unsustainable development. In the context of Nepal, there
appears to be no significant relationship between population and GDP over a 41-year
period.

5.3 Recommendation
The main objective of this study was to analyse the relationship between the
economic growth and population growth of Nepal. Based on the above finding, the
study makes these recommendations:
1. This study is based on the data from 1980 to 2020. Further research
can be conducted by increasing the data set.
2. Since the pace of population growth has remained constant and is
slowing, the government should develop suitable strategies and
policies to produce skilled labour from the available workforce for
significant economic growth.
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 Appendix
Appendix A

Year Total population GDP (constant LCU)

1979 14676932 407731003165.44
1980 15016408 398274113913.21
1981 15367229 431498037480.04
1982 15729431 447805964942.32
1983 16100623 434472963911.67
1984 16477488 476534856428.99
1985 16858315 505817471783.39
1986 17239677 528911329941.70
1987 17623697 537879647055.93
1988 18020755 579279214587.86
1989 18445021 604359965133.75
1990 18905480 632372269184.78
1991 19405506 672642686395.14
1992 19938322 700264130146.34
1993 20489973 727223248912.15
1994 21040899 786971930745.63
1995 21576074 814267673499.59
1996 22090352 857654169084.82
1997 22584772 900953804979.92
1998 23057875 928130080788.18
1999 23509971 969084500652.89
2000 23941099 1029167739573.18
2001 24347113 1078566681102.95
2002 24725625 1079862505360.81
2003 25080880 1122463489032.28
2004 25419337 1175024000797.59
2005 25744500 1215905213122.95
2006 26066687 1256815739732.61
2007 26382586 1299692766247.98
2008 26666581 1379034319586.22
2009 26883531 1441547030874.30
2010 27013207 1510977913259.20
2011 27041220 1562680982208.49
2012 26989160 1632040476100.00
2013 26916795 1689572402700.00
2014 26905982 1791140757800.00
2015 27015033 1862357468500.00
2016 27263430 1870423594200.00
2017 27632682 2038336745400.00
2018 28095712 2193706438428.93
2019 28608715 2339742691963.37
2020 29136808 2290880004056.32
2021 29192480 2232928417888.00
 Appendix B

Year Population growth rate in % GDP growth rate in %

1980 2.286646041 -2.319394203
1981 2.309378509 8.341974134
1982 2.329628847 3.779374654
1983 2.33244234 -2.977405858
1984 2.313711878 9.681130015
1985 2.284892121 6.144905238
1986 2.236952267 4.565650545
1987 2.203088733 1.695618265
1988 2.227973231 7.696808711
1989 2.327032037 4.329647934
1990 2.465735756 4.635036347
1991 2.610501311 6.368150403
1992 2.70867683 4.106406612
1993 2.7292036 3.849850022
1994 2.653247056 8.216002709
1995 2.511690047 3.468451883
1996 2.355593655 5.328284175
1997 2.213492174 5.048612536
1998 2.073148582 3.016389482
1999 1.941726935 4.412573271
2000 1.817197648 6.199999988
2001 1.681667436 4.799892149
2002 1.542687538 0.120143175
2003 1.426564762 3.945037767
2004 1.340438073 4.682603245
2005 1.271082847 3.479181046
2006 1.243712687 3.364614788
2007 1.204603236 3.411560276
2008 1.070696221 6.104639142
2009 0.810273513 4.53307872
2010 0.481202592 4.81641465
2011 0.103647394 3.421828241
2012 -0.192706459 4.438493505
2013 -0.268486268 3.525153171
2014 -0.040180016 6.011482843
2015 0.404484777 3.976053272
2016 0.91527549 0.433113719
2017 1.345295889 8.977279356
2018 1.66177642 7.622376105
2019 1.809442486 6.657055428
2020 1.829086293 -2.088378695
Appendix C

Observation Predicted GDP growth Residuals

rate in %
1 4.439308689 -6.758702892
2 4.443093197 3.898880938
3 4.446464479 -0.667089824
4 4.44693287 -7.424338727
5 4.443814617 5.237315398
6 4.439016696 1.705888542
7 4.431035655 0.13461489
8 4.425398044 -2.72977978
9 4.429540823 3.267267889
10 4.446032161 -0.116384227
11 4.469123596 0.165912751
12 4.493224207 1.874926197
13 4.509568495 -0.403161883
14 4.512985798 -0.663135776
15 4.500340531 3.715662179
16 4.476774079 -1.008322196
17 4.450787107 0.877497067
18 4.427130012 0.621482524
19 4.403765571 -1.387376089
20 4.381886457 0.030686814
21 4.361154786 1.838845202
22 4.338591678 0.461300471
23 4.315454264 -4.195311089
24 4.296122111 -0.351084344
25 4.281783716 0.40081953
26 4.270237438 -0.791056391
27 4.265680846 -0.901066058
28 4.259169893 -0.847609617
29 4.236877015 1.867762127
30 4.193521768 0.339556952
31 4.138737947 0.677676703
32 4.07588245 -0.654054209
33 4.026545375 0.411948129
34 4.013929531 -0.48877636
35 4.051938021 1.959544821
36 4.125965943 -0.149912672
37 4.211002527 -3.777888808
38 4.282592446 4.69468691
39 4.335280216 3.28709589
40 4.359863704 2.297191724
41 4.363134011 -6.451512706